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					Notes to the annual financial statements
Note 1

1.       Accounting policies

         The annual financial statements have been prepared in accordance with International Financial Reporting Standa

         The principal accounting policies adopted are set out below (alphabetically):

         1.1                                      Basis of preparation
                                                  The financial statements are prepared on the historical cost basis, excep

         1.2                                      Basis of consolidation of financial results
                                                  Subsidiaries
                                                  Subsidiaries are those entities (including special purpose entities) over w

                                                  Subsidiaries are consolidated from the date on which control is transferr

                                                  Inter-company transactions, balances and unrealised gains on transactio

                                                  In the Company’s financial statements, investments in subsidiaries are s

                                                  Investment in associated companies
                                                  Companies over which the Group has significant influence but not contro

                                                  In the Company’s financial statements, investments in associates are st

                                                  Interests in joint ventures
                                                  The Group’s interest in jointly controlled entities is accounted for by prop

         1.3                                      Borrowing costs
                                                  Borrowing costs that are directly attributable to qualifying assets are cap

                                                  All other borrowing costs are recognised in the income statement in the

         1.4                                      Employee benefits

                                                  Short-term employee benefits
                                                  Remuneration to employees is recognised in the income statement.

                                                  Post-employment benefits – Defined contribution pension plans
                                                  Contributions to defined contribution plans are recognised in the income

                                                  Post-employment benefits – Defined benefit pension plans
                                                  The Group’s obligation in respect of defined benefit pension plans is act

                                                  The future benefit is discounted using the discount rate to determine its

                                                  Actuarial gains and losses arising from experience adjustments and cha
      Past service costs are recognised immediately to the extent that the ben

      Where the plan assets exceed the gross obligation, the asset recognise

      Post-employment benefits – Medical funds
      The Group provides post-retirement healthcare benefits to certain of its

      The present value of the expected future defined benefit obligation is qu

      Annual charges incurred to reflect additional service rendered by employ

      Equity compensation benefits – The Netcare Share Incentive Schem
      The Group grants share options to certain employees under The Netcar

      Equity compensation benefits – Health Partners for Life
      The beneficiaries of the Health Partners for Life trusts hold trust units wh

1.5   Financial instruments

      Initial recognition and measurement
      Financial instruments are accounted for on transaction date and are initi

      Investments
      Financial instruments held-for-trading are classified as current assets an

      Other financial instruments held by the Group are classified as being ava

      Fair value represents the current market value where a regulated marke

      Trade and other receivables
      Trade and other receivables are classified as loans and receivables and

      Cash and cash equivalents
      Cash and cash equivalents are measured at fair value, with changes in f

      Financial liabilities
      Non-derivative financial liabilities are initially measured at amortised cos

      Amortised cost
      Amortised cost is calculated using the effective interest rate method. Th

      Gains and losses on subsequent measurements
      Unrealised gains and losses on available-for-sale investments are recog

      Other gains and losses from a change in the fair value of financial instru

      Derivative instruments and hedge accounting
      Derivatives that are liabilities are measured at fair value, with changes in

      The method of recognising the resulting gain or loss is dependent on the

      fair value hedges, which hedge the exposure to changes in fair value of
      cash flow hedges, which hedge the exposure to variability in cash flows
      hedges of a net investment in a foreign entity.

      In relation to fair value hedges which meet the conditions for hedge acco

      In relation to cash flow hedges which meet the conditions for hedge acco

      If an effective hedge of a forecast transaction subsequently results in the

      If a hedge of a forecast transaction subsequently results in the recognitio

      In relation to hedges of a net investment in a foreign entity which meet th

      Hedge accounting is discontinued on a prospective basis when the hedg

      Derecognition
      Financial assets are derecognised once the contractual right to receive c

      Financial liabilities are derecognised when the relevant obligation has eit

1.6   Foreign currencies
      Measurement currency
      The financial results of an entity are accounted for in its measurement c

      Transactions and balances
      Transactions denominated in foreign currencies are translated at the rat

      Foreign entities
      All foreign subsidiaries are classified as foreign entities for the purposes

      assets and liabilities, at rates of exchange ruling at balance sheet date;
      income, expenditure and cash flow items at weighted average rates; and
      equity items at the exchange rate ruling when they arose.

