Netcare Circular 140706

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION
Action required
1. This circular is sent to Network Healthcare Holdings Limited (Netcare) shareholders for information purposes only and no action
whatsoever is required in respect hereof.
2. If you do not fully understand any of the information contained in this circular, please consult your stockbroker, banker, accountant, attorney
or other professional adviser.
3. If you have disposed of your entire holding of shares in Netcare, this circular should be handed to the purchaser
to whom, or the broker, CSDP or agent through whom, you disposed of your shares.
4. The interpretations and definitions on pages 12 to 15 of this document apply, mutatis mutandis to this circular and the annexures.
Network Healthcare Holdings Limited

(Incorporated in the Republic of South Africa)
(Registration number 1996/008242/06)
Share code: NTC
ISIN: ZAE000011953
(Netcare or the company)
CIRCULAR TO NETCARE SHAREHOLDERS

regarding
the acquisition of a controlling interest in General Healthcare Group Limited (GHG)

The Consortium partners
Lead sponsor to Netcare
Transactional sponsor to Netcare
Joint financial advisers to the Consortium
Legal advisers to Netcare
Attorneys, Notaries
and Conveyancers
UBS
Legal adviser to the Consortium
Adviser to Netcare
Debt providers to the Consortium

Debt provider to Netcare
Independent reporting accountants to GHG
Deloitte & Touche

Registered Auditors
This circular is available in English. Copies may be obtained from the company:
76 Maude Street (corner West Street), Sandton, 2196.
Date of issue: 11 July 2006
Independent reporting accountants

and auditors to Netcare
CORPORATE INFORMATION
Company secretary and registered office

J Wolpert, CA(SA), FCMA, FCIS
76 Maude Street
(corner West Street)
Sandton, 2196
(Private Bag X34, Benmore, 2010)
Independent reporting accountants and auditors

to Netcare
Grant Thornton
137 Daisy Street
Corner Grayston Drive
Sandown, 2196
Lead sponsor to Netcare
Transactional sponsor to Netcare
Merrill Lynch South Africa (Proprietary) Limited

(Member of the Merrill Lynch Group)
138 West Street
Sandown
Sandton, 2196
(PO Box 651987, Benmore, 2010)
KPMG Services (Proprietary) Limited

KPMG Crescent
85 Empire Road
Parktown, 2193
(Private Bag 9, Parkview, 2122)
Legal advisers to Netcare
Independent reporting accountants to GHG
As to South African law

HR Levin Attorneys, Notaries & Conveyancers
Kentgate
64 Kent Road
corner Oxford Road
Dunkeld, 2196
(PO Box 52235, Saxonwold, 2132)
Deloitte & Touche

Deloitte Place
The Woodlands
20 Woodlands Drive
Woodmead, 2196
(Private Bag X6, Gallo Manor, 2052)
As to English law
Norton Rose
Kempson House
Camomile Street
London EC3A 7AN
United Kingdom
Transfer secretaries
Executive directors of Netcare

Dr R H Friedland (Chief Executive Officer)
Dr V L J Litlhakanyane
P G Nelson (Chief Financial Officer)
I M Davis
N Weltman
Non-executive directors of Netcare
M I Sacks (Chairman)
Dr A H Jammine+
J M Kahn+
H R Levin
Dr J A van Rooyen
+ Independent
Link Market Services South Africa (Proprietary) Limited

11 Diagonal Street
Johannesburg, 2001
(PO Box 4844, Johannesburg, 2000)
The interpretations and definitions on pages 12 to 15 of this circular apply to the following important
information.
This circular is not an invitation to the public to subscribe for shares in Netcare, but is issued in compliance
with the Listings Requirements of the JSE for the purpose of giving information to Netcare shareholders and
to the investing public regarding Netcare.
Information on the Netcare group, post the GHG acquisition, is included in this circular. Due to the nature of
the information, which is derived from the historic information applicable to Netcare and GHG separately, this
information may not give a true reflection of the combined group as it will be constituted.
Pro forma information

The pro forma financial information presented is not necessarily indicative of the operating results or financial
condition which would have been achieved had the GHG acquisition been implemented during the periods
or at the times presented, nor is this information necessarily indicative of future results that will be achieved.
The pro forma financial information does not reflect the impact of synergies that Netcare expects to realise
or the time frame within which these synergies and the integration of the operations may take to achieve.
Forward-looking statements
Certain statements are included in this circular which are not historical facts and which may express or imply
expectations of future events or results. These statements may include financial objectives, plans,
expectations and/or estimates. Forward-looking statements are generally identified by the words: expects,
anticipates, believes, intends and similar such expressions.
All forward-looking statements involve a number of risks, uncertainties and other factors, and Netcare cannot
give assurances that such statements will prove correct. Risks, uncertainties and other factors that could
cause actual events or results to differ from those expressed or implied by the forward-looking statements
include, without limitation, delays in the regulatory processes, changes in the economic or political situation
of South Africa, the UK and/or any other relevant jurisdiction, changes in the healthcare industry within these
countries and the performance of Netcare, post the GHG acquisition. Although Netcares management
believes that the expectations expressed in such forward-looking statements are reasonable, investors and
shareholders are cautioned that forward-looking information and statements are subject to various risks and
uncertainties, many of which are difficult to predict and generally beyond the control of Netcare. These could
cause actual results and developments to differ materially from those expressed in, or implied or projected
by, the forward-looking information and statements.
General
This circular is published by and is the sole responsibility of Netcare.
Dresdner Kleinwort and UBS Investment Bank are acting for the Consortium and no one else in connection
with the GHG acquisition and will not be responsible to anyone other than the Consortium for providing the
protections afforded to customers of Dresdner Kleinwort and UBS Investment Bank, nor for providing advice
in relation to the GHG acquisition.
TABLE OF CONTENTS
Page
CORPORATE INFORMATION
Inside front cover
SALIENT FEATURES
INTERPRETATIONS AND DEFINITIONS
12

1.
Introduction
16
2.
Rationale for and principal terms of the GHG acquisition
17
3.
Terms and conditions of the GHG acquisition
19
4.
Overview of the Consortium Partners
19
5.
Key partnership arrangements
20
6.
Pro forma financial information
21
7.
Information on GHG and the UK healthcare market
23
8.
Prospects for Netcare
32
9.
Directors and their interests
33
10.
Directors opinions and recommendations
37
11.
Share capital
38
12.
Major shareholders
38
13.
Material vendors
38
14.
Material contracts
38
15.
Material loans
39
16.
Statement of solvency and liquidity
39
17.
Statement of material changes
40
18.
Expenses
40
19.
Directors responsibility statement
41
20.
Experts consents
41
21.
Litigation statement
41
22.
Documents available for inspection
41
Annexure 1
Additional background information on Netcare UK
42
Annexure 2
Report of the independent reporting accountants on the historical financial information

reported in accordance with Statements of Generally Accepted Accounting Practice
applicable in the United Kingdom and the JSE Listings Requirements
44
Annexure 3
Historical financial information on GHG
46
Annexure 4
Report of the independent reporting accountants on the historical financial information

reported in accordance with International Financial Reporting Standards and
the JSE Listings Requirements
77
Financial information on GHG for the year ended 31 December 2005

prepared in terms of IFRS
79
Annexure 5
Annexure 6
Reporting accountants report on the pro forma financial information relating to Netcare 106
Annexure 7
Pro forma financial information relating to Netcare
Information Memorandum
108
Enclosed
SALIENT FEATURES
1. INTRODUCTION
On 25 April 2006, the Board of Directors of Netcare announced that the Group had entered into an
agreement to acquire a controlling interest in a leading private hospital operator in the UK, General
Healthcare Group Limited (GHG) from funds managed by BC Partners, a private equity fund
management organisation.
GHG is a leading provider of private acute care in the UK, with a national network of 49 hospitals
comprising 2,476 beds operated predominantly under the BMI brand. GHGs facilities, employees
and relationships with doctors and consultants enable it to offer a comprehensive range of medical and
surgical services across the UK. For the year-ended 31 December 2005, GHG reported gross revenue
and EBITDA of 612m (R7.1bn) and 164m (R1.9bn), respectively (before the IFRS conversion and
applying an average rate of exchange for the stated period of R11.56: 1).
Netcare has undertaken the acquisition of GHG as part of a Consortium with three leading UK-based
financial and property investors funds advised by Apax Partners Worldwide LLP (Apax Partners),
London and Regional Properties Limited (London & Regional) and funds advised by Brockton Capital
LLP (Brockton) (together, the Consortium Partners). The purchase consideration for GHG on an
enterprise value basis is in the order of 2.2bn (excluding transaction costs) with Netcares investment
for its controlling interest being by way of a cash investment of 219m and the injection of its
wholly-owned UK subsidiary Netcare Healthcare UK Limited (Netcare UK). The remaining purchase
consideration has been provided by the Consortium Partners, together with debt financing raised within
GHG on a non-recourse basis to Netcare.
The acquisition of a controlling interest in GHG transforms Netcare into one of the worlds largest
hospital groups with significant potential for future growth and value creation for all
stakeholders, both locally and internationally, over the medium to long term.
The acquisition of GHG brings Netcare a number of key benefits:
Establishes Netcare as one of the worlds largest healthcare groups, with 120 hospitals and
ambulatory day care centres and over 11,500 beds under management in an industry where scale
is becoming increasingly more important in improving efficiency, affordability and the quality of clinical
services;
Provides Netcare with a leadership position in the UK, one of the largest and most attractive
healthcare markets globally;
Enhances the growth prospects for Netcare as a result of the opportunities within the UK healthcare
market;
The combination of GHG and Netcare UK allows Netcare to position itself to best capitalise on the
opportunities that both the privately and publicly funded healthcare segments present;
Enables Netcare to enhance GHGs profitability by leveraging its intellectual property through the
introduction of certain operating skills and practices, as well as ancillary healthcare businesses across
the GHG business;
Provides investors with currency diversification as a significant proportion of Netcares revenue and
earnings will be earned offshore; and
Provides Netcare with an improved platform for future international expansion in the longer term.
Overview of the combined group
Revenue
Revenue *** Rands
EBITDA
EBITDA *** Rands
Hospitals and ambulatory day care centres
Beds
Theatres
Pharmacies
Employees
*Netcare
**GHG
Combined
689m
R7.5bn
132m
R1.4bn
71
9 285
358
82
16 574
612m
R7.1bn
157m
R1.8bn
49
2 476
152
37
8 300
1,301m
R14.6bn
289m
R3.2bn
120
11 761
510
119
24 874
Percentage
change
88.8
118.9
69.0
26.7
42.5
45.1
50.1
= Based on the 2005 published financial information. Includes subsidiaries, associates, public private partnerships and
Netcare UK.
**
= As at 31 December 2005. Based on 2005 financial information converted in terms of IFRS.
*** = Converted at R11.56: 1, being the average rate for the 12 month period ended 31 December 2005.
Detailed information on the UK healthcare market, GHG property portfolio as well as a highlights section
relating to the GHG acquisition can be found in the information memorandum posted together with this
circular.
2. RATIONALE FOR AND PRINCIPAL TERMS OF THE GHG ACQUISITION
Having determined that the next stage of Netcares corporate development would involve international
growth, Netcare has over several years sought opportunities for investment and expansion outside
of South Africa. The acquisition of GHG represents an important step for Netcare providing a leadership
position in an important overseas market. The acquisition represents the spearhead for international
expansion.
Since first establishing a presence in the UK in 2001, Netcare has developed a notable position in the
UK serving the Government outsourcing market. Netcare has successfully competed against domestic
and international groups to be awarded a number of contracts from the Department of Health (DoH).
Netcare has built a solid reputation delivering well against the service and quality standards under the
terms of these contracts. Such a presence allowed Netcare to establish relationships with the DoH, other
funders and the medical practitioner community. This provided Netcare with a strong understanding
of market dynamics and allowed Netcare to assess growth options.
Netcare had determined that entry into the private pay markets (funded by private medical insurance
(PMI) and end-patients (self pay) required an acquisition.
Netcare has pursued the acquisition in a disciplined and cautious manner building on the experience
of operating in the UK as well as seeking third party verification of key issues over an extended
timeframe. Key steps included:
Key market assumptions were tested with third party consultants;
The selection of Consortium members and the development of a Consortium partnership agreement was
pursued over an extended period of several months thus ensuring alignment and appropriate negotiation;
Undergoing an extensive internal business development plan process to ensure the merits of the
acquisition were weighed appropriately and also to ensure that resources required to deliver against
the plan would not be unduly detrimental to the South African operations;
Pursuing an extensive due diligence process in partnership with the Consortium partners through both
direct activity and external advisers on legal, financial, commercial, environmental, taxation, property
and related business issues; and
Utilising both Consortium partners and legal and financial advisers to select and fully negotiate debt
financing for the acquisition.
Through this acquisition Netcare has secured control of a large UK hospital player serving the PMI and
self pay segments. Netcares evaluation suggests that GHG benefits from a number of key strengths:
Strong national presence focused around attractive demographic locations such as the South-East and
suburban locations around London;
Efficient procurement practices with PMI insurers. GHGs position as a significant customer of this
important payer group provides an attractive base upon which to build and further develop relationships;
Well-invested facilities, largely purpose built which attract medical practitioners and patients alike;
Strong relationships with suppliers of medical consumables, drugs and ancillary products; and
A strong employee base and extensive relationships with more than 4,200 medical practitioners.
Given the financial resources available to Netcare, management had determined that an outright
acquisition would have been difficult if not impossible to finance and would have restricted Netcares
ability to pursue initiatives in South Africa. By working through the Consortium, Netcare benefits from
control of GHG, while limiting Netcares investment to 219m. In this way, the Consortium approach
represents a cautious route to international growth.
Netcare management believe GHG offers further opportunities for growth and development both within
the privately reimbursed PMI and self pay markets and the state funded market. GHG ranks well in
doctor surveys in issues such as service delivery, equipment and overall offering. Netcares due diligence
indicated GHG offers several opportunities to substantially differentiate and expand the service offering
and consequently grow the business.
In the State funded market, management believe the combination of Netcare UK and GHG means the
combined organisation will be well-positioned to compete for contracts and also under the initiatives
to give patients more choice.
The Labour administration has been pursing a policy of contracting with private providers for the
provision of healthcare services including the provision of surgical and diagnostic procedures. Netcare UK
has achieved success in this area, winning contracts and delivering a high quality service.
Current policy of the Labour administration to pursue the Patient Choice Initiative under the terms
of which publicly funded patients requiring various medical procedures will be offered five potential
venues including one operated by a private provider, will also expand the publicly funded, private sector
provided segment. The current position of the Conservative party is also to support increased
participation of private providers. The privately provided market is small compared to the publicly
provided part. Management believe that the combined organisation is well-positioned under scenarios
of either increased or decreased State outsourcing of healthcare provision.
The combination of GHG and Netcares UK activities also means that Netcare UK is assisted in its
participation in the current DoH outsourcing programme.
Strategy
Following the GHG acquisition, the strategy for the enlarged group in the UK will involve:
The continued commitment by Netcare to being a National Health Service (NHS) partner of choice,
providing sustainable solutions for the benefit of patients;
The further development and growth of the private acute market, serving both the insured and self
pay segments;
Delivering the highest possible standards of patient care across all services;
Employing the combined expertise and experience of the senior teams from both businesses to drive
innovation, excellence and growth;
Being a private sector employer of choice, offering outstanding career opportunities for high calibre
individuals;
Utilising cost savings opportunities afforded by the scale and presence of the new combined group;
Ensuring the sharing of best practices across the combined group to increase both quality of care and
efficiency.
Given that, Netcare intends, to the extent possible, to utilise UK-based employees to further develop the
GHG business, Netcare does not envisage denuding Netcares South African operations in any way.
Indeed, the South African operations should also derive considerable benefit from being part of a larger
organisation through various cross-pollination initiatives.
3. TERMS AND CONDITIONS OF THE GHG ACQUISITION

On 12 May 2006, the Consortium acquired 100% of GHG for a total consideration of 2.2bn (excluding
transaction costs) on an enterprise value basis.
Netcare will own 52.6% of GHG in return for the investment of 219m (Netcares investment)
and the contribution of Netcare UK, with the other Consortium partners having contributed 303m
for their collective 47.4% interests. GHG management will be entitled to participate in a performancebased equity interest which may equate to approximately 7% of the equity over a period. Netcare will
not dilute to less than 50.1% as a result of this participation. Given the necessity for the use of
short-term offshore bridging facilities in an enacting auction process, Netcares investment has initially
been funded using bridging facilities provided by Dresdner Bank AG London Branch that have been
raised for the purposes of this acquisition. The remaining funds were provided by the Consortium
Partners and debt financing provided by Barclays Capital and Dresdner Bank AG London Branch raised
within the GHG group on a non-recourse basis to Netcare South Africa. Interim bridging finance is
currently in place and shall be replaced in due course by longer-term funding arrangements which are in
the process of being finalised.
All of the conditions, including the settlement of the purchase consideration utilising the various interim
facilities and effective transfer of ownership relating to the acquisition by Netcare and its Consortium
partners of GHG were completed on 12 May 2006.
Although formal approval from Netcare shareholders was not required in terms of the Listings
Requirements of the JSE, the JSE required that Netcare obtain irrevocable support from large
shareholders owning in aggregate more than 50% of the votable shares of Netcare. Support was
obtained from 100% of all shareholders approached, representing more than 60% of the votable shares
of Netcare.
The vendors of GHG (i.e. funds managed by BC Partners) have given certain customary formal warranties
to the Consortium. These include warranties in respect of title to the shares held in GHG. The Consortium
has in turn given certain customary warranties to the vendors of GHG, relating to the Consortiums ability
to meet the financial obligations in terms of the GHG acquisition.
4. OVERVIEW OF THE CONSORTIUM PARTNERS
Apax Partners
Apax Partners, created in 1972, is one of the worlds largest private equity firms and has expertise
focused on five industry sectors, in particular healthcare. Apax Partners has raised approximately $20bn
around the world and invested in more than 500 companies. Since 1995, over 65 of its portfolio
companies have gone public on stock markets around the world. At point of entry to market, these
companies had a collective market capitalisation of over $34 billion. Recent related investments include
Molnlycke (a Swedish manufacturer of medical supplies), Regent Medical Limited (a UK producer of
antiseptics and surgical gloves) and Medimedia USA Inc. (one of the four largest healthcare publishing
companies in the world).
London & Regional
Headquartered in London, London & Regional is one of the largest private property companies in Europe
with investments, developments and business interests in over seven countries, including the UK,
Sweden, Finland, Germany, Denmark and Lithuania. London & Regional was established in 1987, and
is owned by Richard Livingstone and Ian Livingstone. London & Regional has offices in London,
Stockholm, Helsinki, Frankfurt and Moscow.
Brockton
Brockton manages a UK-only opportunity fund established in 2005 by David Marks and Jason Blank, who
have significant experience in real estate and dealing with private equity. Brocktons first fund, Brockton
Capital Fund I, raised 150m and has a life of five years. The Brockton fund recently acquired an office
occupied by Global Asset Management Investment Inc. (GAM) in St Jamess in London SW1 for 25m.
5. DEBT STRUCTURING
GHG funding arrangements
All existing debt within the GHG Group has been repaid or restructured in full on acquisition.
Currently, GHGs debt finance is provided by way of short-term bridge facilities that are secured against
the assets of the GHG Group. Plans to restructure the GHG business into a group of operating companies
(the Opco Group) and a group of property-owning companies (the Propco Group) are already
at an advanced stage.
The major feature of the restructuring is the transfer of much of GHGs real estate into non-trading
property-owning companies. These property-owning companies will lease the real estate to members
of the Opco Group on market related terms. This restructuring enables the Opco Group and the Propco
Group to raise long-term financing independently of one another. The long-term facilities will be used
to refinance the bridge facilities and will significantly reduce the cost of finance to the GHG Group
as a whole, as demonstrated below.
In addition, significant potential exists to develop the earning potential of existing properties and for cash
generation through disposal of surplus property. Both these opportunities will assist GHG and the
Netcare Group to further reduce debt in GHG and improve gearing ratios going forward.
The bridging facilities within GHG have been raised from Dresdner Bank AG London Branch and Barclays
Capital in two tranches, as follows:
Short-term bridge finance
Base rate
Initial margin
Bridge loan Tranche A
LIBOR
2.25%
1 165.0
Bridge loan Tranche B
LIBOR
2.25%
750.0
Total GHG debt
1 915.0
It is intended that long-term facilities will be entered into on terms as described below:
Term loans
Base rate
Margin
LIBOR
3.00%
265.0
LIBOR
1.50%
1 650.0
Opco Group facilities

Facilities
Propco Group facilities
Mortgages raised
Total GHG debt refinanced
1 915.0
The Opco Group facilities will be secured against the assets and shares of the Opco Group. The Propco
Group Facilities will be secured by mortgages over real estate and share security. The Opco Group term
debt is repayable over periods ranging between seven and nine and a half years. The Propco Group term
debt amortises over a period of seven years whereupon the balance will be refinanced. Hedging against
interest rate increases has been secured for twenty five years.
Bridging facilities raised within Netcare for the purposes of the GHG acquisition
The investment of 219m made by Netcare to acquire its 52.6% interest in GHG has initially been
financed by way of bridge financing which is normal in leveraged buy outs and short term by nature.
Various alternative options are currently being considered which will be more permanent in nature and
likely to reduce financing costs in the future. Foreign currency risk has been eliminated through forward
cover swaps at an effective rate of R12.17: 1.
The interest rate risk inherent in the offshore loan has been combined into the integrated treasury
management process within Netcare. In terms of the current policy Netcare hedges up to 75% of all debt
in relation to interest rate risk. This allows sufficient flexibility for future operating cash flows, corporate
action and the short term issue of its perpetual preference shares. As at 30 June approximately 50%
of Netcare debt had been hedged with it constantly being reviewed.
Details of the bridging finance facilities are as follows:

Base rate
Margin
Tranche 1
Libor
1.50%
121.7
Tranche 2
Libor
1.75%
97.3
219.0
The bridging facilities have been made available by Dresdner Bank AG London Branch and have no fixed
terms of repayment, and will be refinanced within six to eighteen months to achieve optimum financing
efficiency.
6. KEY PARTNERSHIP ARRANGEMENTS
The Partnership Contribution Agreement and Partnership Agreement relating to Pantomime Holding LLP
entered into between Netcare, Apax Partners, Brockton and London & Regional have been summarised
in paragraph 5: Key Partnership arrangements, commencing on page 20.
Summary of partnership structure:
Stage 1 Before OPCO/PROPCO implementation
Consortium
Partners
Consideration
Percentage
shareholding
Netcare
303m
47.4%
Management
219m
Netcare UK
52.6%
Note 1
GHG
Note 1: GHG management will receive a performance based equity interest which may equate to approximately 7% of the equity
over a period. Netcare will not dilute to less than 50.1% as a result of this participation.
Stage 2 After proposed OPCO/PROPCO implementation

Partnership contributions and structure as above
GHG
OPCO
Ring fenced debt *
265m
1,650m
(Secured and unsecured mezzanine debt)
(Secured over land and buildings)
* = No recourse to Netcare South Africa.
10
PROPCO
7. PRO FORMA FINANCIAL INFORMATION

The table below sets out the pro forma financial effects of the GHG acquisition on Netcare which have
been reported on by Grant Thornton. Due to the nature of these pro forma financial effects, they are
presented for illustrative purposes only and may not fairly present Netcares financial position or the
results of its operations after the GHG acquisition.
A simple consolidation of the historical financial information does not appropriately reflect the future
prospects of the combined businesses due to, inter alia, the following factors which are not
incorporated:
any efficiencies in relation to the improved cost of finance upon refinancing both the GHG and
Netcare debt from the bridging facilities referred to above;
exchange rate variances;
the benefits of the revenue optimisation and operational excellence initiatives which form part
of Netcares initial three-year and ensuing seven-year business plan for GHG;
NHS tenders being bid on by Netcare UK and Amicus (a division of GHG) or for which they may
be granted preferred bidder status;
rationalisation benefits arising from cross-pollination initiatives between Netcare, GHG and
Netcare UK;
the full impact of existing Netcare UK contracts with the NHS; and
the earnings accretive effects of the Netpartner transactions, as these transactions would not
have been implemented as at the date of this circular.
Consequently historical performance is not an appropriate reflection of future prospects.
The pro forma financial effects are the responsibility of the Netcare directors and are based on Netcares
financial results for the six months ended 31 March 2006 and the pro rata results of GHG based on the
12 months to 31 December 2005 (converted in terms of IFRS). As the business of the GHG Group is not
subject to material seasonal fluctuations, the results have not been seasonally adjusted but rather
pro rata results for six months have been presented. It has been assumed for purposes of the pro forma
financial effects that the GHG acquisition was implemented on 1 October 2005 for income statement
purposes and 31 March 2006 for balance sheet purposes.
(1)
Pro forma financial effects

for the six months ended
and as at 31 March 2006
(2)
Before
the GHG
acquisition
GHG
acquisition
After
the GHG
acquisition
Percentage
change
25.4
72.7
98.1
286.2
Diluted basic earnings per share (cents)
24.8
71.1
95.9
286.7
Earnings per share continuing

operations (cents)
25.4
(6.6)
18.8
(26.0)
25.6
(6.6)
19.0
(25.8)
25.0
(6.5)
18.5
(26.0)
Earnings per share (cents)
Headline earnings per share (cents)
Diluted headline earnings per share (cents)
Given the necessity for the use of short-term offshore bridging facilities in an exacting auction
process, these effects have not been adjusted to reflect the earnings impact through the
customary utilisation of more efficient funding.
Presented in note 4 below are the effects as if more efficient funding was utilised as referred to
above. This presentation is likely to be more representative once the customary funding
structures have been implemented.
11
Notably, it is expected that on a pro forma basis, the initial cash flow effects of the GHG acquisition
are not significant and in the initial years are expected to be largely neutral for Netcare.
Pro forma financial effects

for the six months ended
and as at 31 March 2006
(1)
(2)
Before
the GHG
acquisition
GHG
acquisition
After
the GHG
acquisition
Percentage
change
12.0
12.0
3 543.8
3 543.8
244.7
244.7
3 086.9
(13 867.3)
(10 780.4)
N/A
TNAV per share (cents) 6
213.1
(957.4)
(744.3)
N/A
Ordinary shares in issue
1 450.0
1 450.0
Weighted average number of shares
1 448.3
1 448.3
Diluted weighted average number of

shares
1 482.9
1 482.9
Capital distribution per share (cents)

NAV (Rmillion)
NAV per share (cents)
TNAV (Rmillion)
Notes:
1. The Before financial information has been extracted without adjustment from Netcares published unaudited interim results
for the six months year ended 31 March 2006.
2. The reviewed After calculations are based on the following assumptions:
Land and buildings within GHG were revalued to fair value;
Deferred tax at a rate of 30% was raised on the revaluation surplus;
Existing debt within GHG at above market-related rates was refinanced by market-related debt on acquisition. This had the
effect of reducing the finance charges for the period as a result of the lower interest rates obtained;
GHG income statement information for the pro rata six months was converted at R11.14:1, being the average rate for that
period, whereas balance sheet information was converted at R10.88: 1, being the closing rate as at 31 March 2006; and
Depreciation was increased commensurately as a result of the fair value revaluation of land and buildings.
3. The pro forma financial effects have been prepared in terms of The Guide on Pro Forma Financial Information issued by
The South African Institute of Chartered Accountants. In line with the Listings Requirements of the JSE, Netcare formally
adopted International Financial Reporting Standards (IFRS) with effect from 1 October 2005. GHG financial information for
the year ended 31 December 2005 has been restated in terms of IFRS.
4. Presented below are the effects on EPS and HEPS as if more efficient funding was utilised as referred to above.
Before
the GHG
acquisition
GHG
acquisition
25.4
25.6
74.2
(5.1)
(1)

(2)
After
the GHG
acquisition
99.6
20.5
Percentage
change
292.1
(19.9)
5. Included in EPS for GHG are profits on the disposal of businesses, which have been excluded from HEPS. The impact on
Netcare EPS of the profit on the disposal of Netcare UK has also been excluded from HEPS, EPS and HEPS are reconciled as
follows:
Headline earnings reconciliation
impact of GHG acquisition
Basic earnings
Disposal of businesses GHG
Netcare UK
Netcare capital adjustments
Headline earnings
Rmillion
1 421.5
(1 043.3)
(105.6)
2.4
275.0
Number of
shares
(million)
1
1
1
1
Cents
per share
448.3
448.3
448.3
448.3
98.1
(72.0)
(7.3)
0.2
1 448.3
19.0
6. The negative TNAV arises largely as a result of goodwill arising from the acquisition as well as goodwill within GHG.
It is expected that the goodwill acquired may reduce substantially once the fair value of all assets acquired (required in terms
of IFRS 3) is determined.
12
8. PROSPECTS FOR NETCARE