      All resulting exchange differences are reflected in a foreign currency tran

1.7   Goodwill
      Goodwill is carried at cost less accumulated impairment losses.

      The purchase method is used when an entity is acquired. On acquisition

      Fair values of the identifiable assets and liabilities are determined with re

      The profit or loss realised on disposal or termination of an entity is calcu

      To the extent that the fair value of the net identifiable assets of the entity

1.8   Impairment of assets
      The carrying amounts of the Group’s assets are reviewed at each balan

      The recoverable amount is the higher of an asset’s net selling price and
       With the exception of goodwill, a previously recognised impairment loss

1.9    Income recognition
       Revenue comprises the amount charged for accommodation, theatre fe

       Revenue from charges to patients is recognised when the service giving

       Revenue arising from administration fees is recognised on the accrual b

       Interest is recognised on a time proportion basis, taking account of the p

       Dividends are recognised when the shareholders’ right to receive payme

1.10   Intangible assets
       Intangible assets are stated at cost less accumulated amortisation and a

       Intangible assets are recognised if it is probable that future economic be

       Intangible assets are amortised on a straight-line basis over their estima

       The assumptions regarding estimated useful lives for the 2006 financial

       Management contracts
       Computer software – purchased
       Computer software – internally generated
       Development expenditure

       Internally generated computer software is depreciated when brought into

       Research and development
       Expenditure on research is recognised as an expense when it is incurred

       Development costs relating to the design and testing of new or improved

1.11   Inventories
       Inventories, comprising medical consumables held by contracted entities

       Other consumables, including crockery, cutlery, linen and soft furnishing

1.12   Leasing
       Finance leases
       Leases of assets where the Group assumes substantially all the benefits

       Operating leases
       Leases of assets where the Group does not assume substantially all the

1.13   Property, plant and equipment
       Property, plant and equipment are stated at cost less accumulated depre

       Where an item comprises major components with different useful lives,

       Property, plant and equipment is depreciated to its estimated residual va
       The assumptions regarding estimated useful lives for the 2006 financial

       Land
       Buildings
       Computer equipment
       Furniture and equipment
       Medical equipment
       Motor vehicles
       Aircraft
       Plant and machinery

1.14   Provisions
       Provisions represent liabilities of uncertain timing or amount. Provisions

1.15   Set-off
       Financial assets and liabilities are offset and the net amount reported in

1.16   Taxation
       Current tax comprises tax payable calculated on the expected taxable in

       Deferred taxation is provided for using the balance sheet liability method

       A deferred tax asset is recognised to the extent that it is probable that fu

1.17   Treasury shares
       Treasury shares held by subsidiary companies are deducted from share

1.18   Comparative figures
       Comparative figures are reclassified or restated where necessary to affo

1.19   Judgements made by management
       Preparation of the financial statements in conformity with International F

       Certain accounting policies have been identified as involving particularly

       Acquisition of businesses
       In terms of IFRS 3, Business Combinations, the company has allocated,

       A similar assessment and review was conducted over liabilities and cont

       Asset lives and residual values
       Property, plant and equipment is depreciated over its useful life taking in

       Deferred tax assets
       Deferred tax assets are recognised to the extent it is probable that taxab

       Fair value of share-based payments
       The fair value of options granted in terms of The Netcare Share Incentiv

       Impairment of assets
       Goodwill is considered for impairment at least annually. Property, plant a
                                                   Future cash flows expected to be generated by the assets are projected

                                                   Post-employment benefit obligations
                                                   Post-retirement defined benefits are provided for certain existing and for

                                                   Valuation of financial instruments
                                                   The valuation of derivative financial instruments is based on the market

         1.20                                      Sources of estimation uncertainty
                                                   There are no key assumptions concerning the future and other key sour