The worlds population is living longer and new technology is enabling earlier diagnosis and treatment
of previously incurable or inoperable diseases. These are well-documented trends internationally and
with 65% of healthcare utilisation and costs driven by people over 60 years of age, it will have profound
consequences on healthcare provision and capacity. Even in South Africa, adjusting for the impact of the
HIV/AIDS pandemic, the population is aging and is driving increased healthcare utilisation.
In South Africa, having regard to:
positive advancements in seeking ways to grow the medically insured population of South Africa such
as the Government Employee Medical Scheme (GEMS) and Low Income Medical Scheme
(LIMS);
increased utilisation arising from aging populations and technology advancements;
new facilities being planned and built due to new licences and PPPs being awarded to Netcare which
will broaden the Groups network of medical facilities;
improved stakeholder interaction to find sustainable solutions to the challenges of access and
affordability;
the Groups expanded footprint in Primary Care;
the rollout of the SAP integrated information technology platform; and
In the United Kingdom, having regard to:
the growth potential that this market has over the medium to long term;
the opportunity to derive further operational efficiencies;
the opportunity to expand the service offering of existing hospitals; and
participate meaningfully in Wave 2 of the Independent Sector Treatment Centres (ISTC) Programme
discussed in further detail in the Information Memorandum enclosed with this circular,
and in the absence of any unforeseen circumstances in the South African and global economies and the
healthcare regulatory environment, it is considered that the Group has a well-balanced portfolio of
sustainable healthcare businesses to continue to generate above average returns and growth for all
stakeholders over time.
In addition, with the Groups core assets and resources firmly based in South Africa, Netcare remains
confident of achieving above average growth in the local market. Importantly, the Group is fully
committed to providing affordable, quality healthcare and embraces the South African Department
of Healths drive to achieve equity in access to healthcare. To this end the Group will endeavour to work
closely with the South African Government and other stakeholders to find sustainable products and
services to bring better care to more people of South Africa.
In summary, the Netcare Board is confident that the enlarged group has:
a sound platform for growth given the market dynamics referred to above;
the ability to leverage synergy opportunities across the South African and UK businesses; and
diversification and expansion opportunities to enhance the growth and sustainability of
Groups earnings going forward.
13
INTERPRETATIONS AND DEFINITIONS
Throughout this circular, unless otherwise stated or the context otherwise indicates, the words in the first
column shall have the corresponding meaning stated opposite them in the second column and words in the
singular shall include the plural and vice versa, words importing natural persons shall include corporations and
associations of persons and any reference to one gender shall include the other genders:
A & E
Accident and Emergency;
Act
the Companies Act, 1973 (Act 61 of 1973), as amended;
Amicus
Amicus Healthcare, a division of GHG;
Apax Partners
Apax Partners Worldwide LLP (Registration number OC303117), a

company duly registered and incorporated under the company laws
of the UK and one of the Consortium Partners;
articles of association
or articles
the articles of association of Netcare;
Barclays Capital
the investment banking division of Barclays Bank plc (Registration

number 1026167), a company duly registered and incorporated under
the company laws of the UK and a debt provider to the Consortium;
BC Partners or the seller
BC Partners Limited (Registration number 02020410), a company duly

registered and incorporated under the company laws of the UK and
private equity fund management organisation;
BMI
BMI Healthcare, a division of GHG;
Board or Board of Directors
the board of directors of Netcare;
Brockton
Brockton Capital LLP (Registration number OC313279), a company duly

registered and incorporated under the company laws of the UK and one
of the Consortium Partners;
BUPA
British United Provident Association Limited (Registration number

00432511), a provident association duly registered and incorporated
under the company laws of the UK and a provider of private healthcare
insurance, hospitals and healthcare services;
business day
any day other than a Saturday, Sunday or official public holiday in

South Africa;
c.
circa;
capex
capital expenditure;
circular
this bound document, dated 11 July 2006, including all annexures and
enclosures;
common monetary area
collectively, South Africa, the Republic of Namibia and the Kingdoms

of Lesotho and Swaziland;
Consortium
Netcare and the three leading UK-based financial and property investors
with which Netcare has undertaken the acquisition of GHG, namely
funds advised by the Consortium Partners;
the Consortium Partners
funds advised by Apax Partners, London & Regional and funds advised
by Brockton;
14
CSDP
Central Securities Depository Participant, accepted as a participant

in terms of the Securities Services Act, No. 36 of 2004, as amended;
CT
Computed Axial Tomography;
DoH
Department of Health, a UK Government agency;
Dresdner Bank AG
London Branch
the London Branch of Dresdner Bank AG (Registration number

FC007638), a company duly registered and incorporated under the
company laws of Germany and a debt provider to Netcare and the
Consortium;
Dresdner Kleinwort
the investment banking division of Dresdner Bank AG (Registration

number FC007638), a company duly registered and incorporated under
the company laws of Germany and an adviser to the Consortium;
directors
directors of Netcare;
EBIT (DA) (R) (H)
earnings before interest and tax (depreciation and amortisation) (rental

payments) (central costs);
EBITDAR
earnings before interest, taxation, depreciation, amortisation and rental

payments;
EPS
Earnings per Share;
FV
Fair Value;
GDP
Gross Domestic Product;
GHG or GHG Group
General Healthcare Group Limited (Registration number 4026079),

a public company duly registered and incorporated with limited liability
under the company laws of the UK;
GHG acquisition
the acquisition in terms of which the Group has entered into an

agreement to acquire a controlling interest in GHG, the leading private
hospital operator in the UK from BC Partners;
GP
General Practitioner;
Group or group
collectively, Netcare, its subsidiaries and associated companies;
HEPS
Headline Earnings per Share;
Hold LLP or
Pantomime Holding
Pantomime Holding LLP (Registration number OC319549), a limited

liability partnership registered in England and special purpose vehicle
used by the Consortium Partners to facilitate the GHG acquisition;
IFRS
International Financial Reporting Standards;
Information Memorandum
the Information Memorandum in relation to the GHG acquisition posted

together with this circular;
ISTC
Independent Sector Treatment Centre;
JSE
JSE Limited, a company duly registered and incorporated with limited

liability under the company laws of South Africa under Registration
number 2005/022939/06 and licensed as an exchange under the
Securities Services Act, Act 36 of 2004;
last practicable date
Monday 10 July 2006, being the last practicable date prior to the
finalisation of this circular;
London & Regional
London & Regional Properties Limited (Registration number 02909660),

a company duly registered and incorporated under the company laws
of the UK and one of the Consortium Partners;
15
LIBOR
London Inter-Bank Offer Rate;
Medicross
Medicross Healthcare Group (Proprietary) Limited (Registration number

(1992/002328/07), a private company duly registered and incorporated
with limited liability under the company laws of South Africa and
a subsidiary of Netcare;
Molnlycke
Molnlycke Health Care Group AB (Registration number 5566551965),

a company duly registered and incorporated under the company laws
of Sweden and a recent investment of Apax Partners;
MRI
Magnetic Resonance Imaging;
NAV
Net Asset Value;
Netcare or the company

or Netcare South Africa
Network Healthcare Holdings Limited (Registration number

1996/008242/06), a public company duly incorporated in South Africa
and listed in accordance with the laws of the JSE;
Netcare Health Partners

for Life transaction
the transaction which gave effect to broad-based black economic

participation and transformation within the Netcare group private
healthcare sector and was effective from 1 October 2005;
Netcare International
Netcare International SA (Pty) Limited (Registration number

1992/007456/07), a company duly registered and incorporated under
the company laws of South Africa and a wholly-owned subsidiary of
Netcare;
Netcare shares or shares
the ordinary shares of one cent each in the issued share capital of
Netcare;
Netcare UK
Netcare Healthcare UK Limited (Registration number 04368216),

a company duly registered and incorporated with limited liability under
the company laws of the UK and a wholly-owned subsidiary of Netcare;
Netpartner
Netpartner Investments Limited (Registration number 2003/014215/06),

a company duly registered and incorporated with limited liability under
the company laws of South Africa in which Netcare has a 46.3% interest
and which trades on the OTC market;
Netpartner transactions
the series of transactions released on SENS on 23 March 2006 and

published in the press on 24 March 2006 relating to the unwinding
of the Netcare/Netpartner cross-shareholding and which are the subject
of the circular to Netcare shareholders dated 26 May 2006;
NHS
National Health Service;
NHS Partners Network
a group of healthcare providers committed to working closely with

the NHS;
NHS Plan
published by the DoH on 1 July 2000, the NHS Plan outlines the vision
for the NHS and defines the relationship between the NHS and the
private sector;
OECD
Organisation for Economic Co-operation and Development;
Opco Group
the restructured operating company of GHG after the transaction.

A limited liability partnership registered in England and a wholly-owned
subsidiary of GHG;
OTC market
over the counter market;
16
the Partnership Contribution

Agreement and Partnership
Agreement
agreements relating to Pantomime Holding LLP entered into between

Netcare and Apax Partners, Brockton and London & Regional, effective
12 May 2006;
PCT
Primary Care Trust;
Pedalclip
Pedalclip Limited (Registration number 05740193), a limited liability

partnership registered in England a wholly-owned subsidiary of Hold
LLP and a special purpose vehicle used by the Consortium Partners to
facilitate the GHG acquisition;
PET
Position Emission Tomography;
PMI
Private Medical Insurance;
PPP
Public Private Partnerships;
preference shares
the cumulative, non-redeemable, non-participating, non-convertible

preference shares in the Capital of Netcare with a par value of 50 cents
each created as part of the Netpartner transactions at the general
meeting held on Monday, 19 June 2006;
Propco Group
the restructured property company of GHG, after the transaction.

A limited liability partnership registered in England and a wholly-owned
subsidiary of GHG;
the purchase and sale

agreement
the sale and purchase agreement relating to the GHG acquisition,

effective 12 May 2006;
SENS
the Securities Exchange News Service of the JSE;
SHA
Strategic Health Authority;
shareholders
holders of Netcare shares;
South Africa
the Republic of South Africa;
TNAV
Tangible Net Asset Value;
TPA
third party administered;
transfer secretaries
Link Market Services South Africa (Proprietary) Limited (Registration

number 2000/007239/07), a company duly incorporated in terms of the
laws of South Africa, full details of which are set out on the inside front
cover of this circular;
UBS Investment Bank
the investment banking division of UBS AG (Registration number

FC021146), a company duly registered and incorporated under the
company laws of Switzerland and an adviser to the Consortium;
UK
the United Kingdom; and
US
the United States of America.
17

(Incorporated in the Republic of South Africa)
Share code: NTC
ISIN: ZAE000011953
Directors
Executive
Dr R H Friedland (Chief Executive Officer)
P G Nelson (Chief Financial Officer)
I M Davis
N Weltman
Non-executive
M I Sacks (Chairman)
Dr A P H Jammine+
J M Kahn+
H R Levin
Dr J A van Rooyen
+ Independent
1. INTRODUCTION
On 25 April 2006, the Board of Directors of Netcare announced that the Group had entered into
an agreement to acquire a controlling interest in a leading private hospital operator in the UK, GHG, from
funds managed by BC Partners, a private equity fund management organisation.
GHG is a leading provider of private acute care in the UK, with a national network of 49 hospitals
comprising 2,476 beds operated predominantly under the BMI brand. GHGs facilities, employees and
relationships with doctors and consultants enable it to offer a comprehensive range of medical and
surgical services across the UK. For the year-ended 31 December 2005, GHG reported gross revenue
and EBITDA of 612m (R7.1bn) and 164m (R1.9bn), respectively (before the IFRS conversion and
applying an average rate of exchange for the stated period of R11.56: 1).
Netcare has undertaken the acquisition of GHG as part of a Consortium with three leading UK-based
financial and property investors funds advised by Apax Partners, London & Regional and funds advised
by Brockton. The purchase consideration for GHG on an enterprise value basis is in the order of 2.2bn
(excluding transaction costs) with Netcares investment for its controlling interest being by way of a cash
investment of 219m and the injection of its wholly-owned UK subsidiary, Netcare UK. The remaining
purchase consideration has been provided by the Consortium Partners, together with debt financing
raised within GHG on a non-recourse basis to Netcare.
The acquisition of a controlling interest in GHG transforms Netcare into one of the worlds largest
hospital groups with significant potential for future growth and value creation for all
stakeholders, both locally and internationally, over the medium to long term.
18
The acquisition of GHG brings Netcare a number of key benefits:

Establishes Netcare as one of the worlds largest healthcare groups, with 120 hospitals and ambulatory
day care centres and over 11,500 beds under management in an industry where scale is becoming
increasingly more important in improving efficiency, affordability and the quality of clinical services;
Provides Netcare with a leadership position in the UK, one of the largest and most attractive
healthcare markets globally;
Enhances the growth prospects for Netcare as a result of the opportunities within the UK healthcare
market;
The combination of GHG and Netcare UK allows Netcare to position itself to best capitalise on the
opportunities that both the privately and publicly funded healthcare segments present;
Enables Netcare to enhance GHGs profitability by leveraging its intellectual property through the
introduction of certain operating skills and practices, as well as ancillary healthcare businesses across
the GHG business;
Provides investors with currency diversification as a significant proportion of Netcares revenue and
earnings will be earned offshore; and
Provides Netcare with an improved platform for future international expansion in the longer term.
Overview of the combined group
Revenue
Revenue *** Rands
EBITDA
EBITDA *** Rands
Hospitals and ambulatory day care centres
Beds
Theatres
Pharmacies
Employees
*Netcare
**GHG
Combined
689m
R7.5bn
132m
R1.4bn
71
9 285
358
82
16 574
612m
R7.1bn
157m
R1.8bn
49
2 476
152
37
8 300
1,301m
R14.6bn
289m
R3.2bn
120
11 761
510
119
24 874
Percentage
change
88.8
118.9
69.0
26.7
42.5
45.1
50.1
Based on the 2005 published financial information. Includes subsidiaries, associates, public private partnerships and
Netcare UK.
**
As at 31 December 2005. Based on 2005 financial information converted in terms of IFRS.
*** =
Converted at R11.56: 1, being the average rate for the 12 month period ended 31 December 2005.
2. RATIONALE FOR AND PRINCIPAL TERMS OF THE GHG ACQUISITION

Having determined that the next stage of Netcares corporate development would involve international
growth, Netcare has over several years sought opportunities for investment and expansion outside of South
Africa. The acquisition of GHG represents an important step for Netcare providing a leadership position in
an important overseas market. The acquisition represents the spearhead for international expansion.
Since first establishing a presence in the UK in 2001, Netcare has developed a notable position in the UK
serving the Government outsourcing market. Netcare has successfully competed against domestic and
international groups to be awarded a number of contracts from the DoH. Netcare has built a solid
reputation delivering well against the service and quality standards under the terms of these contracts.
Such a presence allowed Netcare to establish relationships with the DoH, other funders and the medical
practitioner community. This provided Netcare with a strong understanding of market dynamics and
allowed Netcare to assess growth options.
Netcare had determined that entry into the private pay markets (funded by PMI and self pay required an
acquisition.
19
Netcare has pursued the acquisition in a disciplined and cautious manner building on the experience of
operating in the UK as well as seeking third party verification of key issues over an extended timeframe.
Key steps included:
Key market assumptions were tested with third party consultants;
The selection of Consortium members and the development of a Consortium partnership agreement
was pursued over an extended period of several months thus ensuring alignment and appropriate
negotiation;
Undergoing an extensive internal business development plan process to ensure merits of the
acquisition were weighed appropriately and also to ensure that resources required to deliver against
the plan would not be unduly detrimental to the South African operations;
Pursuing an extensive due diligence process in partnership with the Consortium partners through both
direct activity and external advisers on legal, financial, commercial, environmental, taxation, property
and related business issues; and
Utilising both Consortium partners and legal and financial advisers to select and fully negotiate debt
financing for the acquisition.
Through this acquisition Netcare has secured control of a large UK hospital player serving the PMI and
self pay segments. Netcares evaluation suggests that GHG benefits from a number of key strengths:
Strong national presence focused around attractive demographic locations such as the South-East and
suburban locations around London;
Efficient procurement practices with PMI insurers. GHGs position as a significant customer of this
important payer group provides an attractive base upon which to build and further develop
relationships;
Well-invested facilities, largely purpose built which attract medical practitioners and patients alike;
Strong relationships with suppliers of medical consumables, drugs and ancillary products; and
A strong employee base and extensive relationships with medical practitioners.
Given the financial resources available to Netcare, management had determined that an outright
acquisition would have been difficult if not impossible to finance and would have restricted Netcares
ability to pursue initiatives in South Africa. By working through the Consortium, Netcare benefits from
control of GHG, while limiting Netcares investment to 219m. In this way, the Consortium approach
represents a cautious route to international growth.
Netcare management believe GHG offers further opportunities for growth and development both within
the privately reimbursed PMI and self pay markets and the State funded market. GHG ranks well in
doctor surveys in issues such as service delivery, equipment and overall offering. Netcares due diligence
indicated GHG offers several opportunities to substantially differentiate and expand the service offering
and consequently grow the business.
In the State funded market, management believe the combination of Netcare UK and GHG means the
combined organisation will be well-positioned to compete for contracts and also under the initiatives
to give patients more choice.
The Labour administration has been pursing a policy of contracting with private providers for the
provision of healthcare services including the provision of surgical and diagnostic procedures. Netcare UK
has achieved success in this area, winning contracts and delivering a high quality service.
Current policy of the Labour administration to pursue the Patient Choice Initiative under the terms of
which publicly funded patients requiring various medical procedures will be offered five potential venues
including one operated by a private provider, will also expand the publicly funded, private sector provided
segment. The current position of the Conservative Party is also to support increased participation
of private providers. The privately provided market is small compared to the publicly provided part.
Management believe that the combined organisation is well-positioned under scenarios of either
increased or decreased State outsourcing of healthcare provision.
The combination of GHG and Netcares UK activities also means that Netcare UK is assisted in its
participation in the current DoH outsourcing programme.
20
Strategy
Following the GHG acquisition, the strategy for the enlarged group in the UK will involve:
The continued commitment by Netcare to being a NHS partner of choice, providing sustainable
solutions for the benefit of patients;
The further development and growth of the private acute market, serving both the insured and
self pay segments;
Delivering the highest possible standards of patient care across all services;
Employing the combined expertise and experience of the senior teams from both businesses to drive
innovation, excellence and growth;
Being a private sector employer of choice, offering outstanding career opportunities for high calibre
individuals;
Utilising cost savings opportunities afforded by the scale and presence of the new combined group;
Ensuring the sharing of best practices across the combined group to increase both quality of care and
efficiency.
Given that, Netcare intends, to the extent possible, to utilise UK-based employees to further develop the
GHG business, Netcare does not envisage denuding Netcares South African operations in any way.
Indeed, the South African operations should also derive considerable benefit from being part of a larger
organisation through various cross-pollination initiatives.
3. TERMS AND CONDITIONS OF THE GHG ACQUISITION
On 12 May 2006, the Consortium acquired 100% of GHG for a total consideration of 2.2bn (excluding
transaction costs) on an enterprise value basis.
Netcare will own 52.6% of GHG in return for the investment of 219m (Netcares investment) and the
contribution of Netcare UK, with the other Consortium partners having contributed 303m for their
collective 47.4% interests. GHG management will be entitled to participate in a performance-based equity
interest which may equate to approximately 7% of the equity over a period. Netcare will not dilute to less
than 50.1% as a result of this participation. Given the necessity for the use of short-term offshore bridging
facilities in an enacting auction process, Netcares investment has initially been funded using bridging
facilities provided by Dresdner Bank AG London Branch that have been raised for the purposes of this
acquisition. The remaining funds were provided by the Consortium Partners and debt financing provided by
Barclays Capital and Dresdner Bank AG London Branch raised within the GHG Group on a non-recourse
basis to Netcare South Africa. Interim bridging finance is currently in place and shall be replaced in due
course by longer-term-funding arrangements which are in the process of being finalised.
All of the conditions, including the settlement of the purchase consideration utilising the various interim
facilities and effective transfer of ownership relating to the acquisition by Netcare and its Consortium
partners of GHG were completed on 12 May 2006.
Although formal approval from Netcare shareholders was not required in terms of the Listings
Requirements of the JSE, the JSE required that Netcare obtain irrevocable support from large shareholders
owning in aggregate more than 50% of the votable shares of Netcare. Support was obtained from 100%
of all shareholders approached, representing more than 60% of the votable shares of Netcare.
The vendors of GHG (i.e. funds managed by BC Partners) have given certain customary formal warranties
to the Consortium. These include warranties in respect of title to the shares held in GHG. The Consortium
has in turn given certain customary warranties to the vendors of GHG, relating to the Consortiums ability
to meet the financial obligations in terms of the GHG acquisition.
4. OVERVIEW OF THE CONSORTIUM PARTNERS
Apax Partners
Apax Partners, created in 1972, is one of the worlds largest private equity firms and has expertise
focused on five industry sectors, in particular healthcare. Apax Partners has raised approximately $20bn
around the world and invested in more than 500 companies. Since 1995, over 65 of its portfolio
companies have gone public on stock markets around the world. At point of entry to market, these
21
companies had a collective market capitalisation of over $34 billion. Recent related investments include:
Molnlycke (a Swedish manufacturer of medical supplies), Regent Medical Limited (a UK producer of
antiseptics and surgical gloves) and Medimedia USA Inc. (one of the four largest healthcare publishing
companies in the world).
London & Regional
Headquartered in London, London & Regional is one of the largest private property companies in Europe
with investments, developments and business interests in over seven countries, including the UK,
Sweden, Finland, Germany, Denmark and Lithuania. London & Regional was established in 1987, and
is owned by Richard Livingstone and Ian Livingstone. London & Regional has offices in London,
Stockholm, Helsinki, Frankfurt and Moscow.
Brockton
Brockton manages a UK-only opportunity fund established in 2005 by David Marks and Jason Blank, who
have significant experience in real estate and dealing with private equity. Brocktons first fund, Brockton
Capital Fund I, raised 150m and has a life of five years. The Brockton fund recently acquired an office
occupied by Global Asset Management Investment Inc. (GAM) in St Jamess in London SW1 for 25m.
5. KEY PARTNERSHIP ARRANGEMENTS
The Partnership Contribution Agreement and Partnership Agreement relating to Pantomime Holding LLP
entered into between Netcare, Apax Partners, Brockton and London & Regional have been summarised
as follows:
A. Pantomime Holding LLP Principal Partnership Contribution Agreement
On 12 May 2006 Netcare International (a wholly-owned subsidiary of Netcare), Apax Partners,
Baltonsborough Limited (a subsidiary of funds managed by Brockton) and Trafalgar Private Equity
Limited (a subsidiary of London & Regional), inter alia, entered into a Partnership Contribution
Agreement relating to Pantomime Holding LLP, a limited liability partnership registered in England
(Hold LLP). Pursuant to this agreement, Netcare International agreed to contribute 216.8 million
(before its share of costs) to Hold LLP and the shares of Netcare Healthcare UK Limited to a whollyowned subsidiary of Hold LLP, in return for an interest of 52.626% in Hold LLP. Netcare International
gave limited warranties relating to Netcare Healthcare UK Limited of a type customary in a transaction
of this nature. The remaining parties contributed 303.2 million in cash for a combined holding of
47.374% of the partnership interests of Hold LLP.
The purpose of the contributions of the partners of Hold LLP was to enable Hold LLP (through
Pedalclip Limited) to complete the GHG acquisition for a total consideration of 1,535 million.
In addition, debt and debt related obligations amounting to 754.1 million were assumed.
All the shares in GHG have been transferred into the name of Pedalclip Limited, a wholly-owned
subsidiary of Hold LLP. No assets of GHG have been ceded or pledged in terms of the sale and
purchase agreement.
B. Pantomime Holding LLP Limited Liability Partnership Agreement
On 12 May 2006 Netcare International, Apax Partners, London & Regional and Brockton, inter alia,
entered into a partnership agreement governing the management and operation of Hold LLP and the
relationship of the partners amongst themselves.
Under the partnership agreement:
1. Netcare International has the right at all times whilst it owns at least 15% of the partnership
interests in Hold LLP to appoint the majority of the board of directors of the partnership and all
subsidiaries of Hold LLP (the Hold LLP Group). The consent of the minority investors is
required to decisions on certain restricted matters as is customary in transaction of this nature
(i.e. minority protection clauses required by the Consortium Partners bearing in mind their
shareholding percentages and Netcares control of the board of directors of the Hold LLP Group);
22
2. In particular, the consent of the minority investors is required to the nomination of the Chief
Executive Officer and Chief Financial Officer of the GHG Group (to be appointed by Netcare), the
entering into of certain material transactions, the acquisition or disposal of assets subject to certain
materiality thresholds (in the case of subsidiary undertakings where the value is
10 million or more, in the case of real property, where the value exceeds 1 million and for other
assets, where the value is 20 million or more), entering into new or replacement loan facilities,
changes to the capital structure of the partnership group, a listing of any part of the Group
or other exit within three years from the date of signing, winding up the business or partnership.
In addition, a property plan is to be agreed by all investors (designating properties for development
or disposal) and, once such plan has been agreed, the parties may not veto decisions which are in
accordance with the plan;
3. Netcare International and Apax Partners are subject to certain restrictions regarding competing
with the business of Hold LLP in the UK. Netcare has undertaken that it will not enter into
competition in the UK with any business carried on by the Opco Group, except as otherwise
agreed in writing by Apax Partners;
4. Additional funding will be by way of third party non-recourse debt funding unless such funding
is not available or is not available on reasonable terms, in which case the existing investors
will be given the opportunity to subscribe for new partnership interests or other securities on
a pre-emptive basis. If the investors do not take up their pro rata share of the interests or
securities being offered, they may be offered to third parties at the discretion of the board;
5. There are restrictions on the transfer of partnership interests and after the first three years
(during which transfers are only permitted in very limited circumstances) an investor who wishes
to transfer its interests must first offer them to the other investors on a pro rata basis, prior to
any transfer to a third party being permitted. After 12 May 2011, Apax Partners may be entitled,
in certain limited circumstances, to require Netcare International to sell its interests in the
operational side of the GHG Group to a third party to which Apax Partners is selling such
interests (this is a standard drag-along right), subject to Netcare International having had the right
at several stages in the process either to require that a listing of the entity concerned should be
undertaken or to buy Apax Partners interests (subject to Netcare shareholder approval as and
when required);
6. It is intended that GHG will be separated into the Opco Group and Propco Group and certain
properties owned by the Propco Group will be leased to the Opco Group on terms previously
agreed between the parties. After three years from the date of the agreement the parties will
actively pursue a listing of the Opco Group and/or Propco Group, subject to certain valuation
conditions being met. None of the parties is required to sell its holding on a listing and it is
intended that Netcare would retain its majority holding following any such listing;
7. Netcare International has an option to increase its stake in Hold LLP by acquiring a maximum
of an additional 15% from the other investors over a period of three years from the date of the
agreement at an exercise price equal to 2.5 times the original price paid to acquire such interests.
The option can be exercised in tranches of not less than 5% (subject to the final tranche, which
may be less than 5% if Netcare International has already acquired more than 10%) under the
terms of the option. Any exercise of the option will be subject to Netcare shareholder approvals
if and when required; and
8. Subject to cash flow requirements, the Opco and Propco Groups shall distribute by way of
dividend or other distribution not less than two-fifths of the after-tax profits (excluding capital
profits) generated in each financial year.
6. PRO FORMA FINANCIAL INFORMATION
The table below sets out the pro forma financial effects of the GHG acquisition on Netcare which have
been reported on by Grant Thornton. Due to the nature of these pro forma financial effects, they are
presented for illustrative purposes only and may not fairly present Netcares financial position or the
results of its operations after the GHG acquisition.
23
A simple consolidation of the historical financial information does not appropriately reflect the future
prospects of the combined businesses due to, inter alia, the following factors which are not incorporated:
any efficiencies in relation to the improved cost of finance upon refinancing both the GHG and
Netcare debt from the bridging facilities referred to above;
exchange rate variances;
the benefits of the revenue optimisation and operational excellence initiatives which form part
of Netcares initial three-year and ensuing seven-year business plan for GHG;
NHS tenders being bid on by Netcare UK and Amicus (a division of GHG) or for which they may
be granted preferred bidder status;
rationalisation benefits arising from cross-pollination initiatives between Netcare, GHG and
Netcare UK;
the full impact of existing Netcare UK contracts with the NHS; and
the earnings accretive effects of the Netpartner transactions, as these transactions would not
have been implemented as at the date of this circular.
Consequently historical performance is not an appropriate reflection of future prospects.
The pro forma financial effects are the responsibility of the Netcare directors and are based on Netcares
financial results for the six months ended 31 March 2006 and the pro rata results of GHG based on the
12 months to 31 December 2005 (converted in terms of IFRS). As the business of the GHG Group is not
subject to material seasonal fluctuations, the results have not been seasonally adjusted but rather
pro rata results for six months have been presented. It has been assumed for purposes of the pro forma
financial effects that the GHG acquisition was implemented on 1 October 2005 for income statement
purposes and 31 March 2006 for balance sheet purposes.
Pro forma financial effects for the

for the six months ended and
as at 31 March 2006
(1)
Before
the GHG
acquisition
Earnings per share (cents) 5