Note 2

2.       Property, plant and equipment

         Net carrying value


         Group                                                                      Cost Rm
                                            2006
         Freehold and leasehold land and
         buildings                                                                  25,420.30
         Assets under construction                                                      224.2
         Computer equipment                                                             324.5
         Furniture and equipment                                                        293.7
         Medical equipment                                                           2,815.50
         Motor vehicles and aircraft                                                     60.1
         Plant and machinery                                                            196.2
                                                                                    29,334.50
                                            2005
         Freehold and leasehold land and
         buildings                                                                   2,513.70
         Computer equipment                                                             201.4
         Furniture and equipment                                                        220.5
         Medical equipment                                                           1,647.50
         Motor vehicles and aircraft                                                     49.4
         Plant and machinery                                                             48.7
                                                                                     4,681.20

         Properties
         A register of land and buildings, containing the information required by Schedule 4 of the Companies Act, is avail

         Borrowing costs of R12,9 million (2005: R8,2 million) were capitalised during the year and are included in “Additio

         Properties are valued at intervals not exceeding five years. Mills Fitchet Valuation Surveyors carried out an exter

         The properties in the United Kingdom were valued by GVA Grimley (International Property Advisors) in the curren

         Security
         Certain property, plant and equipment has been encumbered as security for long-term and short-term debt as re
                                                                   2006
Group                                                               Rm
Property, plant and equipment                                 22,035.30




Group
2.                              Property, plant and equipment
                                (continued)
                                Movement in property, plant and
                                equipment
                                                                  2006
                                Cost
                                Balance at 1 October 2005
                                Additions
                                Disposals
                                Acquisition of businesses
                                Disposal of business
                                Transfers between categories
                                Translation of foreign entities
                                Balance at 30 September 2006
                                Accumulated depreciation and
                                impairment
                                Balance at 1 October 2005
                                Depreciation
                                Disposals
                                Disposal of business
                                Impairment
                                Transfers between categories
                                Translation of foreign entities
                                Balance at 30 September 2006

                                Carrying value at 30 September 2006
                                                                 2005
                                Cost
                                Balance at 1 October 2004
                                Additions
                                Disposals
                                Balance at 30 September 2005
                                Accumulated depreciation and
                                impairment
                                Balance at 1 October 2004
                                Depreciation
                                Disposals
                                Impairment reversal
                                Balance at 30 September 2005
                                                  Carrying value at 30 September 2005


Note 3

                                                                                  2006
Group                                                                              Rm
3.       Goodwill
         Net carrying value
         Cost                                                                 17,010.80
         Accumulated impairment losses                                           -104.1
                                                                              16,906.70
         Movement in goodwill
         Opening carrying amount                                                    309
         Acquisition of businesses                                            13,408.10
         Negative goodwill derecognised
         Impairment                                                                -2.1
         Translation of foreign entities                                       3,191.70
         Closing carrying amount                                              16,906.70

Note 4


                                                                 Management contracts
Group                                                                             Rm
4.       Intangible assets
                                           2006
         Net carrying value
         Cost                                                                      85.7
         Accumulated amortisation and
         impairment losses                                                        -13.3
                                                                                   72.4
         Movement in intangible assets
         Opening carrying amount
         Acquisition of businesses                                                 69.2
         Additions
         Amortisation                                                             -11.9
         Impairment
         Disposal of business
         Translation of foreign entities                                           15.1

         Carrying value at 30 September 2006                                       72.4
                                        2005
         Net carrying value
         Cost
         Accumulated amortisation and
         impairment losses

         Movement in intangible assets
         Opening carrying amount
         Additions
         Amortisation
         Translation of foreign entities

         Carrying value at 30 September 2005


Note 5

                                                    Group
                                                    2006
                                                     Rm
5.       Investment in subsidiaries

         Shares at cost less amounts written off
         Amounts owing by subsidiaries
         Amounts owing to subsidiaries

         The loan accounts of certain
         subsidiaries amounting to R111,9
         million (2005: R169,9 million) have
         been subordinated in favour of other
         creditors.

         A schedule of the Group’s principal
         subsidiaries is set out in Annexure A.

Note 6

                                                    Group
                                                    2006
                                                     Rm
6.       Investment in associated companies
         Investments (Unlisted)                      81.6
         Loans                                      160.8
                                                    242.4
         Directors’ valuation of associated         423.4
         companies.
         Details of the Group’s principal
         associated companies are set out in
         Annexure B.