Diluted basic earnings per share (cents) 4
Earnings per share continuing
operations (cents)
Headline earnings per share (cents) 5
Diluted headline earnings per share (cents)
(2)
GHG
acquisition
After
the GHG
acquisition
Percentage
change
25.4
24.8
72.7
71.1
98.1
95.9
286.2
286.7
25.4
25.6
25.0
(6.6)
(6.6)
(6.5)
18.8
19.0
18.5
(26.0)
(25.8)
(26.0)
Given the necessity for the use of short-term offshore bridging facilities in an exacting auction
process, these effects have not been adjusted to reflect the earnings impact through the
customary utilisation of more efficient funding.
Presented in note 4 below are the effects as if more efficient funding was utilised as referred
to above. This presentation is likely to be more representative once the customary funding
structures have been implemented.
Notably, it is expected that on a pro forma basis, the initial cash flow effects of the GHG acquisition
are not significant and in the initial years are expected to be largely neutral for Netcare.
(2)
Before
the GHG
acquisition
GHG
acquisition
After
the GHG
acquisition
Percentage
change
Capital distribution per share (cents)
12.0
12.0
3 543.8
3 543.8
244.7
244.7
3 086.9
(13 867.3)
(10 780.4)
N/A
TNAV per share (cents) 6
213.1
(957.4)
(744.3)
N/A
Ordinary shares in issue
1 450.0
1 450.0
Weighted average number of shares
1 448.3
1 448.3
Diluted weighted average number of shares 1 482.9
1 482.9
NAV (Rmillion)
NAV per share (cents)
TNAV (Rmillion)
24
(1)
Pro forma financial effects for the

for the six months ended and
as at 31 March 2006
Notes:
1. The Before financial information has been extracted without adjustment from Netcares published unaudited interim results
for the six months year ended 31 March 2006.
2. The reviewed After calculations are based on the following assumptions:
Land and Buildings within GHG were revalued to fair value;
Existing debt within GHG at above market related rates was refinanced by market related debt on acquisition. This had the
effect of reducing the finance charges for the period as a result of the lower interest rates obtained;
GHG income statement information for the pro rata six-month was converted at R11.14:1, being the average rate for that
period, whereas balance sheet information was converted at R10.88: 1, being the closing rate as at 31 March 2006;
3. The pro forma financial effects have been prepared in terms of The Guide on Pro Forma Financial Information issued by the
South African Institute of Chartered Accountants. In line with the Listings Requirements of the JSE, Netcare formally adopted
International Financial Reporting Standards (IFRS) with effect from 1 October 2005. GHG financial information for the year
ended 31 December 2005 has been restated in terms of IFRS.
4. Presented below are the effects on EPS and HEPS as if more efficient funding was utilised as referred to above:
Before
the GHG
acquisition
GHG
acquisition
25.4
25.6
74.2
(5.1)
(1)

(2)
After
the GHG
acquisition
99.6
20.5
Percentage
change
292.1
(19.9)
5. Included in EPS for GHG are profits on the disposal of businesses, which have been excluded from HEPS. The impact on
Netcare EPS of the profit on the disposal of Netcare UK has also been excluded from HEPS, EPS and EPS are reconciled as
follows:
Headline earnings reconciliation
impact of GHG acquisition
Basic earnings
Disposal of businesses GHG
Netcare UK
Netcare capital adjustments
Headline earnings
Rmillion
1 421.5
(1 043.3)
(105.6)
2.4
275.0
Number of
shares
(million)
1
1
1
1
Cents
per share
448.3
448.3
448.3
448.3
98.1
(72.0)
(7.3)
0.2
1 448.3
19.0
6. The negative TNAV arises largely as a result of goodwill arising from the acquisition as well as goodwill within GHG.
It is expected that the goodwill acquired may reduce substantially once the fair value of all assets acquired (required in terms
of IFRS 3) is determined.
7. INFORMATION ON GHG AND THE UK HEALTHCARE MARKET

7.1
Name, address, history and incorporation

GHG began in 1970 with a US-based organisation, AMI (American Medical International Inc.),
buying its first hospital in the UK and has evolved through the acquisition of a number of private
healthcare organisations, to own and or manage a portfolio of 49 hospitals by 2005. In 1985 GHG,
then known as American Medical International Inc. was floated on the London Stock Exchange.
In 1993 the hospital operating division changed its name to BMI. GHG was acquired by funds
managed by BC Partners in 2000.
Overview
GHG is a UK leading independent acute care operator with a national presence. The GHG Group
has two operating divisions, BMI and Amicus.
BMI
BMI is a large acute hospital group in the United Kingdom. Currently BMI comprises 49 hospitals
and 2 476 beds across 20 of the 28 SHAs in England. In addition BMI is represented in Scotland
and Wales.
25
The table below indicates the spread of BMI hospitals, beds and theatres across the regions.
Region
Greater London
Midlands
North
Scotland
South & West
South East
Wales
West Midlands
Total
Consultants
(Specialists)
Beds
Theatres
552
427
442
161
331
513
28
48
29
25
26
7
18
31
1
7
1 425
878
1 244
587
655
1 174
53
0
2 476
144
6 016
The principle procedures performed in these hospitals are elective surgery, in particular
orthopaedic and general surgery. BMI has a strategic intent to increase the current 38 Chambers
of Excellence (being specialist medical centres of excellence) to 200 by the end of 2007, paying
special regard to orthopaedic, paediatric and cardiac procedures.
Of the 49 hospitals, 46 of the sites are owned by BMI, three facilities are managed sites.
The hospitals can be broken down into flagship, care, partnership and managed.
Flagship hospitals are the major independent hospital in their region the eight BMI flagships have
an average of 99 beds per facility. They are fully equipped, with a full range of diagnostics
capabilities and critical care facilities.
The 29 core BMI hospitals are medium-sized, primarily 35 70 bed hospitals that offer a narrower
range of facilities.
BMI operates nine NHS partnership hospitals with 349 beds. Typically, BMI takes a long-term lease
for a site on the grounds of an NHS hospital.
There are three hospitals that are operated under a management contract or on a joint venture basis.
BMI has seen an increase of 5% of total private market share by acute medical/surgical revenue
between 1994 and 2004, from 20% to 25%. In addition, BMI has embraced working with the NHS,
has established a position as a market leader in PPPs and has recently set up a new division,
Amicus, to meet the specific needs of the public health sector patient contracts.
The registered office of GHG is 10th Floor, 66 Chiltern Street, London W1U 6GH, United Kingdom.
GHG was incorporated in London on 4 July 2000.
Amicus
Amicus was established to meet the specific needs of public health sector patient contracts.
Working together with NHS Trusts and Health Authorities, Amicus provides additional capacity and
capability, contributing to a quality public health service, free at the point of need and delivered at
a cost-effective price for commissioners.
Through its partnership with InHealth Limited, a leading provider of diagnostic and imaging services,
Amicus is currently tendering on four contracts to provide diagnostic radiological services to the
NHS as part of the DoHs outsourcing programme. These contracts, including those in partnership
with InHealth Ltd, have an estimated value of approximately 950m.
Amicus is also tendering on several projects in the Wave 2 ISTC Programme. Going forward, Amicus
will be integrated into Netcare UK as both of these are specialist NHS outsourcing businesses.
7.2
Investment characteristics and opportunities

GHG operates in an attractive market with material growth forecast in the core businesses and is
well-placed to capitalise on the opportunities presented by the significant planned increase in NHS
outsourcing. The key investment characteristics are outlined below.
26
7.2.1 Investment characteristics

Key business and investment characteristics of the BMI division are as follows:
Reputation: BMI as part of GHG has developed a strong reputation for quality healthcare
services;
Locations and specialties: BMI has a wide geographical spread of activities in attractive
locations and a broad offering, providing significant portfolio diversity;
Local market positioning: Hospitals within the BMI division have built up a strong and
sustainable business within their local communities, with good relationships with doctors,
PMI providers, PCTs and NHS Trusts;
Knowledgeable and experienced management: The management at the local, regional
and central levels have considerable experience and know-how;
Motivated employee base: A multi-skilled and highly-trained employee base, both
clinical and non-clinical;
Cash-generative business: BMI has a strong historical record of cash generation; and
Strong asset backing: BMI owns significant property and equipment assets.
From this platform, GHG offers Netcare a wide range of opportunities to grow the business
in terms of both scale and breadth.
Management structure
GHG has a head office support function which operates from Central London and provides
technical support to each of GHGs operating units in areas such as management of property
and major projects, purchasing, IT, research and development, legal, finance, human
resources management, risk management and compliance. The day-to-day running of each
of GHGs hospitals is delegated to the local Executive Directors at each of the hospitals.
Each of these directors is in overall charge of their respective hospital and reports to a
Regional Director.
The senior management team in London is responsible for a variety of line and staff
functions, all of which report ultimately to the Chief Executive Officer (CEO). Strategy and
policy decisions relating to BMI Hospitals are made by the Board or at head office level and
are then implemented throughout the Group by the Executive Directors at each of the
hospitals. Providing consultants with their base at a hospital encourages higher patient and
procedure volume at that site.
Executive management team biographies:
Name, age and position Comment
Paul Murphy (56)
Chief Executive Officer
Paul joined GHG in 1989 and has been a Director since

December 1997;
Previously a Director of Niceopen Ltd, the group that
acquired the UK Healthcare Division and Managing Director
of Great Northern Hospitals Ltd until its merger with BMI;
Before joining the independent sector, Paul worked in the
NHS managing large NHS hospitals in Nottingham and
Birmingham;
Paul is a Member of The Chartered Institute of Secretaries.
Jonathan
Simpson-Dent (39)
Chief Financial Officer
Joined as Group Financial Director in January 2006;

He was previously employed by PepsiCo where he
performed several International CFO roles, and Mckinsey &
Company Inc. Jonathan began his career at
PricewaterhouseCoopers;
Jonathan is a Fellow of The Institute of Chartered
Accountants and has an MA from Cambridge University.
27
Name, age and position Comment

Stephen Collier (48)
General Counsel
Stephen joined GHG in 1982 and worked as a corporate

lawyer to GHG during the 1980s;
He is a barrister, having previously been in independent
practice at the Bar. Stephen has a graduate degree in law
from University College London, and a Masters gained at the
London School of Economics. He is an elected member of
the Bar Council.
Jo Le Couilliard (42)
Chief Operating Officer
Jo joined GHG in November 2005 from GlaxoSmithKline Plc,

where she had spent 10 years in senior roles in general
management and pharmaceutical marketing;
Jo previously worked at Schroder Ventures and Coopers &
Lybrand;
Jo has an MA from Cambridge University.
Iain Main (59)

Managing Director:
Amicus
Ian joined GHG in October 1993;

Iain heads the Amicus division, and is also responsible for
public sector contracting within the UK and Ireland and for
management contracting in the Middle East;
Iain was previously Regional Director of BMI, Midlands and
Scotland and has been a BMI Board Director since 1994;
Iain has an MSc from University of Surrey, and is a member
of the Institute of Health Service Management and a Fellow
of The British Institute of Management.
Robin Thornton (53)

Regional Director:
(London )
Robin joined the predecessor to GHG in 1981 from the NHS;

Robin was Executive Director of the Chaucer Hospital, the
Chiltern Hospital, the Harley Street Clinic and the Clementine
Churchill Hospital before being promoted to current post
in 1998.
Ken McGuckin (52)

Ken was recruited as Executive Director of Ross Hall Hospital
Regional Director: (West)
in 1990;
Ken was promoted to his present position in 1998.
Andrew Cameron (50)
Regional Director:
(Northern and Scotland)
Andrew joined in 1984 as Executive Director of the Chaucer

Hospital, before being promoted to the Alexandra Hospital
where he was responsible for a major hospital development
programme;
He was promoted to his present role in 1994.
Mark Adams (42)

Chief Executive Officer
Netcare UK
Mark joined Netcare UK as CEO in December 2005;

Before joining Netcare he was CEO of Corporate Services
Group Plc, one of the largest recruitment agencies in the UK
which included a specialist healthcare division supplying staff
to the NHS;
Previously Mark was CEO of AXA PPP Healthcare Group, the
second largest private medical insurer in the UK with over
1.5 million customers;
Mark had joined the AXA PPP Healthcare Group as MD of
Denplan, its dental subsidiary which supports dentists
moving from the public to the private sector, and providers
dental cover to over 1 million patients.
Note: Ian Smith resigned as CEO of GHG with effect from 29 June 2006 with Paul Murphy,
the former CEO, assuming the CEO role and Jo Le Couilliard being appointed as Chief
Operating Officer.
28
GROUP MANAGEMENT STRUCTURES

The acquisition of GHG affords Netcare significant potential for future growth and value
creation in the UK healthcare market. Importantly it is an opportunity for cross-pollination
between the respective organisations in sharing the intellectual capital and best practices
between the organisations.
Prior to the GHG acquisition, the majority of Netcares business operations were based
in South Africa, with the remainder in the UK. This meant that the Executive Committee that
was formed on 1 September 2005 largely focused on South Africa and a Senior
Management Team structure in the UK focused on Netcare UK. With GHG now comprising
a substantially bigger portion of Netcares offshore operations, it has become necessary
to modify the Group structures.
Separate management teams, known as Senior Management Teams (SMT) have been
created in England and South Africa to look after Netcares respective interests in each
country, with both SMTs having abundant experience and expertise to manage their
respective responsibilities in line with their targeted objectives and balanced scorecards.
A Group Management Team has also been created to coordinate Netcares Group functions
between the two countries and also have representatives from the SA and UK SMTs.
South African operations will continue to report to the Netcare Board. Netcare UK has been
merged with GHG. As there are other shareholders, the UK operations will also report into
the GHG Board, which will comprise Netcare, the other shareholders and executive directors
of the new GHG.
Figure 1: New Group Structure
Netcare Board
GHG Board
Group Management Team
Group Management Team
UK Senior Management Team
Changes in the UK
Netcare UK and Amicus, the division of GHG which is focused on NHS contract work, have
merged their operations. Mark Adams, the CEO of Netcare UK, will manage the new entity
which will continue to be known as Netcare UK. It will continue to focus on building its
strong partnership with the UK Department of Health and NHS. As Netcare UK will form part
of GHG, Mark Adams will report into the CEO of GHG.
The management teams from both organisations will meet regularly to compare best practice
and plan the way forward in the combined group. A number of key strategic initiatives and
action steps have been identified which require immediate and continuing attention.
Tony Lundin, Netcare head of Group Management Services, has moved to the UK to join the
GHG SMT as the executive responsible for the integration of GHG and Netcare and for
overseeing the implementation of these strategic initiatives within GHG.
Some senior managers in Netcare will be working for various periods of time in both
countries to assist in the integration and execution of the key initiatives and areas of
cooperation between the businesses.
The Board is confident that the organisation will be operationally well managed with well
defined transformation and succession planning in place, as well as strategically aligned and
defined deliverables with performance-based rewards.
29
UK Health Industry Analysis
7.2.2 Background to reform

The UK healthcare market has been, and still is, dominated by the UK Government funded
and managed NHS, accounting for approximately 94.9% of the total healthcare spend for the
UK, which is the highest proportion of public healthcare spend in all the G7 countries.
The Labour Party has recognised that the UK healthcare system is in need of substantial reform
and has proposed the following initiatives in order to improve the service to the population:
Increase healthcare spend to both upgrade facilities as well as increasing wage and other
operating expenditure;
Decrease waiting lists through a range of initiatives including efficiency improvements,
funding increases and increased outsourcing;
Outsource a significant portion of elective surgery to the private sector (targeted to reach
15% by 2014/15);
Stop bed blocking (rationing of facilities to reduce availability);
Redistribute the healthcare budget from the more affluent South (including Greater
London) towards the less affluent Northern regions;
Actively engage with the independent sector through a Concordant that allows SHAs
to purchase the services of the private sector to manage occupancy and service
availability in the NHS. This is achieved through spot purchases and contracts with
private sector operators; and
Introduction of the Patients Choice Initiative which will require GPs to set out five
possible locations for treatment as choices, one of which must be private.
These fundamental and ongoing changes have the potential to create a significantly larger
market for the private provision of healthcare over the next 10 years. Historically, private
provision has been largely restricted to a small supplement to the NHS.
The number of people over the age of 65 is estimated to increase by 18% between 2002
and 2012, clearly reflecting the aging character of the demographics. This results in a change
in the healthcare requirements of the country, for example, such dynamics would
correspond to an increased demand for oncology, orthopaedic joint replacements as the
population outlive the life span of a total joint replacement, cardiology, etc. Another area
of expected growth is nephrology, due to the high level of obesity.
Market size
BMI operates in the acute private hospital segment of the healthcare industry in the UK.
The value of this segment is estimated at being 2.7bn (2003), including private acute
hospitals, NHS funded private treatment and specialist fees. This segment could be regarded
as the private provider segment. The private provider segment has shown an 8% compound
annual growth rate (CAGR) over the 6 years to 2003. (Source: Laing & Buisson).
There are three major revenue sources within the private acute healthcare market; PMI, self
pay and NHS funded.
The PMI segment has remained relatively static over the past 10 years. The self pay market
has increased due to an increased demand for cosmetic surgery and the fact that the
UK Government removed the tax relief on PMI cover resulting in private patients carrying the
risk of private elective surgery. The NHS funded segment has grown as a result of increased
funding and specific outsourcing contracts.
7.2.3 Market participants

There are 216 private acute hospitals in the UK, providing approximately 9,500 beds. Five of
the players cover more than 80% of the market, of which GHG holds the largest market
share by both number of beds and revenue.
30
Table: Competitors in the market
Name
Hospitals
(2004)
GHG (BMI)
Nuffield Hospitals
BUPA
Capio Healthcare UK (a division of Capio AB)
HCA UK (a division of HCA Inc.)
Classic Hospitals
USP (UK subsidiary of United States Surgical
Partners International)
Abbey Healthcare Limited
Number of
beds
(2004)
Revenue
market
share
percentage
(2004)
49
42
25
21
6
10
2 476
1 656
1 395
839
768
338
25.0
17.0
14.0
9.0
8.0
3.0
3
6
155
121
2.1
1.5
Source: Market information.
7.2.4 Outlook for the Private Acute Healthcare Market

PMI
The medical insurance industry has been characterised by a small number of players, including
a strong presence of not-for-profit mutual associations. BUPA (45% market share), PPP
Holdings Limited (28% market share), Norwich Union Holdings Limited (4% market share) and
Standard Life The Assurance Company (Standard Life) (4% market share) were all originally
not for profit although only BUPA and Standard Life retain that structure. Innovation is also
increasing with players such as Norwich Union Holdings Limited, AXA/PPP Holdings Limited,
Western Provident Association and Prudential Plc developing new products.
PMI is the largest funding source for private acute healthcare (62%) representing 6.6 million
lives, or 13% of the total population, followed by self pay (30%) and NHS (8%).
Historically, the PMI market has demonstrated resilience to economic downturns. The PMI
market offers subscribers choice over key issues such as choice of practitioner facilities,
prostheses, dates and enhanced privacy and comfortable surroundings.
Furthermore, continual product development and increased product flexibility, for example
through the development of high excess policies, will continue to underpin the demand
for PMI.
Self pay
Self pay is defined by end-patients paying directly for particular treatments. This segment
includes both those without PMI cover and those requiring treatments that are not ordinarily
available under the NHS or PMI schemes, for example cosmetic surgery (accounting
for c. 20% of self paying admissions) (Source: Laing & Buisson) and obesity management
and treatment. Payment for the treatment of self pay patients is taken in advance of
treatment in the majority of cases.
Volumes of self pay work have grown significantly over the last decade, with the proportion
of self-financed treatment episodes within the independent sector increasing from 12.9% in
1992/3 to 19.2% in 1997/8 and to around 30% of revenue in 2004 (Source: Laing & Buisson).
Self pay remains an attractive option for people over 60 years of age, particularly following
the removal in 1997 of tax relief on PMI premia (for this age group), providing a positive backdrop for the self pay sector.
In response to the growing interest in self pay for private healthcare, healthcare providers have
begun to offer more products, improved marketing and pricing visibility. In addition, providers
of healthcare, PMI and other cash plans are all offering a wider range of products to further
access the self pay sector, increasingly blurring the boundaries between PMI and self pay.
The UKs cosmetic surgery market is a fast-growing sub-segment of the self pay segment.
Market research estimates the value of the UKs cosmetic surgery industry at 224.6m in
2003. This has been experiencing strong growth over the past five years with socioeconomic factors driving demand for cosmetic surgery in the UK.
31
National Health
NHS sources accounted for an estimated 8% of UK private acute healthcare revenue in 2004
(Source: Laing & Buisson). This share has been growing steadily over the past few years, as
the relationship between the private sector and the NHS has developed. Following the
NHS Plan, contracts were awarded to the private sector on a spot basis in an attempt to
meet policy commitments and reduce waiting lists. From being used mainly in the shortterm to cut waiting lists, the private sector has become a vital part of NHS provision and the
nature of the relationship is becoming more formalised.
In October 2000, the DoH and the Independent Healthcare Association first formalised this
shift in NHS policy in a Concordat between the public and private sector. It marked the
first time the private sector had been formally recognised as having a long-term, planned role
in the care of NHS-funded patients. The Concordat has proved an effective way for the NHS
to use the private sector to alleviate waiting lists, securing a rapid and tangible benefit for
the increased UK Government spending on healthcare.
The NHS use of the private sector under the Concordat has typically been on a short-term or
spot basis, whereby the pricing, number and nature of procedures have been negotiated
locally between a private hospital and the local PCT or NHS Trust. More recently, the
UK Government has shown its intention to outsource clinical services to private acute
hospitals on a national basis through such initiatives as Diagnostic and Treatment Centres
(DTCs) and ISTCs. The first wave of ISTCs demonstrated improved productivity and
clinical outcomes and has acted as a catalyst for further implementation of the reform
process. The NHS is now inviting tenders for substantial treatment volumes and is
establishing longer-term national contracts with the private sector.
Patient choice initiative
In addition to these initiatives, over the last few years the UK Government has consistently
been developing its patient choice initiative. The NHS Improvement Plan, announced by the
UK Government on 23 June 2004, delivered the strongest message to date in respect of
patient choice, promising that, by the year 2007/8 patients will have a choice of four to five
different hospital providers to ensure that all waiting lists for elective surgery are down to
a maximum of three months.
Patients will be able to be treated at any facility that meets NHS standards, within the
national maximum price for the treatment they need.
The Conservative Party also broadly supports this patient choice initiative. In its health policy
paper published in June 2004, Right to Choose, the Conservatives proposed a voucher
system, whereby patients would be able to choose to have their operation in an NHS
hospital or to receive a cash contribution towards using a private hospital.
Outlook on the NHS
The UK Government has committed to increase the amount of spending on the nations
health to comparable percentages of GDP to other European countries and push ahead with
radical reform. The NHSs allocated budget is expected to increase by 7.3% in real terms
between 2002 2003 and 2007 2008, a total increase of 42% in real terms over the period.
Annual expenditure on the NHS services is currently planned to reach 100bn by 2008 and
some 10% of GDP by 2010. The stated real increases in Government expenditure on the
NHS is in reality much lower because the underlying NHS inflation rate is materially in excess
of the retail price index, c. 7% 8% per annum. The real level of average increase in
Government investment in the NHS over the period is therefore no greater than 3% 3.5%
per annum. Rising demand for healthcare services leaves little capacity for many major new
initiatives. This is driving the political agenda of engaging the entire national health resource
more efficiently.
With significant political support behind the furthering of the private sectors involvement in
NHS work from both the Labour Government as well as the two main opposition parties,
revenues from NHS work within the private sector seem certain to grow.
32
The NHS Improvement Plan supports comments made earlier in 2006 by the Health
Secretary and states that the private sector will be undertaking up to 15% of NHS elective
procedures by 2008.
The Governments recently launched Choose & Book policy, under which patients are to be
given the choice of which hospital they attend from a selection of four to five approved by
the local PCT (which may include independent sector hospitals), provides an example of how
this may be achieved This potential growth in NHS procedures and diagnostic treatments
carried out by the private sector could result in the doubling of the private sectors entire
volume by 2008.
Furthermore, increasing healthcare funding is likely to stimulate previously latent demand for
acute healthcare services and expand the UK healthcare market. This is supported by
evidence that as healthcare funding increases and consequently waiting lists begin to
shorten, GPs are more willing to refer patients to consultants, in effect reducing the
threshold at which referral takes place.
7.3
Litigation statement
GHG and its subsidiaries and associated companies are currently not involved in any legal or arbitration
proceedings, including any proceedings that are pending or threatened of which GHG is aware, that
may have or have had a material effect on GHGs financial position in the previous 12 months.
7.4
Material vendors
There have been no material assets acquired by the GHG Group during the three years preceding
this circular.
7.5
Material contracts
On 5 April 2005 the GHG Group sold its 100% interest in the ordinary share capital of Partnerships
in Care Limited together with associated assets. The profit after tax of the Partnerships in Care
business up to the date of disposal was 3.4 million, and for 2004, 31.2 million, excluding Group
goodwill amortisation.
On 11 July 2005 the GHG Group sold its 100% interest in the ordinary share capital of BMI Health
Services Limited. The loss after tax of BMI Health Services Limited up to the date of disposal was
767 000, and for 2004, 606 000, excluding Group goodwill amortisation.
Details of the net assets of the above disposals are included in Annexure 3: Historical financial
information on GHG.
No material acquisitions were affected by GHG during the three years preceding this circular.
7.6
Material loans
All existing debt within the GHG Group has been repaid or restructured in full on acquisition.
Currently, GHGs debt finance is provided by way of short-term bridge facilities that are secured
against the assets of the GHG group. Plans to restructure the GHG business into a group of
operating companies (the Opco Group) and a group of property-owning companies (the Propco
Group) are already at an advanced stage.
The major feature of the restructuring is the transfer of much of GHGs real estate into non-trading
property-owning companies. These property-owning companies will lease the real estate to
members of the Opco Group on market related terms. This restructuring enables the Opco Group
and the Propco Group to raise long-term financing independently of one another. The long-term
facilities will be used to refinance the bridge facilities and will significantly reduce the cost of
finance to the GHG group as a whole, as demonstrated below.
In addition, significant potential exists to develop the earning potential of existing properties and for
cash generation through disposal of surplus property. Both these opportunities will assist GHG and
the Netcare Group to further reduce debt in GHG and improve gearing ratios going forward.
33
The new debt within GHG will initially be raised through bridging facilities from Dresdner Bank AG
London Branch and Barclays Capital. The bridging facilities within GHG are to be raised in two
tranches, as follows:
Short-term bridge finance
Bridge loan Tranche A
Bridge loan Tranche B
Base rate
Initial margin
LIBOR
LIBOR
2.25%
2.25%
1 165.0
750.0
Total GHG debt
1 915.0
It is intended that long-term facilities will be entered into on terms as described below:
Term loans
Opco Group facilities
Facilities
Propco Group facilities
Mortgages raised
Total GHG debt refinanced
Base rate
Margin
LIBOR
3.00%
265.0
LIBOR
1.50%
1 650.0
1 915.0
The Opco Group facilities will be secured against the assets and shares of the Opco Group.
The Propco Group Facilities will be secured by mortgages over real estate and share security. The
Opco Group term debt is repayable over periods ranging between seven and nine and a half years.
The Propco Group term debt amortises over a period of seven years whereupon the balance will
be refinanced. Hedging against interest rate increases has been secured for twenty five years.
7.7
Material changes
There have been no material changes in the financial position of GHG and its subsidiaries and
associated companies since publication of the audited results for the year ended 31 December 2005.
8. PROSPECTS FOR NETCARE

The worlds population is living longer and new technology is enabling earlier diagnosis and treatment
of previously incurable or inoperable diseases. These are well-documented trends internationally and
with 65% of healthcare utilisation and costs driven by people over 60 years of age, it will have profound
consequences on healthcare provision and capacity. Even in South Africa, adjusting for the impact of the
HIV/AIDS pandemic, the population is aging and is responsible for increased healthcare utilisation.
Internationally the trend of governments to become both providers and purchasers of healthcare
is increasing and provides a substantial opportunity for growth. This remains an important avenue of
development for Netcare.
In
In
South Africa, having regard to:

positive advancements in seeking ways to grow the medically insured population of South Africa;
increased utilisation arising from aging populations and technology advancements;
new facilities being planned and built due to new licences and PPPs being awarded to Netcare which
will broaden the Groups network of medical facilities;
improved stakeholder interaction to find sustainable solutions to the challenges of access and
affordability;
the Groups expanded footprint in Primary Care;
the rollout of the SAP integrated information technology platform; and
the United Kingdom, having regard to:
the growth potential that this market has over the medium to long term:
the opportunity to derive further operational efficiencies;
the opportunity to expand the service offering of existing hospitals; and
participate meaningfully in the new wave of outsourced contracts from the NHS,
and in the absence of any unforeseen circumstances in the South African and global economies and the
healthcare regulatory environment, it is considered that the Group has a well-balanced portfolio of
sustainable healthcare businesses to continue to generate meaningful returns and growth for all
stakeholders over time.
34
In addition, with the Groups core assets and resources firmly based in South Africa, Netcare remains
confident of achieving solid organic growth in the local market. Importantly, the Group is fully committed
to providing affordable, quality healthcare and embraces the South African DoHs drive to achieve equity
in access to healthcare. To this end the Group will endeavour to work closely with the South African
Government and other stakeholders to find sustainable products and services to bring better care to
more people of South Africa.
In
summary, the Netcare Board is confident that the enlarged group has:
a sound platform for growth given the market dynamics referred to above;
the ability to leverage synergy opportunities across the South African and UK businesses; and
diversification and expansion opportunities to enhance the growth and sustainability of
Groups earnings going forward.
9. DIRECTORS AND THEIR INTERESTS

9.1
Bonus and matching phantom shares

On 24 February 2005, the company purchased European-styled call options to acquire Netcare
shares and simultaneously ceded these options to the directors as set out below:
31 November
2001
Dr R H Bush*
I M Davis
Dr R H Friedland
Dr I Kadish*
P J Lindeque*
P G Nelson
Dr J Shevel **
N Weltman
264
264
264
264
176
211
264
264
264
Total
*
746
746
746
746
497
797
746
746
746
2 241 516
31 May
2006
226
226
226
226
151
181
226
226
226
925
925
925
925
284
540
925
925
925
1 921 299
30 November
2006
134
134
134
134
89
107
134
134
134
780
780
780
780
854
824
780
780
780
1 141 138
31 May
2007
123
123
123
123
82
98
123
123
123
549
549
549
549
365
839
549
549
549
1 046 047
Total
750
750
750
750
500
600
750
750
750
000
000
000
000
000
000
000
000
000
6 350 000
Resigned 16 September 2005.
** Resigned 22 November 2005.
9.2
Leveraged executive bonus scheme