Note 7

                                                    Group
                                                    2006
                                                     Rm
7.       Investments and loans
         Non-current assets
         Loans
         Available-for-sale investments (refer to
         Annexure C)
         Loans                                       12.9
                                                           12.9
          Current assets
          Held-for-trading investments (refer to            4.7
          Annexure C)
          Loans                                            46.8
                                                           51.5
                                                           64.4

Note 8

                                                          Group
                                                          2006
                                                           Rm
8.        Inventories
          Medical and pharmaceutical                      522.6
          merchandise
          Crockery, cutlery, linen, soft furnishings         48
          and other consumables
                                                          570.6
Note 9

                                                          Group
                                                          2006
                                                           Rm
9.        Accounts receivable
          Trade receivables                            2,185.30
          Allowance for doubtful debts                   -191.1
          Trade receivables – net                      1,994.20
          Prepaid expenses                                  128
          Joint venture receivables (refer to                1.8
          Annexure D)
          Other debtors and prepayments                   582.7
                                                       2,706.70

Note 10

                                                          Group
                                                          2006
                                                           Rm
10.       Cash and cash equivalents and bank
          overdrafts
                                                       1,462.70
          Cash on hand and balances with banks
          Bank overdrafts                                -454.1
                                                       1,008.60
          Currency analysis
          Cash on hand and balances with
          banks
          Pound Sterling                                  836.3
          US Dollar                                         3.1
          SA Rand                                         623.3
          Bank overdrafts
          SA Rand                                                     -454.1
                                                                    1,008.60

Note 11




11.       Ordinary share capital
          11.1                     Authorised share capital
                                   2 500 000 000 (2005: 2 500 000 000)
                                   ordinary
                                   shares of 1,0 cent each
          11.2                     Issued share capital
                                   1 778 724 220 (2005: 1 710 322 989)
                                   ordinary shares of 1,0 cent each
                                   Share premium
                                   At beginning of year
                                   Arising on share issues
                                   Share issue and listing expenses
                                   Repurchase of shares
                                   Capital distributions



                                   Treasury shares held

                                   Included in the ordinary shares above are
                                   340 354 743 (2005: 168 711 767) shares
                                   held as treasury shares by subsidiaries,
                                   representing 19,1% (2005: 9,9%) of the
                                   Company’s issued share capital.

                                   In addition, 95 947 700 (2005: 95 432
                                   700) shares are held by the Netcare
                                   Trust, representing 5,4% (2005: 5,6%) of
                                   the Company’s issued share capital. 160
                                   000 000 (2005: Nil) shares are held by the
                                   HPFL Trusts, representing 9,0% (2005:
                                   Nil) of the Company’s issued share
                                   capital.

                                   The Netcare Trust and the HPFL Trusts
                                   are special purpose entities of which
                                   Netcare is a beneficiary. They are
                                   consolidated in terms of SIC 12.

                                   Total share capital and premium
                                   1 182 421 777 ordinary shares (2005: 1
                                   446 178 522 ordinary shares)
                 Reconciliation of treasury shares
          11.3   (million)
                 Treasury shares at the beginning of the
                 year
                 Share buyback
                 Acquired by
                    The Netcare Trust
                    HPFL Trusts
                 Treasury shares held by subsidiary
                 (previously associate)
                 Purchase of treasury shares
                 Treasury shares at end of year
                 The treasury shares held, excluding
                 shares acquired by the Netcare Trust and
                 the HPFL Trusts, do not carry voting
                 rights.
                 Treasury shares are deducted from the
                 number of shares in issue for the
                 purposes of calculating earnings per
                 share.

          11.4   Unissued ordinary shares (million)
                 Unreserved*
                 Reserved for the Netcare Share Incentive
                 Scheme
                 Unissued ordinary shares at 30
                 September 2006
                 *180,0 million (2005: 168,0 million)
                 unissued ordinary shares are under the
                 control of the directors until the next
                 Annual General Meeting.