On 24 February 2005, the under-mentioned directors of the company purchased European-styled
call options to acquire Netcare shares in their personal capacities at a total cost to those directors
of R629 800:
31 November
2001
Dr R H Bush*
I M Davis
Dr R H Friedland
Dr I Kadish*
P J Lindeque*
P G Nelson
Dr J Shevel **
N Weltman
Total
*
52
52
52
52
35
52
52
52
949
949
949
949
299
949
949
949
405 942
31 May
2006
45
45
45
45
30
45
45
45
385
385
385
385
257
385
385
385
347 952
30 November
2006
26
26
26
26
17
26
26
26
956
956
956
956
971
956
956
956
206 663
31 May
2007
24
24
24
24
16
24
24
24
710
710
710
710
473
710
710
710
189 443
Total
150
150
150
150
100
150
150
150
000
000
000
000
000
000
000
000
1 150 000
35
The strike prices on the options in paragraphs 9.1 and 9.2 above are as follows:
Strike price
R
30
31
30
31
9.3
November 2005
May 2006
November 2006
May 2007
5.67
5.92
6.18
6.44
Directors share options

The following share options were held by the directors at 30 September 2005:
Share
options at
Exercise 30 September
price
2004
(cents)
Number
I M Davis
Dr R H Friedland
Dr V L J Litlhakanyane*
P G Nelson
I M Sacks
Dr J Shevel**
N Weltman
Total
*
Appointed 1 December 2005.
36
62
265
436
100
62
265
436
436
436
62
265
62
265
436
62
265
436
700
600
200
40
1 600
900
150
Share
options
granted
during
the year
Number
000
000
000
000
000
000
000
Share
options
exercised
during
the year
Number
700 000
300 000
250 000
250
800
1 500
800
600
200
400
300
100
000
000
000
000
000
000
000
000
000
9 140 000
800
1 500
800
600
200
400
150
250 000
000
000
000
000
000
000
000
5 490 000
Share
options at
30 September
2005
Number
300
200
40
1 600
900
150
250
250
000
000
000
000
000
000
000
000
150 000
100 000
3 900 000
Messrs RH Bush, I Kadish and P J Lindeque resigned as executive directors with effect from
16 September 2005 and their details are as follows:
Share options at
30 September 2004
Number
Dr R H Bush
Dr I Kadish
400
200
50
40
1 400
000
000
000
000
000
62
265
436
100
62
750
100
50
200
75
000
000
000
000
000
265
436
62
265
436
P J Lindeque
Total
Exercise
price
(cents)
3 265 000
Share options exercised

during the year
Market
price at
Benefits
exercise
arising
date
on exercise
Number
(cents)
of options
400 000
100 000
606
606
40 000
250 000
500 000
513
513
606
50 000
100 000
645
645
1 440 000
Share options at
30 September 2005
2 176 000
Not applicable at
341 000 30 September 2005
resigned
165 200
Not applicable at
1 127 500 30 September 2005
2 720 000
resigned
291 500
Not applicable at
380 000 30 September 2005
resigned
7 201 200
There has been no change in the directors share options between 30 September 2005 and the last
practicable date. No shares have been issued or allotted in terms of the share incentive scheme,
as a pledge against an outstanding loan to any employee, which have not been fully paid for.
9.4
Directors emoluments
The emoluments paid to the directors by the company and its subsidiaries for the preceding
financial year are set out below:
Executive directors
(R000)
Dr R H Bush*
I M Davis
Dr R H Friedland
Dr I Kadish*
P J Lindeque*
Dr V L J Litlhakanyane+
P G Nelson
M I Sacks#
Dr J Shevel**
N Weltman
Total
*
Retirement
contribution
Performance
bonus
Other allowances
(including travel
and related
allowances)
738
766
245
290
882
704
1 288
719
2 717
1 051
112
119
175
108
75
60
109
61
750
94
400
669
550
400
495
178
100
2 500
11
400
97
74
11
195
91
942
183
4
3 478
113
14 400
913
6 264
957
Salary
1
1
2
1
2005
2
2
2
1
1
347
628
981
993
543
1 680
3 284
1 658
22 534

+
Appointed 1 December 2004.
Executive director until 1 March 2005.
37
Non-executive directors
(R000)
Consulting
fees
Fees for services

as directors
Total
2005
Dr A P H Jammine
J M Kahn
Prof M B Kistnasamy*
H R Levin
M I Sacks**
J A van Rooyen
467
130
116
75
150
90
130
116
75
150
467
90
Total
467
561
1 028
Appointed 1 December 2004 and resigned following the Netpartner unwinding on 20 June 2006.
** Non-executive director from 1 March 2005.
No sums have been paid or agreed to be paid within the preceding three years to any director or to
any company in which any director is beneficially interested, directly or indirectly, or of which any
director is a director, partner, member of a syndicate or member of an association, in cash or
securities or otherwise, by any person either to induce him to become or qualify such director as
a director, or otherwise for services rendered by him or by the associate company or the associate
entity in connection with the promotion or formation of Netcare.
9.5
Directors interests in securities

The interests of the directors in Netcare shares as published in the annual financial statements for
the year ended 30 September 2005 are set out in the table below:
Directors
Beneficial number
of shares
Direct
Indirect
Executive
I M Davis
5 272 773
Dr R H Friedland
4 627 332
P G Nelson
10 000
N Weltman
3 000 000
Directors
1 613 750
1 613 750
Beneficial number
of shares
Direct
Indirect
Non-beneficial
Indirect
number of shares interest via
Direct
Indirect Netpartner
588 030
294 015
235 212
294 015
Non-beneficial
Indirect
number of shares interest via
Direct
Indirect Netpartner
Total Percentage
number
of issued
of shares
share
held
capital
7 474 553
6 535 097
235 212
10 000
3 294 015
0.52
0.45
0.02
0.00
0.23
Total Percentage
number of issued
of shares
share
held
capital
Non-executive
H R Levin
J A van Rooyen
M I Sacks
Dr J Shevel
10 937 974
10 000
4 300 000
1 613 750
1 613 750
23 719 214
10 937 974
176 408
2 646 133
3 528 177
0.76
186 408
32 279 097
5 141 927
0.01
2.23
0.36
Total
28 158 079
6 455 000
23 719 214
7 761 990
66 094 283
4.58
Messrs R H Bush, I Kadish and P J Lindeque resigned as executive directors with effect from 16 September 2005 and
Dr J Shevel resigned on 22 November 2005.
38
The interests of the directors in Netcare shares at the last practicable date are set out in the table
below:
Directors
9.6
Beneficial number
of shares
Direct
Indirect
Non-beneficial
number of shares
Direct
Indirect
Total Percentage
number of issued
of shares
share
held
capital
Executive
I M Davis
5 022 973 1 613 750
Dr R H Friedland
4 654 359 1 613 750
27 027
P G Nelson
10 000
27 028
N Weltman
3 027 027
Non-executive
H R Levin
10 937 974
J A van Rooyen
10 000
M I Sacks
3 300 000 1 613 750
6 636 723
6 268 109
27 027
37 028
3 027 027
0.46
0.43
0.00
0.00
0.21
23 719 214
10 937 974
10 000
28 632 964
0.76
0.00
1.98
Total
23 719 214
55 576 852
3.84
26 989 360 4 868 278
Directors interests in transactions

Other than the Netpartner transactions, which would not have been implemented as at the date of
this circular, no directors of Netcare had any material beneficial interests, whether direct or indirect,
in transactions that were effected by the company during the current or immediately preceding
financial year or during an earlier financial year which remain in any respect outstanding or
unperformed.
The interests of directors in Netpartner at the last practicable date are set out below:
Percentage
of issued share
capital
Directors
Number
of shares
Executive
I M Davis
R H Friedland
P G Nelson
N Weltman
1 000
500
400
750
500
000
000
000
000
000
0.17
0.09
0.07
0.13
0.09
Non-executive
J A van Rooyen
M I Sacks
300 000
4 500 000
0.05
0.77
Total
7 950 000
1.37
10. DIRECTORS OPINIONS AND RECOMMENDATIONS

The Board is of the opinion that the GHG acquisition is in line with Netcares stated strategy of becoming
the leading African healthcare group, committed to its growth strategy within the local market while
pursuing further growth opportunities in the UK.
The Board is of the opinion that GHG will benefit from the certain operating skills and practices and the
company will be able to extract synergies from the expanded group through the enhancement of
facilities, refinancing of debt, etc. Taking the above into account, the Board is of the unanimous opinion
that the terms and conditions of the GHG acquisition will be to the long-term benefit of Netcare
shareholders.
39
11. SHARE CAPITAL

The authorised and issued share capital of Netcare at the last practicable date is set out below:
R000
Authorised
2 500 000 000 ordinary shares of one cent each
10 000 000 preference shares of 50 cents each
25 000
5 000
Issued
1 817 319 602 ordinary shares of one cent each
Ordinary share premium
18 173
1 050 000
The issued ordinary shares of the company are listed on the JSE. Other than the creation of new
preference shares, the companys share capital has not been updated for the effect of the Netpartner
transactions, as these transactions have not been implemented as at the date of this circular.
12. MAJOR SHAREHOLDERS
The following shareholders insofar as is known to Netcare held 5% or more of the total issued shares
of the company at the last practicable date:
The following shareholders insofar as is known to Netcare held 5% or more of the total issued shares
of the company at the last practicable date:
Director shareholding
Number
of shares
354
723
000
056
947
Percentage
of issued share
capital
Netpartner
The Public Investment Corporation Limited
BEE Trusts (accounted for as treasury shares)
Netcare Hospital Group (Proprietary) Limited (held as treasury shares)
Netcare Trust (accounted for as treasury shares)
340
240
160
116
95
743
050
000
221
700
18.7
13.3
8.8
6.4
5.3
Total
953 081 714
52.5
Changes to major shareholders have not been updated for the effect of the Netpartner transactions,
as these transactions have not been implemented as at the date of this circular.
There are no indirect shareholders holding greater than 5% or more of the total issued shares of the
company as at the last practicable date.
Insofar as known to the directors, the company does not have any controlling shareholders.
13. MATERIAL VENDORS
GHG was acquired from funds managed by BC Partners. The registered address of BC Partners is
43 45 Portman Square, London W1H 6DA, UK. BC Partners is not a related party to Netcare in any way.
There is no restraint of trade provision or payment in terms of the sale and purchase agreement.
No promoter or director has any beneficial interest in terms of the GHG acquisition.
There have been no payments, in cash or securities, to any promoter in the three years preceding the
date of this circular, nor have any payments been proposed in this regard.
14. MATERIAL CONTRACTS
Material contracts entered into by the company during the two years preceding the date of this circular
and which were not in the ordinary course of business, include:
the Netcare Health Partners for Life transaction;
the acquisition of the 20% interest in Medicross held by Netpartner; and
the Netpartner transaction.
No other material contracts have been entered into at any time that contains an obligation or settlement
that is material to Netcare or its subsidiaries at the date of the circular.
40
15. MATERIAL LOANS

Existing debt
At the last practicable date, the following loans had been advanced to Netcare and its subsidiaries:
Type of investment
Loan amount
(Rm)
Promissory notes
Fixed rate notes2
Term loans3
Terms loans4
800
500
200
225
Interest rate
(%)
Secured/
Unsecured
7.50
7.97
12.30
10.1
Unsecured
Unsecured
Unsecured
Secured
Maturity
November
February
June
October
2006
2008
2006
2009
The above-mentioned debts have been arranged through Nedbank Limited and arose as a result of:
1
Refinancing debt that was retired;
Working capital facilities;
Working capital facilities;
Financing property purchase.
The debts which are repayable within 12 months will be refinanced from committed facilities as well as
cash generated from operations.
Debt raised within Netcare for the purposes of the GHG acquisition
The investment of 219m made by Netcare to acquire its 52.6% interest in GHG has initially been
financed by way of bridge financing which is normal in leveraged buy outs and short term by nature.
Various alternative options are currently being considered which will be more permanent in nature and
likely to reduce financing costs in the future. Foreign currency risk has been eliminated through forward
cover swaps at an effective rate of R12.17: 1.
The interest rate risk inherent in the offshore loan has been combined into the integrated treasury
management process within Netcare. In terms of the current policy Netcare hedges up to 75% of all debt
in relation to interest rate risk. This allows sufficient flexibility for future operating cash flows, corporate
action and the short-term issue of its perpetual preference shares. As at 30 June approximately 50%
of Netcare debt had been hedged with it constantly being reviewed.
Details of the bridging finance facilities are as follows:
Tranche 1
Tranche 2
Base rate
Margin
LIBOR
LIBOR
1.50%
1.75%
121.7
97.3
219.0
The bridging facilities have been made available by Dresdner Bank AG London Branch and have no fixed
terms of repayment, and will be refinanced within six to eighteen months to achieve optimum financing
efficiency.
Changes to Netcares debt structure have not been updated for the effect of the Netpartner transactions,
as these transactions have not been implemented as at the date of this circular.
16. STATEMENT OF SOLVENCY AND LIQUIDITY
The Board of Directors, after considering the terms of the GHG acquisition and the effects of the funding
arrangements, as well as the effects of the Netpartner transaction which is the subject of the circular
to Netcare shareholders dated 26 May 2006, and further considering the prospects of the company,
is of the opinion that:
the company and the enlarged group will be able, in the ordinary course of business, to pay its debts
for a period of 12 months after the date of the approval of this circular;
the assets of the company and the enlarged group will be in excess of the liabilities of the company
and the Group for a period of 12 months after the date of the approval of this circular;
41
the share capital and reserves of the company and the enlarged group will be adequate for the ordinary
business purposes for a period of 12 months after the date of the approval of this circular;
the working capital of the company and the enlarged group will be adequate for ordinary business
purposes for a period of 12 months after the date of the approval of this circular.
17. STATEMENT OF MATERIAL CHANGES
There have been no material changes in the financial position of the company and its subsidiaries since
publication of the Group unaudited interim results for the six months ended 31 March 2006, other than
as set out in this circular.
18. EXPENSES
The costs to the Consortium of concluding and implementing the GHG acquisition are estimated
at approximately R2.8 million and 76.0 million, including the following:
Description
R000
(excl VAT)
Lead sponsor Merrill Lynch South Africa (Pty) Limited

Transactional sponsor KPMG Services (Pty) Ltd
Legal adviser HR Levin Attorneys Notaries and Conveyancers
Printing, publication and distribution of this circular
JSE
Independent reporting accountants and auditors to Netcare Grant Thornton
Independent reporting accountants to GHG Deloitte & Touche
350
350
1 500
250
100
150
115
Total Rand
2 815
000
(excl VAT)
Banking and hedging fees

Barclays Capital, Dresdner Bank AG London Branch and various others
Merger and acquisition advisers Dresdner Kleinwort and UBS Investment Bank
Legal due diligence Ashurst
Legal adviser Norton Rose
Commercial, financial and environmental due diligence, structuring and general advisory
various
Property valuations DTZ
Stamp duties
Total
45 680
17 845
850
720
3 722
675
6 492
75 984
The issue expenses incurred, or to be incurred by Netcare within the three years preceding the date of
this circular were in respect of:
approximately R6.0 million in respect of the Netcare Health Partners for Life transaction; and
approximately R7.8 million in respect of the Netpartner transactions.
The total amount of costs incurred in respect of the Netcare Health Partners for Life transaction and
Netpartner transactions include fees paid to the corporate adviser and legal advisers, attorneys,
independent professional expert, sponsors, third party financier and reporting accountants and auditors
and relating to, inter alia, fees and expenditure of transfer secretaries and the costs of announcements
and printing of the circulars and revised listing particulars. In addition, fees for the Netpartner transactions
include JSE listing fees, arranger fees, brokerages and commissions in respect of the listing of the new
preference shares.
42
19. DIRECTORS RESPONSIBILITY STATEMENT

The directors, whose names are set out in the Corporate information section of this circular, collectively
and individually, accept full responsibility for the accuracy of the information given and certify that to the
best of their knowledge and belief there are no facts that have been omitted which would make any
statement false or misleading, and that all reasonable enquiries to ascertain such facts have been made and
that this circular contains all the information required by law and the JSE Listings Requirements.
20. EXPERTS CONSENTS
The corporate advisers, legal advisers, independent reporting accountants and auditors, sponsors,
independent professional expert and transfer secretaries of the company have consented to the inclusion
of their names in this circular in the context and form in which they appear and have not withdrawn such
consents, as at the date of issue of this circular.
21. LITIGATION STATEMENT
The directors of the company are not aware of any legal or arbitration proceedings, including any such
proceedings that are pending or threatened, which may have, or have had, a material effect on the
Groups financial position during the 12 months preceding the last practicable date.
22. DOCUMENTS AVAILABLE FOR INSPECTION
The following documents or copies thereof, will be available for inspection during normal business hours
at the registered office of the company from and including Tuesday, 11 July 2006, for a 30-day period:
a copy of this circular;

the memorandum and articles of association of the company;
the memorandum and articles of association of GHG;
the sale and purchase agreement;
the redacted Partnership Contribution Agreement and Partnership Agreement;
material contracts as referred to in paragraph 14 of this circular;
the report of the independent reporting accountants on the historical financial information reported
in accordance with Statements of Generally Accepted Accounting Practice applicable in the United
Kingdom, and the JSE Listings Requirements as set out in Annexure 2;
the report of the independent reporting accountants on the historical financial information reported
in accordance with International Financial Reporting Standards and the JSE Listings Requirements as
set out in Annexure 4;
the reporting accountants report on the pro forma financial information relating to Netcare as set out
in Annexure 6;
a summary of service agreements with directors entered into during the last three years;
the audited annual financial statements of the company for the last three financial years ended
30 September 2005 and the interim financial statements for the six months ended 31 March 2006;
the audited annual financial statements of GHG for the last three financial years ended 31 December 2005
and the IFRS adjusted financial statements for the year ended 31 December 2005; and
the signed consent letters.
By order of the Board

Signed in Sandton by the directors of Network Healthcare Holdings Limited.
11 July 2006
Registered office
76 Maude Street
(corner West Street)
Sandton, 2196
43
ANNEXURE 1
ADDITIONAL BACKGROUND INFORMATION ON NETCARE UK
Netcares UK operation was established in 2001 and provides specialised clinical services to patients under
contract to the NHS. Existing contracts involve Netcare performing an estimated 90,000 procedures over
five years.
Over the past five years, Netcare UK has:
Participated in waiting list initiatives in Morecombe Bay, London, Southport and Portsmouth which saw
over 900 cataract procedures, several hundred tonsillectomies and other ear, nose and throat (ENT)
procedures and over 1 000 orthopaedic procedures performed;
Initiated and operated a nationwide programme to offer cataract procedures, using a number of mobile
operating theatres;
Mobilised and operated a large, purpose-built surgical centre in Greater Manchester, providing orthopaedic
and general surgery services;
Developed Commuter Walk-in Centres in Kings Cross and Leeds.
Patient satisfaction is consistently above 97% throughout Netcare UK operations. Netcare was awarded the
Best Healthcare Operational Project at the recent Public Private Finance awards held in London. This was
in recognition of the mobile cataract service that Netcare operates.
Strategy
Netcare UKs strategy is to become a provider of choice amongst NHS patients, general practitioners and
commissioners for an increasing range of healthcare services. Working together with NHS Trusts and SHAs,
Netcare UK provides additional capacity and capability, contributing to a quality public health service, free
at the point of need and delivered at a cost-effective price.
Current operations
Greater Manchester Surgical Centre
The Greater Manchester Surgical Centre, located in Trafford, is a 48-bed facility employing almost
150 medical personnel providing inpatient and outpatient services
Period of contract
2005 2010
Procedures (five years)
44 836
Staff
150
The centre is open 24 hours, 7 days per week. Procedures include day surgery, inpatient and outpatient
procedures, including general surgery, ear nose and throat and orthopaedics. In the first year of operation,
5 000 procedures were carried out, achieving satisfaction levels of 97%.
All the consultants are registered as specialists with the General Medical Council (GMC) and all Registered
Nurses (RNs) are registered with the Nursing and Midwifery Council (NMC).
Cataract services
Many PCTs have identified that a reduction in cataract waiting lists is a strategic priority of great value to the
general public. Netcare UK has worked closely with the NHS to develop an innovative and effective solution
to meet this need, bringing healthcare almost to the patients doorstep. Netcare UK recently operated on its
20,000th patient.
44
Period of contract
2003 2008
Procedures (five years)
44 737
Staff
30
The mobile units undertake pre-operative assessment, surgery and post-operative care. They travel
nationwide, rotating between different locations, to minimise patient inconvenience. Amongst the areas
visited are Cumbria and Lancashire, Cheshire and Merseyside, Thames Valley, Reading, Surrey and Sussex,
Kent and Medway, Hampshire, South West, Dorset and Somerset and a satisfaction rating of 97% has been
consistently achieved.
The consultant ophthalmologists are all on the Specialist Register. This ensures a low complication rate,
allowing patients to benefit from improved eyesight and resume an independent lifestyle.
Patients are primarily referred by participating PCTs, although some optometrists are also able to refer.
Commuter-Walk-In Centres
Netcare UK is to open two NHS walk-in centres, in Leeds city centre and near Kings Cross station in London.
These will serve both the local community and the commuter population, and aim to increase access to the
types of services available from GP surgeries. They will be closely integrated into the local health economy.
Period of contract
2006 2011
Patient visits (five years) 200 000 250 000 each site
Staff (when open)
16 each site
The centres will be staffed by GPs, nurses and a physiotherapist. Patients will be able to walk-in, or book
an appointment. Treatments can be provided for patients with the symptoms of seasonal colds, sore throats
and coughs, skin rashes, ear ache, unexplained aches and pains and some minor injuries.
It is anticipated that each site will see between 200,000 and 250,000 patients over a five-year period.
Future opportunities
The UK Government is firmly committed to using the independent sector to support improvements in the
NHS. In 2005, Phase 2 of the Independent Sector Treatment Programme was launched which is expected
to deliver up to 250,000 procedures per year. Netcare UK is actively involved in this programme:
2 Tender responses submitted and in convergence discussions;
1 Tender response submitted with convergence decision awaited;
2 further Invitations to Negotiate (ITNs) underway; and
10 15 additional ITNs expected during the remainder of 2006.
There are also numerous smaller opportunities to provide services to various local PCTs.
45
ANNEXURE 2
REPORT OF THE INDEPENDENT REPORTING ACCOUNTANTS ON THE HISTORICAL

FINANCIAL INFORMATION REPORTED IN ACCORDANCE WITH STATEMENTS OF
GENERALLY ACCEPTED ACCOUNTING PRACTICE APPLICABLE IN THE UNITED
KINGDOM AND THE JSE LISTINGS REQUIREMENTS
10 July 2006
The Directors
76 Maude Street
Sandown
Sandton
2196
South Africa
Dear Sirs
REPORT OF THE INDEPENDENT REPORTING ACCOUNTANTS ON THE HISTORICAL FINANCIAL
INFORMATION REPORTED IN ACCORDANCE WITH STATEMENTS OF GENERALLY ACCEPTED
ACCOUNTING PRACTICE APPLICABLE IN THE UNITED KINGDOM, AND THE JSE LISTINGS
REQUIREMENTS
Introduction
At your request and for the purposes of the circular to Network Healthcare Holdings Limited shareholders,
to be dated on or about 11 July 2006, we present our report on the historical financial information in respect
of the acquisition of a controlling interest in General Healthcare Group Limited, as set out in Annexure 3
to this circular, in compliance with the Listings Requirements of the JSE Limited (JSE).
Responsibility
The compilation, contents and presentation of the circular are the responsibility of the directors of Network
Healthcare Holdings Limited. Our responsibility is to express an opinion on the historical financial information
included as Annexure 3 to this circular.
Scope
We have audited the financial information of General Healthcare Group Limited for the year ended
31 December 2005, and reviewed the financial information for the years ended 31 December 2004
and 31 December 2003.
Basis of opinion
Audit opinion
We conducted our audit in accordance with International Standards on Auditing. Those standards require that
we plan and perform the audit to obtain reasonable assurance that the historical financial information relating
to the year ended 31 December 2005 is free of material misstatement.
An audit includes:
Examining, on a test basis, evidence supporting the amounts and disclosures of the abovementioned
historical financial information;
Assessing the accounting principles used and significant estimates made by management; and
Evaluating the overall historical financial information presentation.
We believe that our audit provides a reasonable basis for our audit opinion.
46
Review opinion
We conducted our review in accordance with the International Standard on Review Engagements 2400
applicable to the review of Financial Information. This standard requires that we plan and perform the review
to obtain moderate assurance that the historical financial information for the years ended 31 December 2004
and 31 December 2003, is free of material misstatement. A review is limited primarily to enquiries
of company personnel and analytical procedures applied to financial data and this provides less assurance
than an audit. We have not performed an audit of the abovementioned historical financial information and,
accordingly, we do not express an audit opinion thereon.
Opinion
Audit opinion
In our opinion, the historical financial information of General Healthcare Group Limited for the year ended
31 December 2005 fairly presents, in all material respects, the financial position at that date, and the results
of the operations and cash flows for the year then ended in accordance with Statements of Generally
Accepted Accounting Practice applicable in the United Kingdom, and the JSE Listings Requirements.
Review opinion
Based on our review, nothing has come to our attention that causes us to believe that the historical financial
information of General Healthcare Group Limited for the years ended 31 December 2004 and 31 December
2003, is not fairly presented, in all material respects, in accordance with Statements of Generally Accepted
Accounting Practice applicable in the United Kingdom, and the JSE Listings Requirements.
Consent
We consent to the inclusion of this report, which will form part of the circular to shareholders of Network
Healthcare Holdings Limited, to be issued on or about 11 July 2006, in the form and context in which it
appears.
Yours faithfully
Deloitte & Touche
Registered Auditors
20 Woodlands Drive, Johannesburg
Per P S F Austin
Partner
National Executive: G G Gelink Chief Executive A E Swiegers Chief Operating Officer
G M Pinnock Audit D L Kennedy Tax L Geeringh Consulting M G Crisp Financial Advisory
L Bam Strategy C R Beukman Finance T J Brown Clients & Markets
S J C Sibisi Public Sector and Corporate Social Responsibility N T Mtoba Chairman of the Board
J Rhynes Deputy Chairman of the Board
A full list of partners and directors is available on request.
47
ANNEXURE 3
HISTORICAL FINANCIAL INFORMATION ON GHG
Principal activity and review of the business for the year ended 31 December 2005:
The directors of GHG indicated in the directors report included in the annual financial statements for the year
ended 31 December 2005 that the principal activity of the company is the provision of healthcare services
through its subsidiary undertakings.
The directors considered both the overall level of business and the year end financial position as satisfactory.
On 5 April 2005, the business of Partnerships in Care Limited and associated assets were sold and
on 11 July 2005 the group disposed of its holding in BMI Health Services Limited. Following these disposals,
a significant amount of group debt was repaid with the proceeds. These repayments and the consequent
one-off prepayment and interest rate swap termination costs led to a substantial increase in the finance
charge accounted for in the year.
During the year, the group incurred costs of 2 414 000 tendering for various public sector procurements
contracts. This work is continuing.
On 5 April 2005, the business of Partnerships in Care Limited and associated assets were sold. The directors
expect that the level of activity of the remaining business will be sustained for the foreseeable future.
The directors expect that the present level of activity will be sustained for the foreseeable future.
48
BALANCE SHEET
AS AT 31 DECEMBER
Notes
ASSETS
Non-current assets
Intangible assets
Tangible assets
Investments
11
12
13
Current assets
Stock
Debtors
Cash at bank and in hand
14
TOTAL ASSETS
EQUITY AND LIABILITIES
Capital and reserves
Called-up equity share capital
Called-up non-equity share capital
Profit and loss account
Total shareholders funds/(deficit)
Minority interest
19
19
20
Current liabilities
Amounts falling due within one year
TOTAL EQUITY AND LIABILITIES
2004
000
2003
000
1 004 583
1 202 093
1 235 005
525 640
474 126
4 817
664 971
530 626
6 496
707 383
521 600
6 022
151 761
133 577
132 946
19 189
82 708
49 864
16 383
74 892
42 302
14 215
77 460
41 271
1 156 344
1 335 670
1 367 951
115 342
(185 400)
(143 005)
990
10
114 254
990
10
(186 400)
990
10
(144 005)
115 254
88
(185 400)
(143 005)
949 041
1 416 830
1 414 021
15
18
25
933 192
8 765
7 084
1 392 264
10 619
13 947
1 401 377
12 644
15
91 961
91 961
104 240
104 240
96 935
96 935
1 156 344
1 335 670
1 367 951
21
Non-current liabilities
Amounts falling due after more than one year
Provisions for liabilities and charges
Pension liability
2005
000
49
PROFIT AND LOSS ACCOUNT

FOR THE YEAR ENDED 31 DECEMBER
TURNOVER
Continuing operations
Discontinued operations
Notes
2005
000
2004
000
2003
000
611 997
42 094
544 850
154 336
666 313
699 186
(506 592)
666 313
(473 375)
Cost of services provided
654 091
(483 487)
GROSS PROFIT
170 604
192 594
192 938
(36 587)
(2 414)
(37 304)
(42 375)
(42 412)
(40 024)
(42 412)
Administrative costs
Public procurement bid costs
Goodwill amortisation
Administrative expenses
50
(84 787)
(82 436)
91 385
2 914
94 933
12 874
110 502
94 299
1 532
107 807
2 224
110 502
1 940
95 831
346 283
(89)
3 620
110 031
20
2 893
112 442
(39)
2 050
(35 270)
(106 595)
(52 662)
(79 477)
(50 936)
(77 020)
4, 13
(141 865)
(132 139)
(127 956)
7
9
303 780
(2 835)
(19 195)
(10 041)
(13 503)
(11 434)
21
300 945
(87)
(29 236)
(24 937)
300 858
(29 236)
(24 937)
Total interest payable and similar charges
RETAINED PROFIT/(LOSS) FOR THE YEAR
Share of associates operating profit
PROFIT/(LOSS) ON ORDINARY ACTIVITIES

AFTER TAXATION
Minority interests
(76 305)
PROFIT/(LOSS) ON ORDINARY ACTIVITIES

BEFORE TAXATION
Tax charge on loss on ordinary activities
OPERATING PROFIT (excluding associates)

OPERATING PROFIT
Profit on sale of discontinued operations
(Loss)/Profit on sale of tangible fixed assets
Interest receivable and similar income
Interest payable and similar charges:
Finance cost rolled-up on deep discount bonds
Other interest payable and similar charges
CONSOLIDATED STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES

Notes
Profit/(Loss) for the financial year
Group
Associates
Actuarial loss relating to the pension scheme
2004
000
2003
000
299 786
1 072
(30 793)
1 557
(26 295)
1 358
25
Taxation
Deferred tax relief on special pension
contributions
Deferred tax on pension deficit for special
contribution
Current tax for tax relief on special contribution
Deferred tax on actuarial loss
Total recognised gains and losses relating
to the year
2005
000
Prior year adjustment (as explained in note 10)
(29 236)
(24 937)
(291)
(1 288)
525
(2 100)
1 575
87
386
20
300 858
300 654
(30 138)
(13 947)
Total gains and losses recognised since last annual

report and accounts
286 707
RECONCILIATION OF SHAREHOLDERS
FUNDS/(DEFICIT):
Opening shareholders deficit (2004 as
previously stated)
(185 400)
(143 005)
(12 257)
(118 068)
(185 400)
(155 262)
(118 068)
Opening shareholders deficit as restated

Total recognised gains and losses relating
to the year (2004 as restated)
Closing shareholders funds/(deficit)
10
300 654
115 254
(30 138)
(185 400)
(24 937)
(143 005)
51
CASH FLOW STATEMENT

NET CASH INFLOW

FROM OPERATING ACTIVITIES
Special pension contributions
Dividends from associates
Returns on investments and servicing of finance
Interest received
Interest paid
Finance cost paid on the repayment of deep
discount bonds
Notes
2005
000
2004
000
2003
000
22
155 349
(7 000)
125
184 993
177 219
734
3 558
(64 950)
2 893
(76 888)
2 050
(78 752)
23
Net cash outflow from returns on investments

and servicing of finance
(103 039)
(164 431)
Taxation
Capital expenditure and financial investment
Purchase of tangible fixed assets
Sale of tangible fixed assets
(5 268)
(53 532)
139
(44 804)
870
(54 900)
531
(53 393)
552 339
2 355
(24 631)
Financing
Capital element of finance lease rental payments
Secured notes acquired
Secured loans acquired
Cost of acquisition of new secured notes
Repayment of secured notes
Repayment of secured loans
Repayment of loan notes
Repayment of deep discount bonds
Costs of repayment of secured notes
INCREASE/(DECREASE) IN CASH IN THE YEAR
52
23
23
18
23
23
23
23
(276
(4
(148
(36
(7)
500
(60)
110)
(3)
615)
680)
856)
(447 831)
(54 369)
455 393
23
(43 934)
530 063
Net cash outflow from financing
CASH INFLOW BEFORE FINANCING
(87 448)
(8 783)
Acquisitions and disposals

Net proceeds of sale of subsidiary businesses
Proceeds on liquidation of associated undertakings
Acquisition of subsidiaries
(86 258)
(10 746)
(5 320)
Net cash outflow from capital expenditure and

financial investment
(12 263)
46 018
(111)
578 361
(2 484)
(596 857)
(2 535)
(21 361)
(44 987)
7 562
1 031
30 868
(172)
(15 762)
(1 427)
(26 535)
(43 896)
(13 028)
NOTES TO THE FINANCIAL STATEMENTS

1. PRINCIPLE ACCOUNTING POLICIES:
A summary of the principal accounting policies adopted is set out below. They have all been applied
consistently throughout all three years with the exception of the policy for pensions which is explained
in note 10.
(a)
Basis of accounting
The accounts are prepared under the historical cost convention and in accordance with applicable
United Kingdom law and accounting standards.
(b)
Basis of consolidation
The group accounts consolidate the accounts of the company and its subsidiary undertakings drawn
up to 31 December. Acquisitions are accounted for under the acquisition method and the results
of subsidiaries acquired or sold are consolidated from or to the date on which control passed.
No profit and loss account is presented for GHG as provided by section 230 (3) of the Companies
Act 1985. Within the consolidated profit for the year is a profit of 401 000 (2004 10 000, 2003
56,000) attributable to the shareholders of the GHG which has been dealt with in the accounts of
the company.
(c)
Goodwill
Goodwill arising on the acquisition of subsidiary undertakings and businesses representing any
excess of the fair value of the consideration given over the fair value of the identifiable assets and
liabilities acquired is capitalised and written off on a straight line basis over its estimated useful
economic life of 20 years. Provision is made for any impairment.
(d)
Investments
Fixed asset investments are stated at cost less provision for impairment. Dividends are recognised
in the period in which they are declared.
(e)
Associates
In the group accounts investments in associated undertakings are accounted for using the equity
method. The consolidated profit and loss account includes the groups share of associates profits
less losses while the groups share of the net assets of the associates is shown in the consolidated
balance sheet. Goodwill arising on the acquisition of associates is accounted for in accordance with
the policy set out above.
(f)
Tangible fixed assets

Tangible fixed assets are shown at cost net of depreciation and any provision for impairment.
Depreciation is provided at rates calculated to write off the cost, less estimated residual value
of each asset on a straight line basis over its expected useful life as follows:
Freehold buildings and fixed plant up to 50 years
Leasehold premises
the shorter of 50 years or the length of the lease
Plant and machinery
3 to 10 years
No depreciation is provided on freehold land or construction in progress.

Costs incurred in the construction of tangible fixed assets are capitalised and written off over the
life of the asset.
(g)
Stocks
Stocks, which comprise goods to be supplied to patients and other customers, and consumables
to be used in the provision of services to patients, are stated at the lower of cost and net realisable
value. There is no material difference between balance sheet and replacement cost values.
Provision is made for obsolete or slow moving or defective items where appropriate.
53
(h)
Turnover
Group turnover comprises amounts receivable for goods and services supplied to third parties
in the normal course of business net of refunds, allowances and value added tax.
(i)
Taxation
Current tax is provided at amounts expected to be paid (or recovered) using the tax rates and laws
that have been enacted or substantively enacted by the balance sheet date.
Deferred tax is recognised in respect of all timing differences that have originated but not reversed
at the balance sheet date where transactions or events that result in an obligation to pay more tax
in the future or a right to pay less tax in the future have occurred at the balance sheet date.
Timing differences are differences between the groups taxable profits and its results as stated in
the financial statements that arise from the inclusion of gains and losses in tax assessments in
periods different from those in which they are recognised in the financial statements.
A net deferred tax asset is regarded as recoverable and therefore recognised only when on the
basis of all available evidence it can be regarded as more likely than not that there will be suitable
taxable profits from which the future reversal of the underlying timing differences can be deducted.
Deferred tax is not recognised when fixed assets are revalued unless by the balance sheet date
there is a binding agreement to sell the revalued assets and the gain or loss expected to arise
on sale has been recognised in the financial statements. Neither is deferred tax recognised when
fixed assets are sold and it is more likely than not that the taxable gain will be rolled over, being
charged to tax only if and when the replacement assets are sold.
Deferred tax is measured at the average tax rates that are expected to apply in the periods in which
the timing differences are expected to reverse based on tax rates and laws that have been enacted
or substantively enacted by the balance sheet date. Deferred tax is measured on a non-discounted
basis.
(j)
Pension costs
During 2005 the group adopted the accounting provisions of FRS 17 in respect to defined benefit
pension schemes. Accordingly the comparative statements have been changed to reflect this new
policy as follows:
For defined benefit schemes the amounts charged to operating profit are the current service costs
and gains and losses on settlements and curtailments which are included as part of staff costs.
Past services costs are recognised immediately in the profit and loss account if the benefits have
vested. If the benefits have not vested immediately, the costs are recognised over the period until
vesting occurs. The interest cost and the expected return on assets are shown as a net amount in
other interest payable and similar charges. Actuarial gains and losses are recognised immediately
in the statements of total recognised gains and losses.
Defined benefit schemes are funded, with the assets of the scheme held separately from those
of the group, in separate trustee administered funds. Pension scheme assets are measured at fair
value and liabilities are measured on an actuarial basis using the projected unit method and
discounted at a rate equivalent to the current rate of return on a high quality corporate bond of
equivalent currency and term to the scheme liabilities. The actuarial valuations are obtained at least
triennially and are updated at each balance sheet date. The resulting defined benefit asset or
liability, net of the related deferred tax, is presented separately on the face of the balance sheet.
For defined contribution schemes the amount charged to the profit and loss account in respect
of pension costs is the contributions payable in the year. Differences between contributions payable
in the year and contributions actually paid are shown either as accruals or prepayments in the
balance sheet.
54
(k)
Leases
Assets held under finance leases are initially recorded at the fair value of the asset with
an equivalent liability categorised as appropriate under creditors due within or after one year.
The assets are depreciated over the shorter of the lease term and their useful economic lives.
Finance charges are allocated to accounting periods over the period of the lease to produce
a constant rate of charge on the outstanding balance.
Rentals under operating leases are charged on a straight-line basis over the lease term.
(l)
Finance costs
Finance costs of debt are recognised in the profit and loss account over the term of such
instruments at a constant rate on the carrying amount.
(m) Debt
Debt is initially stated at the amount of the net proceeds after deduction of issue costs. The carrying
amount is increased by the finance cost in respect of the accounting period and reduced
by payments made in the period.
(n)
Derivative financial instruments

The group uses derivative financial instruments to reduce exposure to interest rate movements.
The group does not hold or issue derivative financial instruments for speculative purposes.
The group uses hedge accounting (based on the accruals approach) to account for these interest
rate swaps. Under hedge accounting any interest differentials payable or receivable under
the swaps are recognised by adjusting net interest payable over the period of the contracts.
Where the contracts not to relate to a specific liability to pay interest then they would be marked
to market and the whole of any resulting profit or loss would be recognised in the profit and loss
account at that time.
2. SEGMENT INFORMATION:
The directors are of the opinion that the businesses of the group are substantially similar in that they
all relate to the provision of health care services. Turnover and profit/(loss) before tax on ordinary activities
arise from continuing operations entirely in the UK.
3. OPERATING EXPENSES:
2005
Continuing Discontinued
operations
operations
000
000
Cost of services
GROSS PROFIT
Administrative
expenses
Public bid costs
Goodwill
amortisation
OPERATING PROFIT
Continuing
operations
Total
000
447 906
35 581
483 487
164 091
6 513
34 888
2 414
000
2004
(as restated)
Discontinued
operations
000
Total
000
379 053
127 539
506 592
170 604
165 797
26 797
192 594
1 699
36 587
2 414
35 752
6 623
42 375
35 404
1 900
37 304
35 112
7 300
42 412
91 385
2 914
94 299
94 933
12 874
107 807
The group disposed of its interest in the ordinary share capital of Partnerships in Care Limited and
associated assets on 5 April 2005 and BMI Health Services Limited on 11 July 2005. The results for these
two businesses up to the date of disposal and the comparatives for 2004 are shown under discontinued
operations.
55
4. PROFIT ON SALE OF DISCONTINUED OPERATIONS:

The profit on sale of discontinued operations relates to the disposal of the groups interest in the ordinary
share capital of Partnerships in Care Limited and associated assets and BMI Health Services Limited
(see note 13). The taxation charge to the profit and loss account was increased by 2 779 000 as a result
of these disposals.
5. INTEREST RECEIVABLE AND SIMILAR INCOME:
2005
000
Bank interest income
Other investment income
3 393
227
2004
(as restated)
000
2 698
195
3 620
2 893
2003
000
1 861
189
2 050
56 876
174
5 027
40 741
2 850
346
30
551
74 518
245
1 225
2 484
344
201
460
74 683
280
1 250
337
470
6. INTEREST PAYABLE AND SIMILAR CHARGES:

Interest on bank loans and Secured Notes
Interest on loans notes
Amortisation of debt arrangement fees
Write-off of new debt arrangement fees
Interest rate swap costs on repayment of debt
Penalty charges on repayment of debt
Finance lease and hire purchase contracts
Pension finance costs (see also note 25)
Other interest
106 595
79 477
77 020
37 304
42 412
42 412
30 765
100
33 659
213
28 101
128
4 477
7 255
4 108
7 919
3 748
7 991
315
788
237 005
290
582
279 143
275
137
264 977
7. PROFIT (LOSS) ON ORDINARY ACTIVITIES

BEFORE TAXATION:
Profit/(Loss) on ordinary activities
before taxation is stated after charging:
Amortisation of goodwill
Depreciation and amounts written off tangible fixed assets:
Owned
Held under finance leases
Operating lease rentals
Plant and machinery
Other
Auditors remuneration
Audit fees
Non-audit fees
Staff costs (see note 8)
56
8. STAFF COSTS:
Particulars of employees (including executive directors) are as shown below:
2005
000
Employee costs during the year amount to:
Wages and salaries
Social security costs
Other pension costs (see also note 24)
2004
(as restated)
000
2003
000
212 516
17 319
7 170
251 045
20 636
7 462
239 487
19 097
6 393
237 005
279 143
264 977
The group employs a significant number of part-time staff. The average monthly number of full-time
equivalent employees in the group during the year was as follows:
Medical and ancillary

Administration
Number
Number
Number
8 097
855
9 755
908
9 336
1 164
8 952
10 663
10 500
Directors remuneration
2005
000
Directors remuneration paid in respect of directors
of the company during the year was as follows:
Emoluments
Compensation for office loss
Contribution paid to pension scheme on retirement
of director
1 369
163
670
2 202
2004
(as restated)
000
1 869
582
2 451
2003
000
1 317
1 317
The number of directors who were members of pension schemes was as follows:
Money purchases schemes

Defined benefit schemes
2005
Number
2004
Number
2003
Number
1
3
1
3
1
4
During the year no retirement benefits were paid to directors or past directors in excess of their
entitlement at the date of retirement.
The above amounts for remuneration include 758 000 (2004 1 216 000, 2003 404 000) in respect
of emoluments paid to the highest paid director during the year. The accrued pension entitlement of the
highest paid director is 1 000 (2004 111 000, 2003 98 000) and the accrued lump sum entitlement
is nil (2004 and 2003 nil).
57
Directors interest
The directors who held office at 31st December had the following notified interests in shares and
debentures in the company:
2005
Shares
A Ordinary
10 pence
R Ordinary
90 pence
T Ordinary
Debentures
B Deep
Discount
Bonds
Number
Number
Number
P Murphy
10 000
10 000
105 915
I Smith (appointed 29th September 2004)
8 500
8 000
2004
Shares
A Ordinary
10 pence
R Ordinary
90 pence
T Ordinary
Debentures
B Deep
Discount
Bonds
Number
Number
Number
10 000
10 000
222 456
P Murphy
P Farrier
6 000
6 000
133 474
E Hayes
8 000
8 000
177 965
2003
Shares
A Ordinary
10 pence
R Ordinary
90 pence
T Ordinary
Debentures
B Deep
Discount
Bonds
Number
Number
Number
C Auld
12 000
12 000
287 040
P Murphy
10 000
10 000
239 200
P Farrier
6 000
6 000
143 520
E Hayes
8 000
8 000
191 360
P Preston
7 000
7 000
167 440
9. TAX ON (PROFIT)/LOSS ON ORDINARY ACTIVITIES:

2005
000
2004
(as restated)
000
2003
000
Corporate tax at 30% (2004 30%, 2003 30%)
2 452
11 249
8 834
(Over)/Under provision in prior years
(1 150)
138
(93)
Deferred tax current year

Deferred tax prior year
1 949
(1 805)
(356)
(1 316)
2 624
(513)
929
(338)
Deferred tax on pension liability current year

Tax attributable to income from associated undertakings
460
2 835
(Profit)/Loss on ordinary activities before tax
(303 780)
667
10 041
19 195
582
11 434
13 503
The difference between the total current tax shown above and the amount calculated by applying the
standard rate of corporation tax to the (profit)/loss before tax is as follows:
58
2005
000
(Profit)/Loss on ordinary activities before tax
(303 780)
Tax charge/(credit) on (profit)/loss on ordinary activities

at standard UK corporation tax rate of 30%
2004
(as restated)
000
2003
000
19 195
13 503
91 134
(5 759)
(4 051)
Effect of:
Expenses not deductible for tax purposes
3 989
4 301
3 346
11 174
12 724
12 724
(929)
338
(100 345)
(6)
19
Amortisation of goodwill
Defined benefit pension contribution timing differences
Non-chargeable gains on disposal of fixed assets
Capital allowances in excess of depreciation
(1 357)
1 173
(2 384)
Short term timing differences
(588)
(855)
(238)
Losses brought forward utilised
(514)
Loss carried forward
209
Losses carried forward in company leaving group
139
Share of associates tax
(460)
(667)
(582)
2 452
11 249
8 834
The tax charge in future periods may be affected by deferred tax assets amounting to 361 000 (2004
4 173 000, 2003 3 867 000) for capital losses and 209 000 (2004 and 2003 514 000) for other
losses which have not been recognised because the directors are of the opinion that they cannot
be certain there will be suitable taxable gains available to offset these in the foreseeable future.
The amount of deferred tax that has not been provided on fixed assets subject to rollover relief is
11 810 000 (2004 and 2003 450 000). At present, it is not envisaged that any of this tax will become
payable in the foreseeable future.
10. PRIOR YEAR ADJUSTMENT:
During 2005 the group adopted the accounting provisions of FRS 17 in respect to defined benefit pension
schemes. Accordingly the comparative statements have been changed to reflect this new policy as follows:
2004
(as restated)
000
Adjustments to Profits and Loss account

Decrease in profit and loss account as at 1st January 2004
Cost of services provided
Other interest payable and similar charges
Tax on loss on ordinary activities
Decrease in profit for the year
Actuarial loss relating to the pension scheme including related tax shown in the
consolidated statement of total recognised gains and losses
Total decrease in recognised gains and losses relating to the year
Decrease in profit and loss account as at 31st December 2004
12 257
925
201
(338)
788
902
1 690
13 947
Balance Sheet
Pension liabilities
Increase in liabilities as at 31 December 2004
13 947
13 947
59
11. INTANGIBLE ASSETS:

Goodwill
Cost:
Beginning of the year
Additions (see also note 12)
Disposals (see also note 12)
End of the year
Amortisation:
Charge for the year
Disposals (see also note 12)
End of the year
Net book value:
End of the year
2004
Cost:
Beginning and end of the year
Amortisation:
Charge for the year
2005
000
848 241
10 440
(146 000)
712 681
183 270
37 304
(33 533)
187 041
525 640
664 971
848 241
140 858
42 412
End of the year

Net book value:
End of the year
2003
Cost:
Beginning and end of the year
Amortisation:
183 270
664 971
707 383
848 241
98 446
Charge for the year
60
42 412
End of the year
140 858
Net book value:

End of the year
707 383
749 795
12. TANGIBLE ASSETS:

Land and buildings
Long
Freehold
leasehold
000
000
2005
Cost:
Additions
Acquisitions of subsidiaries
Disposal of subsidiaries
Reclassifications
End of the year
Depreciation:
Charge for the year
Disposals of subsidiaries
Disposals
Reclassifications
End of the year
Net book value:
End of the year
2004
Cost:
Additions
Disposals
Reclassifications
End of the year
Depreciation:
Charge for the year
Impairment losses
Disposals
Reclassifications
End of the year
Net book value:
End of the year
410
9
13
(103
130
964
386
659)
(20)
(6 521)
91 459
12 768
907
(1 507)
(264)
6 220
Plant and
machinery
000
123
30
1
(20
(5
198
183
287
152)
916)
(66)
323 280
109 583
128 534
34 911
8 665
(15 575)
(12)
604
9 284
2 096
(679)
(228)
2
49
20
(15
(5
966
104
162)
732)
(973)
28 593
10 475
48 203
294 687
375 219
396 478
15 258
(1 960)
354
99 108
82 175
85 685
5 770
(20)
24
80 331
73 232
111 077
22 720
(10 221)
(378)
410 130
91 459
123 198
25
9
1
(1
336
510
620
515)
(40)
5 624
1 942
1 550
(2)
170
40 680
19 250
(9 834)
(130)
34 911
9 284
49 966
375 219
371 142
82 175
80 061
73 232
70 397
Total
000
624
52
15
(125
(6
787
915
580
318)
200)
(367)
561 397
94
30
(31
(5
161
865
416)
972)
(367)
87 271
474 126
530 626
593 240
43 748
(12 201)
624 787
71
30
3
(11
640
702
170
351)
94 161
530 626
521 600
61
Land and buildings

Long
Freehold
leasehold
000
000
2003
Cost:
Additions
Disposals
Reclassifications
End of the year
Depreciation:
Charge for the year
Disposals
Reclassifications
End of the year
Net book value:
End of the year
370 449
26 021
(477)
485
79 253
4 970
1 462
Plant and
machinery
000
93
24
(5
(1
515
820
311)
947)
396 478
85 685
111 077
16 792
8 596
(42)
(10)
3 789
1 835
28 048
17 798
(5 176)
10
25 336
5 624
40 680
371 142
353 657
80 061
75 464
70 397
65 467
Total
000
543 217
55 811
(5 788)
593 240
48 629
28 229
(5 218)
71 640
521 600
494 588
Freehold land amounting to 67 278 000 (2004 78 879 000, 2003 79 275 000) has not been
depreciated. Included in the net book value of leasehold buildings is a finance lease of 4 600 000
(2004 4 700 000, 2003 4 800 000) and included in the net book value of equipment are finance
leases of nil (2004 44 000, 2003 372 000).
The company owns no tangible fixed assets.
13. FIXED ASSETS INVESTMENTS:
The following are included in the net book value of fixed assets investments:
2005
000
Associated undertakings
4 817
4 817
2004
000
6 496
6 496
2003
000
6 022
6 022
Principal group investments:

The group has interests in the following companies which principally affected the profits/losses and net
assets/liabilities of the group. To avoid a statement of excessive length, details of investments which are
not significant have been omitted.
62
Subsidiary undertakings
General Healthcare Holdings (2) Limited *

General Healthcare Holdings (3) Limited
GHG Intermediate Holdings Limited
GHG Finance Limited
GHG Limited
Startapply Limited
Generale de Sante International Limited
BMI Healthcare Limited
Partnerships in Care Limited
Pastoral Homes Limited
GHG Leasing Limited
BMI Health Services Limited
Beaumont Hospital Physiotherapy Limited
Amicus Healthcare Group Limited
Amicus Healthcare Limited
Amicus Healthcare Leasing Limited
Bishopswood SPV Limited
South Cheshire SPV Limited
Runnymede SPV Limited
Albyn Hospital Limited
Fernbrae Hospital Limited
BMI Mount Alvernia Hospital Limited
CARE Fertility Group Limited
South Manchester Imaging Limited
Priory MRI Plc
EMMI Plc
Care Limited
Three Shires Hospital Limited
*
2005
Proportion of
ordinary shares
held by the group
2004
2003
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
50%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
49%
** 25%
50%
49%
25%
** 41%
50%
50%
49%
25%
41%
50%
Shares held directly by the company.
** In liquidation.
GHG Finance Limited is incorporated in the Cayman Islands and was set up in 2001 to provide finance for
the group. GHG Leasing Limited, Amicus Healthcare Leasing Limited, Runnymede SPV Limited,
Bishopswood SPV Limited and South Cheshire SPV Limited own and lease certain hospitals and
equipment. The principal activity of all other subsidiary and associated undertakings is the provision of
private health care services and supplies. All these companies are incorporated and operate in Great Britain.
(a)
Subsidiary undertakings
2005
000
2004
000
2003
000
56
56
56
Share of net assets

Beginning of year
Share of retained profit for the year
Repayments
Disposals
6 496
1 072
(125)
(2 626)
6 022
1 557
(1 083)
5 398
1 358
(734)
End of year
4 817
6 496
6 022
Cost and net book value:

Beginning and end of year
(b)
63
Included in disposals is an amount of 1 343 000 representing the value of the investment in Centres for
Assisted Reproduction Limited restructured on 7th October 2005:
(c)
Other investments
2005
000
2004
000
2003
000
Cost and net book value:

Beginning of year
Additions
Disposals
84
6
(45)
80
10
(6)
78
7
(5)
End of year
45
84
80
Acquisitions of Subsidiary Undertakings

On 29th April 2005 the group acquired the entire share capital of BMI Mount Alvernia Hospital Limited
as a vehicle to purchase the assets and trade of the Mount Alvernia Hospital on 23 May 2005 for cash
consideration.
The following table sets out the book values of the identifiable assets and liabilities acquired and their
fair values to the group:
Fixed assets
Current assets
Creditors
Net assets acquired
Goodwill on acquisition
Consideration
Satisfied by:
Cash consideration
Costs of acquisition
Book value
000
Revaluation
000
Fair value to
the group
000
16 212
2 175
(1 718)
(2 189)
14 023
2 175
(1 718)
16 669
(2 189)
14 480
8 150
22 630
22 500
130
22 630
The fair value adjustment represents the valuation of land and buildings at lower of market value and
depreciated replacement cost.
On 7th October 2005 the group acquired 50% of a new entity, CARE Fertility Group Limited, which then
acquired the entire issued capital of Centres for Assisted Reproduction Limited (CARE), previously
an associate undertaking. This transaction, resulted a net cash outflow of to 2m, paid to the other
shareholders in CARE. As a result whilst the group has ultimately retained a 50% holding in CARE
through its new parent company CARE Fertility Group Limited the undertaking has become a subsidiary
undertaking under FRS2 Accounting for Subsidiary Undertakings.
The following table sets out the book values of the identifiable assets and liabilities of CARE Fertility
Group Limited consolidated from 7th October 2005, together with their fair value to the group:
64
Fixed assets
Current assets
Creditors
Secured loans
Preference shares payable to minority
Net assets acquired
Investment in associate previously recognised
Net additional assets/(liabilities) acquired
Book value
000
Revaluation
000
Fair value to
the group
000
2 395
2 565
(1 387)
(156)
(25)
(1 500)
(838)
1 557
2 565
(1 387)
(156)
(25)
(1 500)
1 892
(1 343)
(838)
1 054
(1 343)
549
(838)
(289)
2 290
Consideration
2 001
Satisfied by:
Cash consideration
2 001
The fair value adjustment represents the write down of investments to net realisable value.
Sale of Subsidiary Undertakings
On 5th April 2005 the group sold its 100% interest in the ordinary share capital of Partnerships in Care
Limited together with associated assets. The profit after tax of the Partnerships in Care business up to
the date of disposal was 3 446 000, and for 2004, 31 237 000 excluding group goodwill amortisation.
On 11th July 2005 the group sold its 100% interest in the ordinary share capital of BMI Health Services
Limited. The loss after tax of BMI Health Services Limited up to the date of disposal was 767 000, and
for 2004, 606 000 excluding group goodwill amortisation.
Net assets disposed of and the related sale proceeds were as follows:
Partnerships
in Care
000
Fixed assets
Cash
Current assets
Creditors
Pension liability
Net assets acquired
Related goodwill
Costs of sale
Profit on sale
Sale proceeds, satisfied by cash
Net cash inflows in respect of the sale comprised:
Cash consideration
Cash at bank and in hand sold
Bank overdrafts sold
Costs of sale
91
6
8
(7
(3
837
338
973
838)
503)
192
BMI Health
Services Limited
000
2 065
(140)
3 565
(1 321)
(533)
152
95 999
3 788
107 917
7 832
345 852
4 550
619
431
557 600
557 600
(6 338)
(7 832)
543 430
9 388
9 388
140
(619)
8 909
65
14. DEBTORS:
The following are included in debtors falling due within one year:
2005
000
Trade debtors
Amounts owed by associated undertakings
Other debtors
Prepayments and accrued income
2004
000
66 587
304
4 655
11 162
58
1
4
10
431
009
778
674
82 708
74 892
2003
000
63 132
385
4 637
9 306
77 460
2005
000
2004
000
2003
000
596
541
258
811
755
7
596
615
638
593
791
113
264
173
990
395
15. CREDITORS AMOUNTS FALLING DUE WITHIN ONE YEAR:

The following are included in creditors falling due within one year:
Obligations under finance leases