          11.5   Reconciliation of issued shares (less
                 treasury shares) (million)
                 In issue at beginning of year
                 Issued during the year
                 Cancellation of issued shares
                 Share buyback (treasury shares)
                 Acquired by
                    The Netcare Trust
                    HPFL Trusts
                 Treasury shares held by subsidiary,
                 previously associate
                 Purchase of treasury shares
                 In issue at end of year

          11.6   Details of options under the Netcare
                 Share Incentive Scheme are disclosed
                 under note 32.

Note 12
                                                                                     Group
                                                                                     2006
                                                                                      Rm
12.       Non-distributable reserves
          Foreign currency translation reserve                                    1,413.90
          Investment fair value reserve                                              230.2
          Cash flow hedge accounting reserve                                        -298.6
          Net investment hedging reserve                                             -98.1
          Capital redemption reserve                                                  24.7
          Contingency reserve                                                          1.4
          Share-based payment reserve                                                 83.4
          Surplus on disposal of subsidiaries
                                                                                  1,356.90

Note 13




13.       Preference share capital
          13.1                                   Authorised share capital
                                                 10 000 000 cumulative preference shares
                                                 of 50,0 cents each
          13.2                                   Issued share capital
                                                 6 500 000 cumulative preference shares
                                                 issued at R100,00 each
                                                 Share capital
                                                 Share premium (less share issue
                                                 expenses)

          13.3                                   Rights
                                                 Dividend rights
                                                 Preference share dividends are
                                                 calculated at a rate per annum which is
                                                 75% of the prime rate.
                                                 Voting rights

                                                 The preference shares are non-voting,
                                                 save in those circumstances prescribed
                                                 under section 194 of the Companies Act.
                                                 Redemption/Conversion rights
                                                 The preference shares are non-
                                                 redeemable and non-convertible.

Note 14




14.       Long-term debt
          Total South African Rand and foreign currency debt
          Short-term portion (refer to note 19)
              Comprising
              South African Rand
                Secured liabilities
                Finance leases
                Mortgage bonds
                Redeemable cumulative preference shares
                Promissory notes
                Unsecured liabilities

              Foreign currency
                Secured liabilities
                Redeemable cumulative preference shares
                Unsecured liabilities




                                                          Interest rate at
Terms of                                                   30 September
repayment Security                                                   2006
Liabilities in
South
African
Rand
Secured
liabilities
Repayable in Secured by property with a book value
full in 2006   of RNil (2005: R502,0 million) and a
               pledge of shares in certain subsidiaries

Repayable in Secured by a cession of shares and
semi annual rights under a series of put options
instalments
ending in
2010
                                                                   8.40%
Repayable in
monthly
instalments
ending in
2008 and
2011         Various                                              12.90%

Finance
leases
Repayable in Secured by plant and equipment with a
monthly      book value of R10,9 million (2005:
instalments R323,1 million)
ending in
2007                                                       9,5% – 10,5%
Mortgage
bonds
Repayable in Secured by property with a
monthly and
annual
instalments
ending in    book value of
2015         R8,6 million (2005: 9,0 million)                            10,5% – 13,7%
Redeemable
cumulative
preference
shares


Repayable in
full between
March 2006
and February
2013                                                                             8.70%
Promissory
notes

Repayable
on maturity in
February and
September
2008                                                        8,0% fixed and JIBAR + 0,4%
Unsecured
liabilities
Repayable in                                             LIBOR + 1,5% and LIBOR + 1,3%
2007 and                                                                       variable
2009

Repayable
quarterly
ending in
July 2011                                                                 JIBAR + 1,3%
Various


Liabilities in
foreign
currency
Secured
liabilities
Repayable in
November       Secured by property and fixtures with a
2007*          book value of R22 011,8 million                                   6.50%
Repayable in
monthly        Secured by property with a


                                                                                 6.30%
instalments
ending in
2014             book value of R4,0 million                                            6.30%

Redeemable
cumulative

preference
shares
Repayable
on exit or as
determined
by
shareholder                                                                         4,0% fixed
Unsecured
liabilities
Repayable in
April 2008                                                                       LIBOR – 1,0%


*This liability has been refinanced subsequent to 30 September 2006.