Secured notes
Loan notes
Secured loans
Trade creditors
UK corporation tax
Accruals and deferred income
12
1
23
1
52
18
4
17
7
55
91 961
104 240
17
18
4
56
96 935
2004
000
2003
000
16. CREDITORS AMOUNTS FALLING DUE AFTER MORE THAN ONE YEAR:
The following are included in creditors falling due after more than one year:
2005
000
Obligations under finance leases
Secured notes
Secured loans
Preference shares
Deferred income
4
629
17
1
32
999
857
112
500
040
4 999
895 000
28 132
5 004
913 603
7 150
30 525
Deep discount bonds
685 508
247 684
928 131
464 133
956 282
445 095
933 192
1 392 264
1 401 377
The company has no creditors falling due after more than one year.
Preference shares
The preference shares accrue a fixed cumulative preferential cash dividend at an annual rate of
four per cent per annum. The preference shares are redeemable on or immediately prior to an exit or on
such dates and in such amounts as the Board of CARE Fertility Group Limited may from time to time
resolve.
66
2005
000
2004
000
2003
000
1
4 998
1
4 998
7
1
4 996
Finance leases
Repayments of the principal falls due as follows:
Between one and two years
Between two and five years
After five years
Secured notes
Principal
Issue costs
4 999
4 999
5 004
638 799
(8 942)
908 573
(13 573)
928 368
(14 765)
629 857
895 000
913 603
The secured notes, including amounts falling due within one year, are split into the following classes
falling due as indicated:
Total
000
2005
Class
Class
Class
Class
Class
A2
A3
B2
C2
C3
Issue costs
150
179
94
150
77
000
997
780
000
473
652 250
(9 797)
Less than
1 year
000
Between
1 and 2 years
000
Between
2 and 5 years
000
13 451
14 401
49 595
13 451
(855)
14 401
(826)
49 595
(2 318)
642 453
12 596
13 575
47 277
Over
5 years
000
150
102
94
150
77
000
550
780
000
473
574 803
(5 798)
569 005
On 15th April 2005, 276 110 000 of the class A3, B2 and C3 notes were repaid. The notes are secured
by a first ranking security charge over certain assets of the group and a first floating charge over the
remaining assets. Further details of the interest rate profiles are indicated in note 17.
Less than
1 year
000
Between
1 and 2 years
000
Between
2 and 5 years
000
000
360
000
000
000
000
19 787
21 192
72 981
Total
000
2004
Class
Class
Class
Class
Class
Class
A2
A3
B2
C2
C3
D1
Issue costs
150
303
125
150
150
50
Over
5 years
000
150
189
125
150
150
50
000
400
000
000
000
000
928 360
(14 764)
19 787
(1 191)
21 192
(1 157)
72 981
(3 249)
814 400
(9 167)
913 596
18 596
20 035
69 732
805 233
67
On 15 October 2004, the class A1, B1 and C1 notes were repaid in full and replaced by class A3, B2 and
C3 notes. The notes are secured by a first ranking security charge over certain assets of the group and
a first floating charge over the remaining assets. Further details of the interest rate profiles are indicated
in note 17.
Less than
1 year
000
Between
1 and 2 years
000
Between
2 and 5 years
000
857
000
000
000
000
000
18 489
19 794
68 168
Total
000
2003
Class
Class
Class
Class
Class
Class
A1
A2
B1
C1
C2
D1
Issue costs
321
150
125
150
150
50
Over
5 years
000
215
150
125
150
150
50
406
000
000
000
000
000
946 857
(15 990)
18 489
(1 225)
19 794
(1 191)
68 168
(3 364)
840 406
(10 210)
930 867
17 264
18 603
64 804
830 196
The notes are secured by a first ranking security charge over certain assets of the group and a first
floating charge over the remaining assets. Further details of the interest rate profiles are indicated
in note 17.
Secured loans
2005
Bank loan
Other loan
Total
000
Less than
1 year
000
Between
1 and 2 years
000
Between
2 and 5 years
000
Over
5 years
000
18 500
153
1 525
16
1 825
16
4 850
55
10 300
66
18 653
1 541
1 841
4 905
10 366
Loans are secured on the relevant individual companys assets. The bank loan bears interest at LIBOR +
0.9125% and the other loan bears interest at base rate + 1.5%.
Loan notes
The loan notes are unsecured and interest is payable at LIBOR. The final redemption date is
30 November 2005.
The Floating Rate Guaranteed Unsecured Loan Notes 2005 bear interest at LIBOR and the final
redemption date is 1 September 2005.
All of the above notes can be redeemed on any interest due date during the period up to the final
redemption date.
Deep discount bonds
2005
000
2004
000
2003
000
The following amounts are included in deep discount bonds:

Principal
135 123
Rolled-up finance cost
112 561
Issue costs
283 803
180 666
(336)
305 164
140 766
(835)
247 684
464 133
445 095
68
The deep discount bonds are unsecured and subordinated to the Secured Notes. On 21st April 2005
52.39% by value of the B Series bonds were redeemed. The remainder of the B Series bonds are due
for redemption on 1st March 2012 at an amount of 497 525 000. The finance cost, representing the
difference between the subscription amount and the final redemption amount is being recognised over
the full term of the deep discount bond at a constant annual rate of 12% on the outstanding amount.
17. DERIVATIVES AND OTHER FINANCIAL INSTRUMENTS:
The group has Secured Notes issued on the Irish Stock Exchange and the numerical disclosures in this
note deal with financial assets and financial liabilities as defined in FRS 13. Non-equity shares issued
by the company are dealt with in the disclosures in the same way as the groups financial liabilities but
separately disclosed. Short-term debtors and creditors have been excluded from the disclosures as have
certain financial assets such as investments in associated companies.
Interest rate profile
The group has no financial assets other than sterling cash deposits of 37 842 000 (2004 51 507 000,
2003 45 744 000) which are part of the financing arrangements of the group. The sterling cash
deposits comprise deposits placed on money market at call, monthly and three monthly rates.
After taking into account interest rate swaps entered into by the group, the interest rate profile of the
groups financial liabilities at 31st December was as follows:
Sterling
2005
Borrowings
Non-equity shares
2004
Borrowings
Non-equity shares
2003
Borrowings
Non-equity shares
Floating rate
000
Fixed rate
000
Interest free
000
Total
000
915 289
10
915 289
10
915 289
10
915 299
4 615
1 382 735
10
1 387 350
10
4 615
1 382 735
10
1 387 360
7 150
1 381 079
10
1 388 239
10
7 150
1 381 079
10
1 388 239
Fixed rate
Weighted
Weighted
average
average period
interest
for which rate
rate
is fixed
%
Years
Borrowings
2005
2004
2003
9.02
9.21
9.37%
12
12
15
The interest free non-equity shares have no maturity date.
69
The maturity profile of the groups financial liabilities at 31st December was as follows:
Non-equity
shares
000
2005
In less than one year
After five years
10
14
15
52
833
10
915 289
2004
After five years
137
416
182
554
14
15
52
833
137
416
182
564
915 299
23
20
69
1 274
10
1 387 350
1 387 360
10
17
18
71
1 280
17
18
71
1 280
10
1 388 229
218
036
732
364
Total
000
10
2003
After five years
Borrowings
(note 15)
000
377
610
955
287
23
20
69
1 274
218
036
732
374
377
610
955
297
1388 239
Borrowing facilities
The group has an undrawn committed working capital facility of 25 000 000 available for an initial five
years from 31st July 2001, and an undrawn committed liquidity facility of 112 348 000 (2004 and 2003
120 000 000) which is reducing in proportion to the aggregate of the principal outstanding on all the
Secured Notes.
Fair values
Set out below is a comparison by category of book values and fair values of the groups financial assets
and liabilities:
Book
value
2005
000
Fair
value
2005
000
Book
value
2004
000
Fair
value
2004
000
Book
value
2003
000
Fair
value
2003
000
37 842
(14 137)
(901 152)
37 842
(14 137)
(864 731)
51 507
(23 218)
(1 364 132)
51 507
(23 218)
(1 277 754)
39 091
17 377
(1 370 852)
39 091
17 377
(1 276 685)
(34 671)
(95 141)
(31 052)
(122 419)
(35 113)
(121 328)
Primary financial instruments held or

issued to finance group operations:
Financial assets
Short-term borrowings
Long-term borrowings
Derivative financial instruments held
to manage the interest rate:
Interest rate swaps
The fair values of the Secured Notes and interest rate swaps have been determined by reference
to prices available from the markets on which the instruments involved are traded and are stated at gross
fair values. For the deep discount bonds there is no market value and so an estimate has been made
of the fair value based on discount rates the directors believe investors may expect if similar instruments
were to be issued at the balance sheet date. All other fair values shown above have been calculated
by discounting cash flows at prevailing interest rates.
70
During 2001, a partial loss relating to the interest rate swaps was crystallised as a result of the
refinancing activities. The resulting creditor, which is included in the book value above, is being amortised
to the profit and loss account over the remaining life of the interest rate swaps.
In 2005, in accordance with the repayment of the Secured Notes detailed in note 16 the interest rate
swap was restructured resulting in an additional write back of 12 735 000 in the year and a further
deferral of 19 470 000.
Gains and losses on hedges
The group uses interest rate swaps to manage its interest rate profile. Changes in the fair value
of instruments used as hedges are not recognised in the financial statements until the hedged position
matures. An analysis of the unrecognised gains and losses is as follows:
Unrecognised losses on hedges at beginning of year

Losses arising in previous years that were recognised
in the year
2005
000
2004
000
2003
000
91 367
86 215
104 748
(50 578)
Losses arising before beginning of the year that were

not recognised in the year
Losses arising in the year that were not recognised
in the year
40 789
72 271
85 377
19 096
838
60 470
91 367
86 215
(9 255)
Losses expected to be recognised after the

next financial year
(19 371)
19 681
Unrecognised losses on hedges at the end of the year

Losses expected to be recognised in the
next financial year
(13 944)
51 215
(11 300)
(17 089)
80 067
69 126
Debit/
(Credit) Utilisation
to
in the
STRGL
year
000
000
End of
the year
000
18. PROVISIONS FOR LIABILITIES AND CHARGES:

Provisions for liabilities and charges for the group comprise:
Beginning
of the year
000
Acquisitions/
Disposals
000
Debit/
(Credit)
Profit
and Loss
000
8 363
186
1 402
668
369
144
68
(806)
2005
Deferred taxation
Provision for employee benefits
Provision for legal claims
Provision for property leases
Total
10 619
369
10 038
472
1 370
764
(594)
(1 575)
(1 575)
(50)
104
(108)
(54)
7 301
204
700
560
8 765
2004
Deferred taxation
Total
12 644
7 927
914
830
900
(1 675)
200
236
(1 239)
(486)
(204)
(96)
(786)
8 363
186
1 402
668
10 619
2003
Deferred taxation
Total
2 111
(277)
540
10 571
2 374
(165)
(136)
(301)
10 038
472
1 370
764
12 644
71
The employee benefit provisions relate to commitments to certain employees for healthcare, pension
and other benefits. The provisions are expected to be utilised during the next five years through
payments to external providers.
The group is subject to a number of legal claims and provision has been made for estimated costs
of settlement. This provision is expected to be utilised within five years.
Provision has been made for the estimated costs of leases on underutilised properties. This provision will
be utilised within the next ten years.
Deferred taxation is fully provided and comprises the following:
Accelerated capital allowances

Other timing differences
2005
000
2004
000
2003
000
12 145
(4 844)
11 907
(3 544)
13 934
(3 896)
7 301
8 363
10 038
19. CALLED-UP EQUITY SHARE CAPITAL:

Authorised, allotted, issued
and fully paid
Equity
A ordinary shares of 1 each
T ordinary shares of 90p each
900 000
100 000
900 000
90 000
900 000
100 000
990 000
Non-equity
R ordinary shares of 10p each
100 000
10 000
900 000
100 000
990 000
100 000
10 000
900 000
90 000
1 000 000
10 000
900 000
90 000
990 000
100 000
10 000
1 000 000
10 000
10 000
1 000 000
Rights to dividends
No dividend can be declared or paid on any class of share unless cumulative dividends from previous
periods have been paid in full.
The R ordinary shares carry no rights to any dividend or other distribution. The T ordinary and A ordinary
shares rank pari passu as regards dividends or other distributions.
Priority and amounts receivable in the event of winding-up
In the event of winding up, the assets of the company available for distribution, after the settlement
of all other liabilities and the cost of winding up shall be distributed as follows:
(i) A ordinary shares
(ii) T ordinary shares
(iii) R ordinary shares
For
(i)
(ii)
(iii)
72
A ordinary shares priority will be given to the aggregate of the amounts below:
The subscription price
Any unpaid dividends
Any interest on unpaid dividends
Voting rights
All shares are entitled to one vote except R ordinary shares. Holders of R ordinary shares will not
be entitled to receive notice of or attend any general meeting.
20. RESERVES:
2005
000
2004
000
2003
000
(186 400)
(144 005)
(12 257)
(119 068)
Beginning of the year as restated

Total recognised gains and losses for the year
(2004 as restated)
(186 400)
(156 262)
(119 068)
Total profit and loss account (2004 as restated)
114 254
Profit and loss account

Beginning of the year (2004 as previously stated)
300 654
2005
Pension reserve
Profit and loss excluding pension liability
Amount relating to the defined benefit pension
scheme net of deferred tax
Profit and loss reserve
(30 138)
(186 400)
(24 937)
(144 005)
000
2004
(as restated)
000
000
121 338
(172 453)
(7 084)
114 254
(13 947)
(186 400)
2003
Shareholders funds (deficit) may be analysed as follows:

Equity interests
Non-equity interests
115 244
10
(185 410)
10
(143 015)
10
115 254
(185 400)
(143 005)
2005
Equity
000
2004
Equity
000
2003
Equity
000
1
87
21. MINORITY INTERESTS:

Equity
000
At 1st January 2005
Acquisition of subsidiary undertaking
Profit on ordinary activities after taxation
1
87
At 31st December 2005
88
At 1st January 2005

88
73
22. RECONCILIATION OF OPERATING PROFIT TO OPERATING CASH FLOWS:

2005
000
Operating profit
Depreciation and amounts written-off tangible fixed assets
94 299
30 865
37 304
162
(2
(16
12
Increase in stocks
(Increase)/Decrease in debtors
Increase in creditors
Decrease in provisions and deferred income
Adjustment for pension funding
Net cash inflow from operating activities
468
670)
760)
193
(792)
910
2004
(as restated)
000
2003
000
107 807
33 872
42 412
110 502
28 229
42 412
184
(2
3
1
(2
181
(1
(3
3
(2
091
168)
651
237
743)
925
143
147)
503)
187
461)
155 349
184 993
177 219
Beginning
of year
000
Cash flow
000
Noncash flow
000
End of
year
000
23. ANALYSIS AND RECONCILIATION OF NET DEBT:
2005
Cash
Debt due within 1 year
Finance leases
Secured notes
Loan notes
Secured loans
42 302
7 562
49 864
(7)
(18 596)
(4 615)
4 615
3
6 336
(1 544)
(12 260)
(1 541)
Debt due after 1 year

Finance leases
Secured notes
Secured loans
Preference shares
Deferred income
Deep discount bonds
(4 999)
(895 000)
(28 132)
(464 133)
276 110
(18 500)
251 719
967)
388
500)
908)
270)
Net debt
2004
Cash
Short-term loans
Finance leases
Loan notes
Finance leases
Loan notes
Deep discount bonds
Long-term loans
Deferred income
Net debt
74
(1 373 180)
521 516
(10
1
(1
(3
(35
(45 465)
(4
(629
(17
(1
(32
(247
999)
857)
112)
500)
040)
684)
(897 129)
41 271
1 031
42 302
(17 264)
(113)
18 489
111
(19 821)
(5)
(4 615)
(18 596)
(7)
(4 615)
2 535
33 624
7
4
(52
18
2
5
615
662)
596
393
(4 999)
(464 133)
(895 000)
(28 132)
(5
(7
(445
(913
(30
004)
150)
095)
603)
525)
(1 377 483)
55 797
(51 494)
(1 373 180)
Beginning
of year
000
Cash flow
000
Noncash flow
000
End of
year
000
Cash
Short-term loans
Finance leases
54 299
(13 028)
41 271
(14 512)
(169)
15 762
169
(18 514)
(113)
(17 264)
(113)
3
1 427
37 281
113
(50 936)
17 264
2 423
2003

Finance leases
Loan notes
Deep discount bonds
Long-term loans
Deferred income
Net debt
(5
(8
(431
(930
(32
120)
577)
440)
867)
948)
(1 369 334)
41 614
(49 763)
(5
(7
(445
(913
(30
004)
150)
095)
603)
525)
(1 377 483)
Non-cash movements represent deep discount bond finance cost rolled up, finance costs written-off,
acquisition of subsidiaries and the amortisation of the creditor resulting from the recognition of an interest
rate swap in 2001. Cash movements on deep discount bonds include the repayment of rolled-up finance cost
of 103 039 000 (2004 12 263 000, 2003 10 746 000).
24. FINANCIAL COMMITMENTS:
(a)
Capital commitments
At the end of the year, group capital commitments contracted but not provided were 16 691 000
(2004 32 090 000, 2003 36 816 000).
(b)
Minimum annual commitments under non-cancellable operating leases

Property
000
Plant and
machinery
000
within one year
240
222
between one and five years
874
77
2005
Operating leases which expire:
after five years
3 213
4 327
101
400
Property
Plant and
machinery
000
000
2004
within one year
261
65
889
116
after five years
3 993
5 143
181
75
Property
2003
within one year
after five years
000
Plant and
machinery
000
554
929
3 884
58
148
5 367
206
(c) Guarantees
During the 2003 year, Generale de Sante International Limited, a subsidiary of the company,
received notification of the cancellation of certain guarantees it had provided in respect of bank
loans to one of its former subsidiaries.
25. PENSION ARRANGEMENTS:
The group operates a defined benefit scheme in the UK. A full actuarial valuation was carried out as at
1st January 2005 and updated to 31st December 2005 by a qualified independent actuary. A full actuarial
valuation was carried out at 1st January 2003 and updated to 31st December 2003 by a qualified
independent actuary. For 2004 and 2003, the pension costs charged in the profit and loss account for
the year were 2004 6 537 000 and 2003 6 393 000 comprising the regular costs of the defined
benefit scheme of 2004 3 222 000 and 2003 3 556 000, the defined contribution schemes of 2004
3 315 000 and 2003 3 114 000, and the credit of a provision of 2004 nil and 2003 277 000.
The major assumptions used by the actuary were:
Inflation assumption
Discount rate
Rate of increase in salaries
Rate of increase in pensions in deferment
Rate of increase in pensions in payment
2005
%
2004
%
2003
%
2.8
4.8
4.3
2.8
2.7
2.9
5.3
4.4
2.9
2.7
2.8
5.5
4.3
2.8
2.8
The fair value of the assets in the schemes, the present value of the liabilities and the expected rate
of return at the balance sheet date were:
Expected rate of return:

Equities
Bonds
Other
Value:
Equities
Bonds
Other
Total value of assets
Present value of scheme liabilities
Deficit in the scheme
Related deferred tax asset
Net pension deficit
76
2005
%
2004
%
2003
%
7.4
4.5
4.0
7.4
4.6
4.0
8.0
4.9
4.0
000
49 411
1 036
4 062
000
38 693
3 677
4 197
000
32 359
3 915
2 333
54 509
(64 629)
(10 120)
3 036
(7 084)
46 567
(66 492)
(19 925)
5 978
(13 947)
38 607
(56 117)
(17 510)
5 253
(12 257)1
The contribution rate for the main scheme in 2005 was 21.1% (2004 19.6%, 2003 19.6%) of
pensionable earnings for all members apart from former members of the GHG Public Sector Benefits
plan for whom the contribution rate is 35.1% (2004 35.1%, 2003 35.1%).
Analysis of amount charge to profit and loss account
Current service cost

Past service cost Augmented benefits for E Hayes
Past service cost Discretionary pension increases
2005
000
2004
000
2003
000
3 702
4 557
3 571
670
26
35
Total operating charge
4 407
4 583
3 580
Gain on settlements
(3 503)
Gain on curtailments
(533)
Total charge before taxation
371
4 583
3 580
3 153
3 015
2 151
Analysis of the amount (debited)/credited

to net finance charges
Expected return on pension scheme assets
Interest on pension scheme liabilities
(3 183)
Net financial expense
(30)
(3 216)
(201)
(2 567)
(416)
6 177
1 152
3 992
264
741
2 103
Analysis of the amount recognised in the statement

of total recognised gains and losses
Actual return less expected return on pension
scheme assets
Experience gains arising on the scheme liabilities
Changes in assumptions underlying the present value
of the scheme liabilities
(6 732)
Actuarial loss
(291)
(3 181)
(1 288)
(7 637)
(1 542)
Movement in the scheme deficit during the year

Beginning of year
(19 925)
(17 511)
(15 529)
Current service cost
(3 702)
(4 557)
(3 571)
Contributions
10 497
3 658
3 556
(705)
(26)
(9)
Settlement gains
3 503
Curtailment gains
533
Other financial expense
(30)
(201)
(416)
Past service costs
Actuarial loss
(291)
End of year
(10 120)
(1 288)
(19 925)
(1 542)
(17 511)
77
History of experience gains and losses
Difference between expected and actual

return on scheme assets:
Amount 000
% of scheme assets
Experience gains and losses on scheme liabilities
Amount 000
% of present value of scheme liabilities
Total actuarial loss in the statement on total
recognised gains and losses
Amount 000
% of present value of scheme liabilities
2005
2004
2003
2002
6 177
11%
1 152
2%
3 992
10%
(8 016)
(29%)
264
0%
741
1%
2 103
4%
(2 143)
(5%)
(291)
0%
(1 288)
2%
(1 542)
(3%)
(10 742)
(25%)
Defined Contribution Schemes

The group also operates a number of defined contribution schemes for which the pension cost charge
for the year amounted to 2 763 000 (2004 2 879 000).
26. RELATED PARTY TRANSACTIONS:
Details of directors interests are disclosed in note 8.
The group is taking advantage of the exemption granted by paragraph 3(c) of the Financial Reporting
Standard No. 8 Related Party Transactions not to disclose transactions with group companies
which are related parties.
27. CONTROLLING PARTY:
The company is controlled by various funds advised by BC Partners Limited.
78
ANNEXURE 4
REPORT OF THE INDEPENDENT REPORTING ACCOUNTANTS ON THE HISTORICAL

FINANCIAL INFORMATION REPORTED IN ACCORDANCE WITH INTERNATIONAL
FINANCIAL REPORTING STANDARDS AND THE JSE LISTINGS REQUIREMENTS
10 July 2006
The Directors
76 Maude Street
Sandown
Sandton
2196
South Africa
Dear Sirs
REPORT OF THE INDEPENDENT REPORTING ACCOUNTANTS ON THE HISTORICAL FINANCIAL

INFORMATION REPORTED IN ACCORDANCE WITH INTERNATIONAL FINANCIAL REPORTING
STANDARDS AND THE JSE LISTINGS REQUIREMENTS
Introduction
At your request and for the purposes of the circular to Network Healthcare Holdings Limited shareholders,
to be dated on or about 11 July 2006, we present our report on the historical financial information in respect
of the acquisition of a controlling interest in General Healthcare Group Limited, as set out in Annexure 5
to this circular, in compliance with the Listings Requirements of the JSE Limited (JSE).
Responsibility
The compilation, contents and presentation of the circular are the responsibility of the directors of Network
Healthcare Holdings Limited. Our responsibility is to express an opinion on the historical financial information
included as Annexure 5 to this circular.
Scope
We reviewed the financial information for the year ended 31 December 2005 presented in terms of
International Financial Reporting Standards.
Basis of opinion
We conducted our review in accordance with the International Standard on Review Engagements 2400
applicable to the review of Financial Information. This standard requires that we plan and perform the review
to obtain moderate assurance that the historical financial information for the year ended 31 December 2005
presented in terms of International Financial Reporting Standards, is free of material misstatement. A review
is limited primarily to enquiries of company personnel and analytical procedures applied to financial data and
this provides less assurance than an audit. We have not performed an audit of the abovementioned historical
financial information and, accordingly, we do not express an audit opinion thereon.
79
Opinion
Review opinion
Based on our review, nothing has come to our attention that causes us to believe that the historical financial
information of General Healthcare Group Limited for the year ended 31 December 2005, is not fairly
presented, in all material respects, in accordance with International Financial Reporting Standards, and the
JSE Listings Requirements.
Without qualifying our opinion, we draw your attention to the fact that the financial information does not
include comparative information.
Consent
We consent to the inclusion of this report, which will form part of the circular to shareholders of Network
Healthcare Holdings Limited, to be issued on or about 11 July 2006, in the form and context in which
it appears.
Yours faithfully
Deloitte & Touche
Registered Auditors
20 Woodlands Drive, Johannesburg
Per P S F Austin
Partner
National Executive: G G Gelink Chief Executive A E Swiegers Chief Operating Officer
G M Pinnock Audit D L Kennedy Tax L Geeringh Consulting M G Crisp Financial Advisory
L Bam Strategy C R Beukman Finance T J Brown Clients & Markets
S J C Sibisi Public Sector and Corporate Social Responsibility N T Mtoba Chairman of the Board
J Rhynes Deputy Chairman of the Board
A full list of partners and directors is available on request.
80
ANNEXURE 5
FINANCIAL INFORMATION ON GHG FOR THE YEAR ENDED 31 DECEMBER 2005

PREPARED IN TERMS OF IFRS
Financial information for the year ended 31 December 2005 has been prepared in terms of IFRS and
comprises the consolidated income statement, the balance sheet, the statement of recognised income
and expense, the cash flow statement and related notes (together the 2005 IFRS Financial Statements),
which have been prepared on the basis set out therein. The financial information is the responsibility of, and
has been approved by, the directors of GHG. The directors of GHG are responsible for preparing the financial
information in compliance with the basis of preparation set out therein, including first time adoption choices
and for the selection of accounting policies consistent with the IFRS framework as adopted by Netcare.
IFRS 1 establishes the transition requirements for the preparation of financial statements in accordance with
IFRS for the first time. The general principle is that the IFRS effective at the first-time adoption reporting date
(anticipated to be 30th September 2006 for the Group) are to be applied retrospectively to the opening IFRS
balance sheet (1st January 2005), the comparative period (12 months ended 31st December 2005) and the
reporting period (9 months ended 30th September 2006). Key exemptions and choices that are available
under IFRS are the same as those of Netcare in all material respects. The 2005 IFRS Financial Statements
have thus been prepared and presented on this basis.
Comparative information for the 2003 and 2004 financial years has not been presented due to the onerous
level of complexity (including availability of information) and timing necessary to compile such information.
The complexities include, but are not limited to:
Valuation of exotic, derivative debt instruments to date, GHG has been a highly geared company with
a myriad of very complex derivative debt instruments. The valuation of many of these instruments requires
the involvement of valuation experts. The assumptions and valuation variables which may have existed
at the time that the valuation would have been prepared, had IFRS been effective, are in all material
respects not readily available;
Discontinuing operations during 2003 and 2004;
Goodwill recognised and amortised to date;
Information relating to the valuation of defined benefit plans; and
Relevant information relating to business combinations during 2003 and 2004.
81
BALANCE SHEET
AS AT 31 DECEMBER 2005
Notes
ASSETS
Non-current assets
Goodwill
Other intangible assets
Property, plant and equipment
Interests in associates
Deferred tax assets
11
12
13
15
21
Current assets
Inventories
Trade and other receivables
Cash and cash equivalents
16
17
17
TOTAL ASSETS
Called-up share capital
Cash flow hedging reserve
Retained earnings
Total shareholders funds
Minority interest
23
24
24
25
Borrowings
Deep discount bonds
Retirement benefit obligation
Deferred tax liabilities
Long-term provisions
19
19
30
21
22
Current liabilities
Trade and other payables
Current tax liabilities
Borrowings
TOTAL EQUITY AND LIABILITIES
82
2005
000
2005
Opening
balances
000
1 068 907
1 235 037
557
3
476
4
26
819
294
452
817
525
19
20
971
902
024
496
644
151 761
133 577
19 189
82 708
49 864
16 383
74 892
42 302
1 220 668
1 368 614
36 058
(333 042)
1 000
(32 341)
67 311
1 000
(63 957)
(270 085)
35 970
88
(333 042)
997 586
1 475 366
648
247
11
88
1
469
684
801
168
464
187 024
18
664
1
524
6
37
78
1
14
92
565
811
137
511
1 220 668
895
464
22
91
2
000
133
301
676
256
226 290
80
7
18
119
602
593
596
499
1 368 614
INCOME STATEMENT
Revenue
Costs of services provided
Notes
2005
000
611 997
(448 299)
Gross profit
163 698
Share of results of associates
(37 302)
1 072
OPERATING PROFIT
Investment revenues
Finance costs
7
8
Loss before taxation

Taxation
LOSS FOR THE YEAR FROM CONTINUING OPERATIONS

Profit for the year from discontinued operations
PROFIT FOR THE YEAR
127 468
6 772
(158 560)
(24 320)
6 088
(18 232)
10
355 929
337 697
Attributable to:
Equity holders of the parent
Minority interest
337 610
87
337 697
CONSOLIDATED STATEMENT OF RECOGNISED INCOME AND EXPENSE
Actuarial loss on defined benefit pension schemes
Notes
2005
000
30
(300)
Taxation
Deferred tax relief on special pension contributions
Deferred tax on pension deficit for special contribution
Current tax for tax relief on special contribution
Deferred tax on actuarial loss
1 575
(2 100)
525
87
Profit for the year
337 697
Total recognised income and expense for the year

Attributable to:
Minority interest
337 484
24
25
337 397
87
337 484
83
CASH FLOW STATEMENT

NET CASH INFLOW FROM OPERATING ACTIVITIES
Notes
2005
000
28
142 702
Investing activities
Interest received
3 558
Dividend received from associates