Maturity
profile
                                                                                          <1
                                                  Total                                  year
         2006                                      Rm                                     Rm

Liabilities in
South
African Rand                                   3,987.00                              1,227.20
Liabilities in
foreign
currency                                      26,464.40                                   0.2
                                              30,451.40                              1,227.40

         2005

Liabilities in
South
African Rand                                     906.3                                  413.4


Undrawn borrowing facilities
The Group has the following undrawn borrowing facilities at 30 September 2006:

                                                     Group
                                                  2006                                   2005
                                                   Rm                                     Rm
Facilities
expire:
Within 1 year                                     785.6                                       983.5
Between 1
and 2 years                                    1,909.90
In 2 years or
more                                                974                                        211.6
                                               3,669.50                                     1,195.10

Note 15

                                                                                               Group
                                                                                               2006
                                                                                                Rm
15.             Post-retirement benefit obligations
                Post-retirement healthcare benefits                                             86.7
                (refer to note 15.1)
                Post-retirement pension benefits (refer                                         207
                to note 15.2)
                                                                                              293.7

                15.1                                      Post-retirement healthcare benefits
                                                          The Group provides post-retirement healthcare benefits to certain of its
                                                          Employees who joined the employment of the Group prior to 1 Novembe
                                                          retirement medical aid subsidy and in the case of Ampath Trust, 1 Augu

                                                          An actuarial valuation is performed every three years. The post-retireme
                                                          Details of the defined benefit scheme are set out below.
                                                          Valuation
                                                          Last actuarial valuation
                                                            Netcare Medical Scheme
                                                            Ampath defined benefit obligation
                                                          Valuation method adopted




                                                          Principal actuarial assumptions
                                                          Healthcare cost inflation
                                                          Discount rate


                                                          Reconciliation of the actuarial
                                                          obligations to amounts recognised in
                                                          the balance sheet
                                                          Unfunded obligation and net liability
                                                          recognised
                                                          Reconciliation of net liability to
                                                          amounts recognised in the balance
                                                          sheet
                                                          Net liability at the beginning of year
                                                          Service cost
                                                          Past service cost
       Interest cost
       Benefits paid
       Net liability at end of year

       Net post-retirement healthcare costs
       recognised in the income statement
       Service cost
       Past service cost
       Interest cost
       Benefits paid
       Total cost recognised in the income
       statement


15.2   Post-retirement pension benefits
       In South Africa, all employees are covered by defined contribution schem
       There are currently four funds, of which two are closed to new entrants.
       assets of the schemes are under the control of trustees. The defined
       contribution schemes are governed by the Pension Funds Act.

       In the United Kingdom, employees are covered by defined contribution s
       and a defined benefit scheme. There are currently nine defined contribu
       schemes, of which seven are closed to new entrants. The defined benef
       scheme was closed to new entrants in July 2003. Details of the defined b
       scheme are set out below.

       Valuation
       Last actuarial valuation
       Valuation method adopted

       Principal actuarial assumptions
       Discount rate
       Expected rate of salary increases
       Future pension increases
       Expected rate of return of plan assets

       The overall expected return of assets is calculated as the weighted aver
       the expected return of each individual asset class. The expected return o
       equities is the sum of inflation, the dividend yield, economic growth and
       investment expenses. The return on bonds is the current market yield on
       term bonds. The expected return on property has been set equal to the e
       return on equities. The expected return on other assets is a long-term es
       of the return available on cash.

       The actual return on plan assets is 6,7%.


       Present value of obligation
       Acquisition of businesses
       Current service cost
       Interest cost
       Past service cost
                                                Contributions by plan participants
                                                Benefit payments
                                                Translation of foreign entities
                                                Actuarial losses
                                                Benefit obligation at end of year
                                                Fair value of plan assets
                                                Acquisition of businesses
                                                Expected return on plan assets
                                                Actuarial losses
                                                Contributions by plan participants
                                                Employer contributions
                                                Benefit payments
                                                Translation of foreign entities
                                                Fair value of plan assets at end of year
                                                Represented by investments in:
                                                Equity instruments
                                                Debt instruments
                                                Property
                                                Other


                                                Reconciliation to balance sheet
                                                Present value of obligation
                                                Fair value of plan assets
                                                Net liability recognised
                                                Net pension cost recognised in the
                                                income statement
                                                Current service cost
                                                Past service cost
                                                Interest cost
                                                Expected return on plan assets
                                                Total cost recognised in the income
                                                statement
                                                Actuarial losses amounting to R12,0
                                                million (net of tax) were recognised
                                                directly in equity.