Proceeds on disposal of subsidiary businesses
Proceeds on liquidation of an associate
Proceeds on disposal of property, plant and equipment
125
27
552 339
2 355
139
Purchases of property, plant and equipment
(53 532)
Acquisition of subsidiaries
(24 631)
NET CASH FLOWS FROM INVESTING ACTIVITIES
480 353
Financing activities
Interest paid
Repayment of secured notes
Costs of repayment of secured notes
(64 623)
(276 110)
(36 856)
Repayments of deep discount bonds
(148 680)
Finance cost paid on the repayment of deep discount bonds
(103 039)
Repayment of other borrowings
(4 625)
New secured loans raised
18 500
Costs of acquisition of new secured loans

NET CASH FLOWS FROM FINANCING ACTIVITIES
NET INCREASE IN CASH AND CASH EQUIVALENTS
(60)
(615 493)
7 562
Cash and cash equivalents at the beginning of the year
42 302
Cash and cash equivalents at the end of the year
49 864
NOTES TO THE FINANCIAL STATEMENTS

1. GENERAL INFORMATION:
General Healthcare Group Limited is a company incorporated in the United Kingdom under the
Companies Act 1985.
The address of the registered office is 66 Chiltern Street, London W1U 6GH. The nature of the groups
operation and its principal activities is provision of healthcare services through its subsidiary
undertakings.
IFRS 1 establishes the transition requirements for the preparation of financial statements in accordance
with IFRS for the first time. The general principle is that the IFRS effective at the first-time adoption
reporting date (anticipated to be 30th September 2006 for the Group) are to be applied retrospectively
to the opening IFRS balance sheet (1st January 2005), the comparative period (12 months ended
31st December 2005) and the reporting period (9 months ended 30th September 2006).
Outlined below is the Groups position in relation to key exemptions and choices that are available under
IFRS (which are the same as those of Netcare in all material respects):
Business combinations
The Group has adopted the exemption not to apply IFRS 3 Business Combinations in respect of
acquisitions occurring prior to the date of transition (1st January 2005).
84
The Group has accounted for acquisitions prior to 1 January 2005 as follows:
The carrying amount of goodwill recognised under UK GAAP as at 1 January 2005 has not been adjusted;
From the date of transition to IFRS (1st January 2005) goodwill is no longer amortised;
There has been no re-measurement of original fair values determined at the date of acquisition.
Employee benefits
Under International Accounting Standards (IAS 19) Employee Benefits, the Group is required to
reflect its obligations or surpluses under defined benefit schemes on the balance sheet.
The Group has elected under IFRS 1 to recognised all cumulative actuarial gains and losses on defined
benefit pension schemes at the date of transition to IFRS. Actuarial gains and losses are recognised
in full in the period in which they occur. They are recognised outside of the income statement and are
presented in the consolidated statement of recognised income and expense.
Financial instruments
The group has adopted IAS 32 Financial Instruments: Disclosure and Presentation and IAS 39
Financial Instruments: Recognition and Measurement effective from the date of transition to IFRS
(1st January 2005).
On transition, the recognition of the Groups financial instruments, in particular, interest rate swaps,
is made through the creation of a cashflow hedging reserve, to the extent that the amount has previously
been deferred, in line with the transitional guidance set out in IFRS 1.
Future movements in the fair value of the interest rate swaps will be recognised through the income
statement.
2. SIGNIFICANT ACCOUNTING POLICIES:
Basis of accounting
The financial statements have been prepared in accordance with IFRS for the first time. They are
non-statutory and do not comply with the full provisions of IFRS, providing selected notes only.
For the purposes of these financial statements, the group has assumed a date of transition to IFRS of
1st January 2005. These financial statements have also been prepared in accordance with IFRS adopted
for use in the European Union and therefore comply with Article 4 of the EU IAS Regulation.
The financial statements have been prepared on the historical cost basis, except for the revaluation of
certain properties and financial instruments. The principal accounting policies adopted are set out below.
Basis of consolidation
The consolidated financial statements incorporate the financial statements of the company and entities
controlled by the company (its subsidiaries) made up to 31st December each year. Control is achieved
where the company has the power to govern the financial and operating policies of an investee entity
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 or up to the effective date of disposal, as
appropriate.
Where necessary, adjustments are made to the financial statements of subsidiaries to bring the
accounting policies used into line with those used by the group.
All intra-group transactions, balances, income and expenses are eliminated on consolidation.
Business combinations
The acquisition of subsidiaries is accounted for using the purchase method. The cost of the acquisition
is measured at the aggregate of the fair values, at the date of exchange, of assets given, liabilities
incurred or assumed, and equity instruments issued by the group in exchange for control of the acquiree,
plus any costs directly attributable to the business combination. The acquirees identifiable assets,
85
liabilities and contingent liabilities that meet the conditions for recognition under IFRS 3 are recognised
at their fair value at the acquisition date, except for non-current assets (or disposal groups) that are
classified as held for resale in accordance with IFRS 5 Non-Current Assets Held for Sale and
Discontinued Operations, which are recognised and measured at fair value less costs to sell.
Goodwill arising on acquisition is recognised as an asset and initially measured at cost, being the excess
of the cost of the business combination over the groups interest in the net fair value of the identifiable
assets, liabilities and contingent liabilities recognised. If, after reassessment, the groups interest in the
net fair value of the acquirees identifiable assets, liabilities and contingent liabilities exceeds the cost
of the business combination, the excess is recognised immediately in profit or loss.
Investments in associates
An associate is an entity over which the group is in a position to exercise significant influence, but not
control or joint control, through participation in the financial and operating policy decisions of the
investee. Significant influence is the power to participate in the financial and operating policy decisions
of the investee but is not control or joint control over those policies.
The results and assets and liabilities of associates are incorporated in these financial statements using
the equity method of accounting except when classified as held for sale (see below). Investments in
associates are carried in the balance sheet at cost as adjusted by post-acquisition changes in the groups
share of the net assets of the associate, less any impairment in the value of individual investments.
Losses of the associates in excess of the groups interest in those associates are not recognised.
Any excess of the cost of acquisition over the groups share of the fair values of the identifiable net
assets of the associate at the date of acquisition is recognised as goodwill. Any deficiency of the cost of
acquisition below the groups share of the fair values of the identifiable net assets of the associate at the
date of acquisition (i.e. discount on acquisition) is credited in profit or loss in the period of acquisition.
Where a group company transacts with an associate of the group, profits and losses are eliminated
to the extent of the groups interest in the relevant associate. Losses may provide evidence of an
impairment of the asset transferred in which case appropriate provision is made for impairment.
Goodwill
Goodwill arising on consolidation represents the excess of the cost of acquisition over the groups
interest in the fair value of the identifiable assets and liabilities of a subsidiary, associate or jointly
controlled entity at the date of acquisition. Goodwill is initially recognised as an asset at cost and is
subsequently measured at cost less any accumulated impairment losses. Goodwill which is recognised
as an asset is reviewed for impairment at least annually. Any impairment is recognised immediately
in profit or loss and is not subsequently reversed.
For the purpose of impairment testing, goodwill is allocated to each of the groups cash-generating units
expected to benefit from the synergies of the combination. Cash-generating units to which goodwill has
been allocated are tested for impairment annually, or more frequently when there is an indication that
the unit may be impaired. If the recoverable amount of the cash-generating unit is less than the carrying
amount of the unit, the impairment loss is allocated first to reduce the carrying amount of any goodwill
allocated to the unit and then to the other assets of the unit pro-rata on the basis of the carrying amount
of each asset in the unit. An impairment loss recognised for goodwill is not reversed in a subsequent
period.
On disposal of a subsidiary, associate or jointly controlled entity, the attributable amount of goodwill
is included in the determination of the profit or loss on disposal.
Goodwill arising on acquisitions before the date of transition to IFRSs has been retained at the previous
UK GAAP amounts subject to being tested for impairment at that date.
Revenue recognition
Revenue is measured at the fair value of the consideration received or receivable and represents
amounts receivable for goods and services provided in the normal course of business, net of discounts,
VAT and other sales-related taxes.
86
Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective
interest rate applicable, which is the rate that exactly discounts estimated future cash receipts through
the expected life of the financial asset to that assets net carrying amount.
Leasing
Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks
and rewards of ownership to the lessee. All other leases are classified as operating leases.
Assets held under finance leases are recognised as assets of the group at their fair value or, if lower,
at the present value of the minimum lease payments, each determined at the inception of the lease.
The corresponding liability to the lessor is included in the balance sheet as a finance lease obligation.
Lease payments are apportioned between finance charges and reduction of the lease obligation so as to
achieve a constant rate of interest on the remaining balance of the liability. Finance charges are charged
directly against income, unless they are directly attributable to qualifying assets, in which case they are
capitalised in accordance with the groups general policy on borrowing costs (see below).
Rentals payable under operating leases are charged to income on a straight-line basis over the term
of the relevant lease.
Benefits received and receivable as an incentive to enter into an operating lease are also spread on
a straight line basis over the lease term.
Borrowing costs
Borrowing costs are recognised in profit or loss in the period in which they are incurred.
Retirement benefit costs
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall
due.
For defined benefit schemes, the cost of providing benefits is determined using the Projected Unit Credit
Method, with actuarial valuations being carried out at each balance sheet date. Actuarial gains and losses
are recognised in full in the period in which they occur. They are recognised outside profit or loss and
presented in the statement of recognised income and expense.
Past service cost is recognised immediately to the extent that the benefits are already vested, and
otherwise is amortised on a straight-line basis over the average period until the benefits become vested.
The retirement benefit obligation recognised in the balance sheet represents the present value of the
defined benefit obligation as adjusted for unrecognised past service cost, and as reduced by the fair value
of scheme assets. Any asset resulting from this calculation is limited to past service cost, plus the
present value of available refunds and reductions in future contributions to the scheme.
Taxation
The tax expense represents the sum of the tax currently payable and deferred tax.
The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit
as reported in the income statement because it excludes items of income or expense that are taxable
or deductible in other years and it further excludes items that are never taxable or deductible. The groups
liability for current tax is calculated using tax rates that have been enacted or substantively enacted
by the balance sheet date.
Deferred tax is the tax expected to be payable or recoverable on differences between the carrying
amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the
computation of taxable profit, and is accounted for using the balance sheet liability method. Deferred tax
liabilities are generally recognised for all taxable temporary differences and deferred tax assets are
recognised to the extent that it is probable that taxable profits will be available against which deductible
temporary differences can be utilised. Such assets and liabilities are not recognised if the temporary
difference arises from the initial recognition of goodwill or from the initial recognition (other than in a
business combination) of other assets and liabilities in a transaction that affects neither the tax profit nor
the accounting profit.
87
Deferred tax liabilities are recognised for taxable temporary differences arising on investments
in subsidiaries and associates, and interests in joint ventures, except where the group is able to control
the reversal of the temporary difference and it is probable that the temporary difference will not reverse
in the foreseeable future.
The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced
to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part
of the asset to be recovered.
Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability
is settled or the asset is realised. Deferred tax is charged or credited in the income statement, except
when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt
with in equity.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current
tax assets against current tax liabilities and when they relate to income taxes levied by the same taxation
authority and the group intends to settle its current tax assets and liabilities on a net basis.
Land and buildings held for use in the production or supply of goods or services, or for administrative
purposes, are stated in the balance sheet at cost, less any subsequent accumulated depreciation and
subsequent accumulated impairment losses.
Properties in the course of construction for production, rental or administrative purposes, or for purposes
not yet determined, are carried at cost, less any recognised impairment loss. Depreciation of these
assets, on the same basis as other property assets, commences when the assets are ready for their
intended use.
Fixtures and equipment are stated at cost less accumulated depreciation and any recognised impairment
loss.
Depreciation is charged so as to write off the cost or valuation of assets, other than land and properties
under construction, over their estimated useful lives, using the straight-line method, on the following
bases:
Freehold buildings and fixed plant
up to 50 years
Leasehold premises
the shorter of 50 years or the length of the lease
Plant and machinery
3 to 10 years
Assets held under finance leases are depreciated over their expected useful lives on the same basis
as owned assets or where shorter, over the term of the relevant lease.
The gain or loss arising on the disposal or retirement of an asset is determined as the difference between
the sales proceeds and the carrying amount of the asset and is recognised in income.
Impairment of tangible and intangible assets excluding goodwill
At each balance sheet date, the group reviews the carrying amounts of its tangible and intangible assets
to determine whether there is any indication that those assets have suffered an impairment loss. If any
such indication exists, the recoverable amount of the asset is estimated in order to determine the extent
of the impairment loss (if any). Where the asset does not generate cash flows that are independent from
other assets, the group estimates the recoverable amount of the cash-generating unit to which the asset
belongs. An intangible asset with an indefinite useful life is tested for impairment annually and whenever
there is an indication that the asset may be impaired.
Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value
in use, the estimated future cash flows are discounted to their present value using a pre-tax discount
rate that reflects current market assessments of the time value of money and the risks specific to the
asset for which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying
amount, the carrying amount of the asset (cash-generating unit) is reduced to its recoverable amount.
An impairment loss is recognised as an expense immediately, unless the relevant asset is carried at a
revalued amount, in which case the impairment loss is treated as a revaluation decrease.
88
Where an impairment loss subsequently reverses, the carrying amount of the asset (cash-generating
unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying
amount does not exceed the carrying amount that would have been determined had no impairment loss
been recognised for the asset (cash-generating unit) in prior years. A reversal of an impairment loss
is recognised as income immediately, unless the relevant asset is carried at a revalued amount, in which
case the reversal of the impairment loss is treated as a revaluation increase.
Inventories
Inventories, which comprise goods to be supplied to patients and other customers, and consumables
to be used in the provision of services to patients, are stated at the lower of cost and net realisable value.
Net realisable value represents the estimated selling price less all estimated costs of completion and
costs to be incurred in marketing, selling and distribution.
Financial instruments
Financial assets and financial liabilities are recognised on the groups balance sheet when the group
becomes a party to the contractual provisions of the instrument.
Trade receivables
Trade receivables are measured at initial recognition at fair value, and are subsequently measured
at amortised cost using the effective interest rate method. Appropriate allowances for estimated
irrecoverable amounts are recognised in profit or loss when there is objective evidence that the asset
is impaired. The allowance recognised is measured as the difference between the assets carrying
amount and the present value of estimated future cash flows discounted at the effective interest rate
computed at initial recognition.
Investments
Investments are recognised and derecognised on a trade date where a purchase or sale of an investment
is under a contract whose terms require delivery of the investment within the timeframe established
by the market concerned, and are initially measured at cost, including transaction costs.
Investments are classified as either held-for-trading or available-for-sale, and are measured at subsequent
reporting dates at fair value. Where securities are held for trading purposes, gains and losses arising from
changes in fair value are included in net profit or loss for the period. For available-for-sale investments,
gains and losses arising from changes in fair value are recognised directly in equity, until the security
is disposed of or is determined to be impaired, at which time the cumulative gain or loss previously
recognised in equity is included in the profit or loss for the period. Impairment losses recognised in profit
or loss for equity investments classified as available-for-sale are not subsequently reversed through profit
or loss. Impairment losses recognised in profit or loss for debt instruments classified as available-for-sale
are subsequently reversed if an increase in the fair value of the instrument can be objectively related
to an event occurring after the recognition of the impairment loss.

Cash and cash equivalents comprise cash on hand and demand deposits and other short-term highly
liquid investments that are readily convertible to a known amount of cash and are subject to an
insignificant risk of changes in value.
Financial liabilities and equity

Financial liabilities and equity instruments are classified according to the substance of the contractual
arrangements entered into. An equity instrument is any contract that evidences a residual interest in the
assets of the group after deducting all of its liabilities.
Bank borrowings and deep discount bonds

Interest-bearing bank loans, overdrafts and deep discount bonds are recorded at the proceeds received,
net of direct issue costs. Finance charges, including premiums payable on settlement or redemption and
direct issue costs are accounted for on an accrual basis in profit or loss account using the effective
interest method and are added to the carrying amount of the instrument to the extent that they are not
settled in the period in which they arise.
89
Trade payables
Trade payables are initially measured at fair value, and are subsequently measured at amortised costs,
using the effective interest rate method.
Equity instruments
Equity instruments issued by the company are recorded at the proceeds received, net of direct issue
costs.

The groups activities expose it primarily to the financial risks of changes in interest rates. The group uses
interest rate swap contracts to hedge these exposures. The group does not use derivative financial
instruments for speculative purposes.
The use of financial derivatives is governed by the groups policies approved by the board of directors,
which provide written principles on the use of financial derivatives.
Changes in the fair value of derivative financial instruments are recognised in the income statement
as they arise.
Derivatives embedded in other financial instruments or other host contracts are treated as separate
derivatives when their risks and characteristics are not closely related to those of host contracts and the
host contracts are not carried at fair value with unrealised gains or losses reported in the income
statement.
Provisions
Provisions are recognised when the group has a present obligation as a result of a past event, and
it is probable that the group will be required to settle that obligation. Provisions are measured at the
directors best estimate of the expenditure required to settle the obligation at the balance sheet date,
and are discounted to present value where the effect is material.
Cashflow hedge reserve

The value of the interest rate swap contract was recognised in full at the date of transition to IFRS.
The amount not previously accounted for was recognised in the cashflow reserve which is being
amortised over the remaining period of the contract.
3. REVENUE:
An analysis of the groups revenue is as follows:
2005
000
Sale of goods and services
Discontinued operations (see note 10)
611 997
42 094
654 091
4. BUSINESS AND GEOGRAPHICAL SECTORS:

The directors are of the opinion that the businesses of the group are substantially similar in that they all
relate to the provision of healthcare services.
The groups operations are all located within the UK.
90
5. PROFIT FOR THE YEAR:
Public procurement bid costs

Depreciation of property plant and equipment
Amortisation of intangible assets
Staff costs (see note 6)
Auditors remuneration
Audit fees
Non-audit fees
Continuing
operations
000
Discontinued
operations
000
Total
000
2 414
29 273
524
211 814
968
25 263
2 414
30 241
524
237 077
315
788
315
788
Continuing
operations
Number
Discontinued
operations
Number
2005
Total
Number
7 318
796
779
59
8 097
855
8 114
838
8 952
Continuing
operations
000
Discontinued
operations
000
Total
000
189 948
15 386
6 480
22 568
1 933
762
212 516
17 319
7 242
6. STAFF COSTS:
Medical and ancillary

Administration
Their aggregate remuneration comprised:

Wages and salaries
Social security costs
Other pension costs (see also note 30)
211 814
25 263
237 077
7. INVESTMENT REVENUES:
Continuing
operations
2005
000
Interest on bank deposits
Other investment income
3 393
3 379
6 772
91
8. FINANCE COSTS:
Interest on bank loans and Secured Notes

Interest on loan notes
Amortisation of debt arrangement fees
Penalty charges on repayment of debt
Interest on obligations under finance leases
Pension finance costs
Interest on Deep Discount Bonds
Other interest
Total borrowing costs
Loss arising on derivative trading not in designated
hedge accounting relationship
Fair value gains on interest rate swaps transferred
from equity
Continuing
operations
000
Discontinued
operations
000
Total
000
46 535
174
5 002
2 850
19
3 311
35 270
551
503
25
47 038
174
5 027
2 850
19
3 311
35 270
551
93 712
528
94 240
19 682
19 682
45 166
158 560
528
45 166
159 088
Continuing
operations
000
Discontinued
operations
000
Total
000
(1 940)
(1 150)
(2 998)
4 391
(10 472)
2 451
(1 150)
(13 740)
9. TAX ON (PROFIT)/LOSS ON ORDINARY ACTIVITIES:
Current tax charge/(credit)

Over provision in prior periods
Deferred tax (note 21)
(6 088)
(6 351)
(12 439)
The charge for the year can be reconciled to the profit per the income statement as follows:
Total
000
Profit/(Loss) before tax:
Less: Associate companies
(24 320)
(1 072)
349 578
324 186
Tax at the UK corporate tax rate of 30%

Expenses that are not deductible in determining taxable profit
Non chargeable gains on disposals of fixed assets
Utilisation of tax losses not previously recognised
Losses carried forward
Losses carried forward in company leaving the group
Adjustment in respect of prior periods
Tax expense and effective tax rate for the year
92
97 256
3 960
(110 534)
(514)
209
139
(2 955)
(12 439)
10. DISCONTINUED OPERATIONS:

On 28th March 2005 the group entered into a sale agreement to dispose of Partnerships in Care Limited.
The disposal was completed on 5th April 2005, on which date control of Partnerships in Care Limited
passed to the acquirer.
The disposal of BMI Health Services Limited was agreed and completed on 11th July 2005, on which
date control of BMI Health Services Limited passed to the acquirer.
The results of the discontinued operations, which have been included in the consolidated income
statement, were as follows:
2005
000
Revenue
Expenses
Profit before tax
Attributable tax expense
Profit for the year on discontinued operations
Profit on disposal of discontinued operations
Attributable deferred tax on buildings
Other attributable tax expenses
Net profit attributable to discontinued operations
42
(37
4
(1
2
345
7
094
803)
291
612)
679
287
997
(34)
355 929
11. GOODWILL:
Cost and carrying amount
At 1st January 2005
Recognised on acquisition of a business
Derecognised on disposal of a subsidiary
664 971
7 215
(114 367)
557 819
The group tests goodwill annually for impairment or more frequently if there are indications that goodwill
might be impaired.
The recoverable amount of goodwill is determined from value in use calculations. The key assumptions
for the value in use calculations are those regarding the discount rates, growth rates and expected
changes to selling prices and direct costs during the period. Management estimates discount rates using
pre-tax rates that reflect current market assessments of the time value of money and the risks specific
to the business. The growth rates are based on industry growth forecasts. Changes in selling prices and
direct costs are based on past practices and expectations of future changes in the market.
The group prepares cash flow forecasts derived from the most recent financial budgets and forecasts
approved by management for the next five years and extrapolates cash flows in perpetuity based
on an estimated growth rate of 2.8%. This rate does not exceed the average long-term growth rate for
the relevant markets.
The rate used to discount the forecast cash flows is 12%.
93
12. OTHER INTANGIBLE ASSETS:
Cost:
At 1st January 2005
Additions
Software
000
Total
000
5 927
1 916
5 927
1 916
7 843
Amortisation:
At 1st January 2005
Charge for the year
4 025
524
4 025
524
4 549
Carrying amount:
7 843
3 294
4 549
3 294
Software is amortised over its estimated useful life, which is between 3 and 7 years.
13. PROPERTY, PLANT AND EQUIPMENT:
Land and buildings
Long
Freehold
leasehold
000
000
Cost:
At 1st January 2005
Additions
Acquisition of a business
Disposals
Disposal of subsidiaries
Reclassifications
31st December 2005
Accumulated depreciation
and impairment
At 1st January 2005
Charge for the year
Eliminated on disposal
Eliminated on disposal of subsidiaries
Reclassifications
31st December 2005
410 130
9 964
23 286
(20)
(103 659)
(6 521)
86 459
12 768
1 227
(264)
(1 507)
6 220
Plant and
machinery
000
117
28
1
(5
(20
271
267
287
916)
152)
(66)
333 180
104 903
120 691
34 911
8 665
(12)
(15 575)
604
8 984
1 996
(228)
(679)
2
45
19
(5
(15
941
580
732)
162)
(973)
28 593
10 075
43 654
Total
000
613
50
25
(6
(125
860
999
800
200)
318)
(367)
558 774
89
30
(5
(31
836
241
972)
416)
(367)
82 322
304 587
94 828
77 037
Carrying amount
31st December 2005
476 452
An independent open market valuation of the groups interests in land and buildings was carried out
in 2004. This indicated the assets had a total value of 705 000 000 in excess of the book value and the
directors are of the opinion that the situation has remained broadly unchanged.
At 31 December 2005, the group had entered into contractual commitments for the acquisition of
property, plant and equipment amounting to 16 691 000.
94
14. SUBSIDIARIES:
A list of the significant investments in subsidiaries, including the name, country of incorporation and
proportion of ownership interest is shown below:
Proportion of ordinary
shares held by the group
General Healthcare Holdings (2) Limited *
GHG Intermediate Holdings Limited
GHG Finance Limited
BMI Healthcare Limited
GHG Leasing Limited
Bishopswood SPV Limited
South Cheshire SPV Limited
Runnymede SPV Limited
Albyn Hospital Limited
Fernbrae Hospital Limited
BMI Mount Alvernia Hospital Limited
CARE Fertility Group Limited
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
50%
* Shares held directly by the company.
GHG Finance Limited is incorporated in the Cayman Islands and was set up in 2001 to provide finance
for the group. GHG Leasing Limited, Amicus Healthcare Leasing Limited, Runnymede SPV Limited,
Bishopswood SPV Limited and South Cheshire SPV Limited own and lease certain hospitals and
equipment. The principal activity of all other subsidiary and associated undertakings is the provision
of private health care services and supplies. All these companies are incorporated and operate in
Great Britain.
15. INTERESTS IN ASSOCIATES:
2005
000
Cost and carrying amount:
Aggregated amounts relating to associates
Group share of net assets
4 817
Proportion of ordinary shares held by the group

Proportion of ordinary
shares held by the group
South Manchester Imaging Limited
Priory MRI Plc (in liquidation)
Three Shires Hospital Limited
49%
25%
50%
All these companies are incorporated and operate in Great Britain.

16. INVENTORIES:
2005
000
Medical surgical and consumable supplies
19 189
95
17. OTHER FINANCIAL ASSETS:

2005
000
Trade and other receivables:
Trade debtors
Amounts owed by associated undertakings
Other debtors
Prepayments and accrued income
66 587
304
4 655
11 162
82 708
The average credit period taken on sales of goods and services is 41 days. No interest is charged on the
receivables.
The directors consider that the carrying amount of trade and other receivables approximates their fair
value.
Cash and cash equivalents comprise cash held by the group and short-term bank deposits with
an original maturity of three months or less. The carrying amount of these assets approximates their
fair value.
Credit risk
The groups principal financial assets are bank balances and cash, trade and other receivables and
investments.
The groups credit risk is primarily attributable to its trade receivables. The amounts presented in the
balance sheet are net of allowances for doubtful receivables. An allowance for impairment is made
where there is an identified loss event which, based on previous experience, is evidence of a reduction
in the recoverability of the cash flows.
The credit risk on liquid funds and derivative financial instruments is limited because the counterparties
are banks with high credit-ratings assigned by international credit-rating agencies.
The group has no significant concentration of credit risk, with exposure spread over a large number
of counterparties and customers.
18. TRADE AND OTHER PAYABLES:
2005
000
Trade creditors and accruals
78 565
Trade creditors and accruals principally comprise amounts outstanding for trade purchases and ongoing
costs.
The directors consider that the carrying amount of trade payables approximates to their fair value.
19. BORROWINGS:
2005
000
Secured loans
Secured notes
Deep discount bonds
Preference shares
18
642
247
1
653
453
684
500
910 290
96
2005
000
The borrowings are repayable as follows:

On demand or within one year
In the second year
In the third to fifth years inclusive
After five years
14
15
52
828
137
416
182
555
910 290
Less: Amount due for settlement within 12 months

(shown under current liabilities)
(14 137)
Amount due for settlement after 12 months
896 153
Secured loans
Loans are secured on the relevant individual companys assets. The bank loan bears interest at LIBOR +
0.9125% and the other loan bears interest at base rate + 1.5%.
Bank loan
Other loan
Total
000
Less than
1 year
000
Between
1 and 2 years
000
Between
2 and 5 years
000
Over
5 years
000
18 500
153
1 525
16
1 825
16
4 850
55
10 300
66
18 653
1 541
1 841
4 905
10 366
Secured Notes
The Secured Notes, including amounts falling due within one year, are split into the following classes
falling due as indicated:
Total
000
Class
Class
Class
Class
Class
A2
A3
B2
C2
C3
Issue costs
150
179
94
150
77
000
997
780
000
473
652 250
(9 797)
Less than
1 year
000
Between
1 and 2 years
000
Between
2 and 5 years
000
13 451
14 401
49 595
13 451
(855)
14 401
(826)
49 595
(2 318)
642 453
12 596
13 575
47 277
Over
5 years
000
150
102
94
150
77
000
550
780
000
473
574 803
(5 798)
569 005
On 15th April 2005, 260 000 000 of the class A3, B2 and C3 notes were repaid. The notes are secured
by a first ranking security charge over certain assets of the group and a first floating charge over the
remaining assets.
Deep Discount Bonds
2005
000
The following amounts are included in deep discount bonds:
Principal
Rolled-up finance cost
135 123
112 561
247 684
97
The deep discount bonds are unsecured and subordinated to the Secured Notes. On 21st April 2005
52.39% by value of the B Series bonds were redeemed. The remainder of the B Series bonds are due
for redemption on 1st March 2012 at an amount of 497 525 000. The finance cost, representing the
difference between the subscription amount and the final redemption amount is being recognised over
the full term of the deep discount bond at a constant annual rate of 12% on the outstanding amount.
Preference shares
The preference shares accrue a fixed cumulative preferential cash dividend at an annual rate of four per
cent per annum. The preference shares are redeemable on or immediately prior to an exit or on such
dates and in such amounts as the Board of CARE Fertility Group Limited may from time to time resolve.
Borrowing facilities
The group has an undrawn committed working capital facility of 25 000 000 available for an initial five
years from 31st July 2001, and an undrawn committed liquidity facility of 112 348 000 which is reducing
in proportion to the aggregate of the principal outstanding on all the Secured Notes.
Fair values
Set out below is a comparison by category of book values and fair values of the groups financial assets
and liabilities:
Primary financial instruments held or issued to finance group operations:

Financial assets
Short-term borrowings
Long-term borrowings
Book
value
000
Fair
value
000
37 842
(14 137)
(896 153)
37 842
(14 137)
(859 732)
The fair values of the Secured Notes have been determined by reference to prices available from the
markets on which the instruments involved are traded and are stated at gross values. For the deep
discount bonds there is no market value and so an estimate has been made of the fair value based on
discount rates the directors believe investors may expect if similar instruments were to be issued at the
balance sheet date. All other fair values shown above have been calculated by discounting cash flows
at prevailing interest rates.
Interest rate profile
The group has no financial assets other than sterling cash deposits of 37 842 000 which are part of the
financial arrangements of the group. The sterling cash deposits comprise deposits placed on money
market at call, monthly and three-monthly rates.
The group has fixed rate borrowings of 910 290 000 at a weighted average interest rate of 8.99%, fixed
for a weighted average period of 11 years.
Liquidity risk
The group uses underdrawn working capital facilities to manage liquidity risks.
20. DERIVATIVE FINANCIAL INSTRUMENTS:
Interest rate swaps
The group uses interest rate swaps to manage its exposure to interest rate movements on its bank
borrowings and secured notes. Contracts with nominal values of 364 million at 31st December 2005
have fixed interest payments at an average rate of 8.043% for periods up until 2024 and have floating
interest receipts at LIBOR.
98
The fair value of the interest rate swap disclosed in the accounts is:
2005
000
Interest rate swap
92 511
21. DEFERRED TAX:

The following are the major deferred tax liabilities and assets recognised by the group and movements
thereon during the current and prior reporting period.
At
1st January
2005
Accelerated tax depreciation
Other timing differences
Pension scheme deficit
Land and buildings
Interest rate swap value
Net Deferred Tax Liability/
(Asset)
Deferred tax included in the
cash flow hedge reserve
11
(3
(6
79
(27
907
544)
690)
769
410)
54 032
27 410
Charge
to
equity
Charge/
(Credit) to
income
(1 575)
2 013
(129)
274
1 138
(10 742)
9 269
438
(190)
(13 550)
Acquisitions
At
and 31st December
disposals
2005
367
6 996
7 363
12
(4
(3
76
(18
145
845)
539)
023
141)
61 643
(13 860)
Certain deferred tax assets and liabilities have been offset. The following is the analysis of the deferred
tax balances (after offset) for financial reporting purposes:
2005
000
Deferred tax assets
88 168
(26 525)
61 643
A deferred tax liability of 67 608 000 (75 605 000 at 1st January 2005) has been recognised in respect
of fixed assets that have been acquired as part of a business combination. This represents the deferred
tax liability on the value of the assets that will be recovered through use. However, an unrecognised
deferred tax asset exists in relation to the tax losses that are anticipated will crystallise on the eventual
sale of these assets at their residual value. The unrecognised deferred tax asset at 31 December 2005
is 107 835 000 (129 110 000 at 1 January 2005). No deferred tax asset has been recognised in respect
of these losses as it is not considered likely at this stage that they will be able to be utilised.
Deferred tax assets relating to capital losses of 361 000 and non-trading deficits of 209 000 have not
been recognised as there is insufficient evidence that the assets will be recovered.
Deferred tax has not been provided on fixed assets subject to rollover relief of 7 900 000. At present
it is not envisaged that any of this tax will become payable in the foreseeable future.
Temporary differences arising in connection with interests in associates and joint ventures are
insignificant.
99
22. LONG-TERM PROVISIONS:
At 1st January 2005

Additional provision in the year
Utilisation of provision
Credit to profit and loss account
Employee
benefits
000
Legal
claims
000
Property
leases
000
Total
000
186
68
(50)
1 402
104
(806)
668
(108)
2 256
68
(54)
(806)
204
700
560
1 464
Total
000
Included in current liabilities
Included in non-current liabilities
1 464
1 464
The employee benefits provision relates to commitments to certain employees for healthcare, pension
and other benefits. The provisions are expected to be utilised during the next five years through
payments to external providers.
The group is subject to a number of legal claims and provision has been made for estimated costs of
settlement. This provision is expected to be utilised within five years.
Provision has been made for the estimated costs of leases on underutilised properties. This provision will
be utilised over the next ten years.
23. CALLED UP SHARE CAPITAL:
2005
Number
2005
900 000
100 000
900 000
90 000
Authorised allotted issued and fully paid

Equity
A ordinary shares of 1 each
T ordinary shares of 90p each
R ordinary shares of 10p each
100 000
1 100 000
10 000
1 000 000
Rights to dividends
No dividend can be declared or paid on any class of share unless cumulative dividends from previous
periods have been paid in full.
The R ordinary shares carry no rights to any dividend or other distribution. The T ordinary and A ordinary
shares rank pari passu as regards dividends or other distributions.
24. RESERVES:
At 1st January 2005

Total recognised income and expense for the year
Transfer to income
100
Cash-flow
hedge reserve
000
Retained
earnings
000
Total
000
(63 957)
31 616
(270 086)
337 397
(334 043)
337 397
31 616
(32 341)
67 311
34 970
25. MINORITY INTERESTS:

Equity
000
At 1st January 2005
1
87
88
26. ACQUISITION OF BUSINESSES:

On 29th April 2005, the group acquired the trade and assets of Mount Alvernia Hospital for cash
consideration. This transaction has been accounted for by the purchase method of accounting.
Net assets acquired

Inventories
Book value
000
Fair value
adjustments
000
Fair value
000
16 212
484
1 691
(1 718)
8 031
(6 996)
24 243
484
1 691
(8 714)
16 669
1 035
17 704
Goodwill
Total consideration
Satisfied by:
Cash
Directly attributable costs
4 926
22 630
22 500
130
22 630
The goodwill arising on the acquisition of Mount Alvernia Hospital is attributable to the anticipated
profitability of the hospital.
Mount Alvernia Hospital contributed 11 441 000 revenue and 472 000 to the groups profit before tax
for the period between the date of acquisition and the balance sheet date. Since the hospital was
acquired by the company as a purchase of assets and trade, information for the full year is not available.
The following table sets out the book values of the identifiable assets and liabilities of CARE Fertility
Group Limited consolidated from 7th October 2005, together with their fair value to the group.
This transaction is accounted for under the purchase method of accounting.
101
Book value
000
Borrowings
Investment in associate previously recognised
Net additional assets/(liabilities) acquired
2
2
(1
(1
395
565
387)
656)
(25)
1 892
(1 343)
549
Fair value
adjustments
000
Fair value
to the group
000
(838)
(838)
(838)
1
2
(1
(1
557
565
387)
656)
(25)
1 054
(1 343)
(289)
2 290
Consideration
2 001
Satisfied by:
Cash consideration
2 001
The fair value adjustment represents the write down of investments to net realisable value.
The goodwill arising on the acquisition of CARE Fertility Group Limited is attributable to the anticipated
profitability of the company.
CARE Fertility Group Limited contributed 2 677 000 revenue and 477 000 to the groups profit before
tax for the period between the date of acquisition and the balance sheet date. It is not practicable to be
able to supply information for the full year.
27. DISPOSAL OF SUBSIDIARIES:
As referred to in note 10, on 5th April 2005 and 11th July 2005 the group disposed of its interests
in Partnerships in Care Limited and BMI Health Services Limited. The net assets of Partnerships in
Care Limited and BMI Health Services Limited at their respective dates of disposal were as follows:

Inventories
Bank balances and cash
Deferred tax assets
Trade payables
Bank overdraft
Attributable goodwill
Costs of sale
Gain on disposal
Total consideration satisfied by cash
Net cash outflow arising on disposal:
Cash consideration
Cash and cash equivalents disposed of
Cost of sales
Partnerships
in Care Limited
000
BMI Health
Services Limited
000
91 837
350
8 623
6 338
192
(4 275)
(7 838)
(7 997)
109 667
2 065
76
3 489
152
(665)
(1 321)
(140)
4 700
196 897
7 832
352 871
8 356
619
413
557 600
557 600
(6 338)
(7 832)
543 430
102
9 388
9 388
140
(619)
8 909
The impact of Partnerships in Care Limited and BMI Health Services Limited on the groups results in the
current year is disclosed in note 10.
28. NOTES TO THE CASH FLOW STATEMENT:
2005
000
Operating profit from continuing operations
Operating profit from discontinued operations
Adjustments for:
Depreciation of property plant and equipment
Amortisation of intangible assets
Decrease in provisions
Pension funding
126 490
4 814
30 241
524
(792)
982
Operating cash flows before movements in working capital

Increase in inventories
Increase in receivables
Increase in payables
Cash generated by operations
Income taxes paid
Special pension contributions
162
(2
(16
12
155
(5
(7
259
670)
760)
193
022
320)
000)
Net cash from operating activities
142 702
Cash and cash equivalents (which are presented as a single class of assets on the face of the balance
sheet) comprise cash at bank and other short-term highly liquid investments with a maturity of three
months or less.
29. OPERATING LEASE ARRANGEMENTS:
Property
000
Minimum lease payments under operating leases recognised
in income for the year
7 582
Plant and
machinery
000
4 477
At the balance sheet date, the group had outstanding commitments for future minimum lease payments
under non-cancellable operating leases, which fall due as follows:
Property
Within one year

In the second to fifth years inclusive
After five years
000
Plant and
machinery
000
240
874
3 548
222
77
101
4 662
400
30. RETIREMENT BENEFIT SCHEMES:

Defined contribution schemes
The group operates defined contribution retirement benefit schemes for all qualifying employees.
The assets of the schemes are held separately from those of the group in funds under the control of
trustees. Where there are employees who leave the schemes prior to vesting fully in the contributions,
the contributions payable by the group are reduced by the amount of forfeited contributions.
103
The total cost charged to income of 2 763 000 represents contributions payable to these schemes by
the group at rates specified in the rules of the plans.
Defined benefit schemes
The group operates defined benefit schemes for qualifying employees. The schemes are funded
schemes.
The most recent actuarial valuations of plan assets and the present value of the defined benefit obligation
were carried out at 31st December 2005. The present value of the defined benefit obligation, the related
current service cost and past service cost were measured using the projected unit credit method.
2005
Key assumptions used:
Discount rate
Expected return on scheme assets
Expected rate of salary increases
Price inflation
Future pension increases
4.80%
7.10%
4.30%
2.80%
2.70%
Amounts recognised in income in respect of these defined benefit schemes are as follows: 2005
2005
000
Current service costs
Past service cost
Interest cost
Gains on curtailments and settlements
3 774
705
3 311
(3 153)
(4 940)
(303)
The charge for the year has been included in cost of services provided. Actuarial gains and losses of
300 000 have been reported in the statement of recognised income and expense.
The amount included in the balance sheet arising from the groups obligations in respect of its defined
benefit retirement benefit schemes is as follows:
2005
000
Present value of defined benefit obligations
Fair value of scheme assets
Deficit in scheme
Related deferred tax asset
Liability recognised in the balance sheet
66 310
54 509
(11 801)
3 539
(8 262)
Movements in the present value of defined benefit obligations were as follows:

2005
000
At 1st January 2005
Service cost
Interest cost
Contributions from scheme members
Actuarial gains and losses
Benefits paid
Past service cost
Curtailments
Settlements
At 31 December 2005
104
68 868
3 774
3 311
947
6 477
(1 136)
705
(665)
(15 971)
66 310
Movements in the fair value of scheme assets were as follows:

2005
000
At 1st January 2005
Actuarial gains and losses
Contributions from the sponsoring companies
Contributions from scheme members
Benefits paid
Settlements
46
3
6
10
567
153
177
497
947
(1 136)
(11 696)
At 31 December 2005
54 509
The overall expected return on assets is calculated as the weighted average of the expected returns on
each individual asset class. The expected return on equities is the sum of inflation, the dividend yield,
economic growth and investment expenses. The return on gilts and bonds is the current market yield on
long term gilts and bonds. The expected return on property has been set equal to the expected return
on equities. The expected return on other assets is a long term estimate of the return available on cash.
The four-year history of experience adjustments is as follows:
2005
000
2004
000
2003
000
2002
000
Present value of defined benefit obligations

Fair value of scheme assets
66 310
54 509
68 868
46 567
58 096
38 607
45 015
27 938
Deficit in the scheme
11 801
22 301
19 489
17 077
(6 477)
(2 625)
(5 774)
(10%)
(4%)
Experience adjustment on scheme

liabilities
Amount (000)
Percentage of scheme liabilities
(10%)
6 177
1 152
3 992
Experience adjustment on scheme

assets
Amount (000)
Percentage of scheme liabilities
11%
2%
10%
The estimated amounts of contributions expected to be paid to the scheme during the next financial year
is 6 800 000.
31. CONTROLLING PARTY:
During the year the company was controlled by various funds advised by BC Partners Limited.
On 12th May 2006 the company was acquired by a consortium led by Netcare, a South African public
company listed on the JSE Limited, who acquired a 52.6% controlling interest.
32. NON-STATUTORY ACCOUNTS:
The financial information in this document does not constitute full accounts within the meaning of
Section 240 of the Companies Act 1985. Full accounts for the year ended 31st December 2005, prepared
under UK GAAP, have been delivered to the Registrar of Companies.
33. EXPLANATION OF TRANSITION TO IFRSs:
This is the first year that the company has presented its financial statements under IFRS. The following
disclosures are required in the year of transition. The last financial statements under UK GAAP were for
the year ended 31st December 2005. The date of transition to IFRSs is 1st January 2005.
105
Reconciliation of equity at 31st December 2005
Non-current assets
Goodwill
Other intangible assets
Interests in associates
Deferred tax assets
Current assets
Inventories
TOTAL ASSETS
Current liabilities
Current tax liabilities
Borrowings
UK GAAP
000
Effect of
Transition
to IFRS
000
525 640
474 126
4 817
32 179
3 294
2 326
26 525
1 004 583
64 324
TOTAL LIABILITIES
NET ASSETS
Called-up equity share capital
Called-up non-equity share capital
Cash-flow hedging reserve
Retained earnings
106
557
3
476
4
26
819
294
452
817
525
1 068 907
19 189
82 708
49 864
19 189
82 708
49 864
151 761
151 761
1 156 344
64 324
1 220 668
76
1
32
14
2 552
60 471
78
1
92
14
013
811
040
137
124 001
63 023
Borrowings
Deep discount bonds
IFRS
000
653
247
7
7
1
468
684
084
301
464
(4 999)
4 717
80 867
917 001
80 585
565
811
511
137
187 024
648
247
11
88
1
469
684
801
168
464
997 586
1 041 002
143 608
1 184 610
115 342
990
10
114 254
(79 284)
10
(10)
(32 341)
(46 943)
36 058
1 000
(32 341)
67 311
Total shareholders funds

Minority interest
115 254
88
(79 284)
35 970
88
TOTAL EQUITY
115 342
(79 284)
36 058
Reconciliation of profit and loss for 2005
Revenue
Costs of services provided
Gross profit
Share of results of associates
OPERATING PROFIT
Loss on sale of tangible fixed assets
Investment revenues
Finance costs
Profit/(Loss) before tax
Taxation
UK GAAP
000
Reclassification
of discontinued
operations
000
Effect of
transition
to IFRS
000
IFRS
000
611 997
(447 906)
(393)
611 997
(448 299)
164
(37
(35
1
091
302)
404)
532
92 917
(89)
3 620
(141 865)
(5)
528
(393)
35 404
(460)
34 551
94
3 152
(17 223)
163 698
(37 302)
1 072
127 468
6 772
(158 560)
(45 417)
523
20 574
(24 320)
(2 835)
1 646
7 277
6 088
PROFIT/(LOSS) FOR THE YEAR

Profit for the year from discontinued
operations
(48 252)
2 169
27 851
(18 232)
349 197
(2 169)
8 901
355 929
PROFIT FOR THE YEAR
300 945
36 572
337 697
Attributable to:
Minority interest
300 858
87
36 752
337 610
87
300 945
36 752
337 697
Notes to the reconciliation of profit and loss for 2005 and equity at 31st December 2005
The primary adjustments required to restate the financial statements under IFRS are as follows:
Goodwill
Goodwill at 31st December 2005 is stated at the amortised cost under UK GAAP as at 1st January 2005
adjusted for additions and disposal for the year. This has resulted in reversal of the amortisation
of 37 304 000, including 1 900 000 relating to discontinued operations, in the profit for the year.
Adoption of IAS 39 has required the group to show the full fair value of its interest rate swap on the
balance sheet at 95 141 000 compared with the value shown under UK GAAP of 34 671 000.
Movements in valuation are taken to the profit and loss account. A cash-flow hedge reserve was created
at 1st January 2005 and is being amortised through the profit and loss account. The net effect on the
income statement for 2005 was a charge of 14 269 000.
107
ANNEXURE 6
REPORTING ACCOUNTANTS REPORT ON THE PRO FORMA FINANCIAL

INFORMATION RELATING TO NETCARE
The Directors
Private Bag X34
Benmore
2010
10 July 2006
Dear Sirs
INDEPENDENT REPORTING ACCOUNTANTS ASSURANCE REPORT ON THE PRO FORMA FINANCIAL
INFORMATION OF NETWORK HEALTHCARE HOLDINGS LIMITED (Netcare or the issuer)
We have performed our limited assurance engagement in respect of the pro forma financial effects and
financial information set out in paragraph 6 and Annexure 7 to the circular to Netcare shareholders to be
dated on or about 11 July 2006 (the circular). The pro forma financial information has been prepared
in accordance with the requirements of the JSE Limited (the JSE) Listings Requirements, for illustrative
purposes only, to provide information about how the proposed acquisition by Netcare of a controlling interest
in General Healthcare Group Limited from BC Partners Limited (the transaction) might have affected
the reported historical financial information presented for the six months ended 31 March 2006, had the
transaction been undertaken at the commencement of the period or at the date of the pro forma balance
sheet being reported on.
Directors responsibility
The directors are responsible for the compilation, contents and presentation of the pro forma financial
information contained in the circular and for the financial information from which it has been prepared.
Their responsibility includes determining that:
the pro forma financial information has been properly compiled on the basis stated;
the basis is consistent with the accounting policies of Netcare;
the pro forma adjustments are appropriate for the purposes of the pro forma financial information
disclosed in terms of the JSE Listings Requirements.
Reporting accountants responsibility
Our responsibility is to express our limited assurance conclusion on the pro forma financial information
included in the circular. We conducted our assurance engagement in accordance with the International
Standard on Assurance Engagements applicable to Assurance Engagements Other Than Audits or Reviews
of Historical Financial Information and the Guide on Pro Forma Financial Information issued by
The South African Institute of Chartered Accountants.
This standard requires us to obtain sufficient appropriate evidence on which to base our conclusion.
We do not accept any responsibility for any reports previously given by us on any financial information used
in the compilation of the pro forma financial information beyond that owed to those to whom those reports
were addressed by us at the dates of their issue.
Sources of information and work performed
Our procedures consisted primarily of comparing the unadjusted financial information with the source
documents, considering the pro forma adjustments in light of the accounting policies of Netcare, considering
the evidence supporting the pro forma adjustments and discussing the adjusted pro forma financial
information with the directors of the company in respect of the transaction that is the subject of the circular.
108
In arriving at our conclusion, we have relied upon financial information prepared by the directors of Netcare
and other information from various public, financial and industry sources.
While our work performed has involved an analysis of the historical published audited financial information
and other information provided to us, our assurance engagement does not constitute an audit or review
of any of the underlying financial information conducted in accordance with International Standards on
Auditing or International Standards on Review Engagements and accordingly, we do not express an audit or
review opinion.
In a limited assurance engagement, the evidence-gathering procedures are more limited than for a
reasonable assurance engagement and therefore less assurance is obtained than in a reasonable assurance
engagement. We believe our evidence obtained is sufficient and appropriate to provide a basis for our
conclusion.
Conclusion
Based on our examination of the evidence obtained, nothing has come to our attention which causes us
to believe that:
the pro forma financial information has not been properly compiled on the basis stated;
such basis is not consistent with the accounting policies of the issuer;
the adjustments are not appropriate for the purposes of the pro forma financial information as disclosed
in terms of Sections 8.17 and 8.30 of the JSE Listings Requirements.
Consent
We consent to the inclusion of this report, which will form part of the circular to shareholders of Netcare,
to be issued on or about 11 July 2006, in the form and context in which it appears.
GRANT THORNTON
Registered Accountants and Auditors
Chartered Accountants (SA)
137 Daisy Street
Corner Grayston Drive
Sandown, 2196
109
ANNEXURE 7
PRO FORMA FINANCIAL INFORMATION RELATING TO NETCARE
The following unaudited pro forma financial information for the six months ended 31 March 2006 is based on:
Netcares financial results for the six months ended 31 March 2006; and
the pro rata results of GHG (converted in terms of IFRS) based on the 12 months to
31 December 2005. As the business of the GHG Group is not subject to material seasonal fluctuations,
the results have not been seasonally adjusted but rather pro rata results for six months have been
presented.
The unaudited pro forma financial information has been prepared to show the effect on the consolidated net
assets of Netcare as if the GHG acquisition had occurred on 31 March 2006 and to show the effect on the
consolidated income statement of Netcare, as if the GHG acquisition had occurred on 1 October 2005.
The unaudited pro forma financial information has been prepared on the basis that the GHG acquisition will
be accounted for using acquisition accounting principles, with the goodwill arising being capitalised.
Other than the revaluation of land and buildings, no account has been taken of any fair value adjustments,
which may arise on the GHG acquisition.
The pro forma combined financial information has been prepared for illustrative purposes only and, because
of its nature, addresses a hypothetical situation and, therefore does not represent the enlarged groups
financial position or results.
The Netcare financial information has been extracted without adjustment from Netcares published unaudited
interim results for the six months year ended 31 March 2006. The GHG financial information has been
extracted from the GHG financial information for the year ended 31 December 2005 prepared in terms of
IFRS, as set in out Annexure 5, with the income statement being pro rata for six months. The GHG income
statement information for the pro rata six-month was converted at R11.14: 1, being the average rate for that
period, whereas balance sheet information was converted at R10.88: 1, being the closing rate as at
31 March 2006.
Goodwill
Goodwill represents the excess of the cost of acquisition over the Groups interest in the fair value of the
identifiable assets and liabilities of a subsidiary at the date of acquisition.
In terms of IFRS3 (Business combinations) goodwill is subject to impairment reviews, both annually and
where there are indications that the carrying value may not be recoverable. Goodwill is allocated to cashgenerating units and is no longer amortised, but tested annually for impairment.
The consolidated figures presented in the pro forma balance sheet and income statement are based on the
following assumptions:
Land and buildings within GHG were revalued to fair value;
Existing debt within GHG at above market related rates was refinanced by market related debt on
acquisition. This had the effect of reducing the finance charges for the period as a result of the lower
interest rates obtained;
GHG income statement information for the pro rata six-month was converted at R11.14: 1, being the
average rate for that period, whereas balance sheet information was converted at R10.88: 1, being the
closing rate as at 31 March 2006; and
110
BALANCE SHEET
Netcare
GHG
Half-year
Half-year
31 March 31 December
2006
2005
Rm
Rm
ASSETS
Non-current assets
Pro forma
adjustments Consolidated
Rm
Half-year
Rm
4 550.8
11 633.5
21 314.9
37 499.2

Goodwill and development
expenditure
Associated companies,
investments and loans
Deferred taxation asset
3 282.4
5 185.5
13 554.5
22 022.4
456.9
6 106.9
7 760.4
14 324.2
792.8
18.7
52.4
288.7
845.2
307.4
Current assets
2 464.8
1 651.7
4 116.5
Investments and loans

Inventories
Accounts receivable
104.6
285.7
1 585.4
489.1
208.8
900.2
542.7
104.6
494.5
2 485.6
1 031.8
Total assets
7 015.6
13 285.2
21 314.9
41 615.7

3 623.6
392.4
2 908.4
6 924.4
Share capital and premium

Treasury shares
Reserves
1 067.8
(1 588.9)
4 064.9
10.9
380.5
(10.9)
1 067.8
(1 588.9)
4 064.9
(380.5)
Ordinary shareholders equity

Minority interest
3 543.8
79.8
391.4
1.0
(391.4)
3 299.8
3 543.8
3 380.6
1 052.4
10 857.3
18 406.5
30 316.2
800.2
158.3
93.9
9 897.7
959.6
14 340.2
4 066.3
25 038.1
158.3
5 119.8
Current liabilities
2 339.6
2 035.5
4 375.1
Accounts payable and provisions

Interest bearing debt
Taxation payable
1 209.9
1 125.9
3.8
855.1
1 160.7
19.7
2 065.0
2 286.6
23.5
Total equity and liabilities
7 015.6
13 285.2
21 314.9
41 615.7
Interest bearing debt

Deferred lease liability
Deferred taxation liability
Net assets of GHG subject to the transaction

Net assets of GHG as at 31 December 2005
Revaluation of land and buildings, net of deferred tax
Net assets of GHG subject to the transaction
m
36.0
871.8
907.8
111
INCOME STATEMENT
Netcare
GHG
Half-year
Half-year
31 March 31 December
2006
2005
Rm
Rm
Revenue
Cost of sales
4 009.2
(1 211.8)
3 409.0
(2 497.2)
Gross profit
Other income
Administrative and other expenses
2 797.4
89.5
(2 332.7)
PROFIT/(LOSS) FOR THE PERIOD
104.3
(135.5)
33.9
Profit/(Loss) for the period from

continuing operations
Profit for the period from
discontinued operations
7 412.7
(3 704.2)
42.9
532.0
(160.2)
(5.5)
4.8
741.7
(883.2)
6.0
Profit/(Loss) before taxation

Taxation
Half-year
Rm
(0.7)
105.6
(62.0)
554.2
50.7
(93.3)
20.4
Rm
911.8
37.7
(207.8)
Operating profit
Financial income
Financial expenses
Share of profit of associates
Pro forma
adjustments Consolidated
147.2
(23.0)
3 708.5
232.8
(2 602.5)
1 338.8
50.7
(872.2)
26.4
543.7
(149.3)
371.8
(101.6)
124.2
394.4
1 982.6
1 982.6
371.8
1 881.0
124.2
2 377.0
Attributable to:
Ordinary shareholders
Minority interests
1 421.5
955.5
2 377.0
The impact on earnings, diluted earnings and headline earnings and dividends per share has been disclosed
in paragraph 6: pro forma financial information, in addition to net asset value and tangible net asset value per
share.
Below is a reconciliation of the goodwill arising on the acquisition of Pedalclip and GHG (applying an
exchange rate of R10.88: 1).
Reconciliation of goodwill
Acquisition price
Payment to vendors
Repayment of debt
Net asset value
Ordinary shareholders equity
Debt repaid
1
Acquisition
of GHG
m
Acquisition
of Pedalclip
by Netcare
m
Acquisition
of Pedalclip
by
Consortium
Partners
m
1 559.1
336.8
303.2
2 199.1
23 933.9
980.8
578.3
336.8
303.2
1 620.8
478.3
17 640.0
6 293.9
1 486.1
1 486.1
16 173.5
907.8
578.3
907.8
578.3
9 879.6
6 293.9
73.0
336.8
303.2
713.0
7 760.4
Total
m
Conversion
to Rand
Rm
The net pension deficit at 31 December 2003 was taken to the profit and loss account. This was subsequently adjusted in 2004, with
the 2003 annual financial statements not being adjusted for the change in accounting treatment.
112
113
PRINTED BY INCE (PTY) LTD
REF. W2CF01037

Netcare Circular 140706

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THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

Network Healthcare Holdings Limited

CIRCULAR TO NETCARE SHAREHOLDERS

the acquisition of a controlling interest in General Healthcare Group Limited (GHG)

Lead sponsor to Netcare

Transactional sponsor to Netcare

Joint financial advisers to the Consortium

Legal advisers to Netcare

Debt providers to the Consortium

Independent reporting accountants to GHG

Deloitte & Touche

Date of issue: 11 July 2006

Independent reporting accountants

Company secretary and registered office

Independent reporting accountants and auditors

Lead sponsor to Netcare

Transactional sponsor to Netcare

Merrill Lynch South Africa (Proprietary) Limited

KPMG Services (Proprietary) Limited

Legal advisers to Netcare

Independent reporting accountants to GHG

As to South African law

Deloitte & Touche

Executive directors of Netcare

Link Market Services South Africa (Proprietary) Limited

Pro forma information

Inside front cover

INTERPRETATIONS AND DEFINITIONS

CIRCULAR TO NETCARE SHAREHOLDERS

Rationale for and principal terms of the GHG acquisition

Terms and conditions of the GHG acquisition

Overview of the Consortium Partners

Key partnership arrangements

Pro forma financial information

Information on GHG and the UK healthcare market

Prospects for Netcare

Directors and their interests

Directors opinions and recommendations

Statement of solvency and liquidity

Statement of material changes

Directors responsibility statement

Documents available for inspection

Additional background information on Netcare UK

Report of the independent reporting accountants on the historical financial information

Historical financial information on GHG

Report of the independent reporting accountants on the historical financial information

Financial information on GHG for the year ended 31 December 2005

Pro forma financial information relating to Netcare

Overview of the combined group

= As at 31 December 2005. Based on 2005 financial information converted in terms of IFRS.

3. TERMS AND CONDITIONS OF THE GHG ACQUISITION

Bridge loan Tranche A

Bridge loan Tranche B

Total GHG debt

Opco Group facilities

Details of the bridging finance facilities are as follows:

Stage 2 After proposed OPCO/PROPCO implementation

Ring fenced debt *

(Secured and unsecured mezzanine debt)

(Secured over land and buildings)

* = No recourse to Netcare South Africa.

7. PRO FORMA FINANCIAL INFORMATION

Pro forma financial effects