Note 16

                                                                                      Group
                                                                                      2006
                                                                                       Rm
16.       Deferred lease liability
          Net operating lease accrual
          Balance at beginning of year                                               159.5
          (Decrease)/increase in accrual*                                            -86.6
          Balance at end of year                                                      72.9
          Less current portion included in
          accounts payable (refer to note 18)                                         -8.5
                                                                                      64.4
          *R85 million decrease due to
          acquisition of hospital previously
          leased.
          Movement as follows:
          Within 1 year                              8.5
          1 – 5 years                               41.2
          5 – 10 years                              23.2
          > 10 years
                                                    72.9

Note 17

                                                   Group
                                                   2006
                                                    Rm
17.       Deferred taxation
          Reconciliation of movement
          Balance at beginning of year              43.1
          Current year charge per the income
          statement (refer to note 24)            -111.4
          Acquisition of businesses             5,067.10
          Translation of foreign entities       1,193.90
          Other                                     10.5
          Balance at end of year                6,203.20
          Comprising
          Deferred tax asset                      -195.9
          Deferred tax liability                6,399.10
                                                6,203.20
          Arising from the following
          temporary differences
          Property, plant and equipment         6,281.10
          Investments (fair value movement)        168.6
          Prepayments                                  6
          Allowance for doubtful debts             -27.7
          Post-retirement benefit obligations      -84.5
          Payroll accruals                         -63.6
          Deferred lease liability                 -21.2
          Calculated tax losses                    -13.4
          Other temporary differences              -42.1
                                                6,203.20

Note 18

                                                   Group
                                                   2006
                                                    Rm
18.       Accounts payable
          Trade creditors                       1,191.50
          Leave pay                                145.1
          Bonuses                                   86.3
          Joint venture payables (refer to
          Annexure D)                               13.5
          Current portion of deferred lease
          liability (refer to note 16)                    8.5
          Other payables                             1,142.20
                                                     2,587.10

Note 19

                                                        Group
                                                        2006
                                                         Rm
19.       Short-term debt
          Total South African Rand and foreign
          currency debt
          Comprising
          South African Rand
             Commercial paper in issue                   800
             Overnight loans                           621.2
             Share cover loan                          200.8
             Short-term portion of long-term debt
          (refer to note 14)                         1,227.20
             Other                                        7.2
                                                     2,856.40
          Foreign currency                                0.2
             Short-term portion of long-term debt
          (refer to note 14)
             Other                                         96
                                                         96.2
                                                     2,952.60

Note 20

                                                        Group
                                                        2006
                                                         Rm

20.       Revenue
          South Africa
            Hospitals and trauma                     6,526.40
            Ancillary healthcare businesses          1,657.90
          United Kingdom                             3,158.80
            Private services
            Public services                             272.8
                                                    11,615.90

Note 21

                                                        Group
                                                        2006
                                                         Rm
21.       Operating profit/(loss)
          After charging:
          Amortisation of intangible assets              25.4
          Auditors’ remuneration                          12.4
             Audit fees                                    9.1
             Fees for other services                       3.3
          Depreciation – property, plant and
          equipment                                     528.2
          Directors’ emoluments (refer to
          Directors' remuneration report)                 26.7
             Executive directors paid by
          subsidiaries
                Basic remuneration, bonuses,
          retirement and
                medical benefits                          25.1
          Non-executive directors
                Consulting fees and fees for
          services as directors                            1.6
          Employee costs (excluding directors’
          emoluments)                                 3,948.10
             Salaries and wages                       3,751.10
             Retirement benefit contributions            155.8

             Post-retirement benefit contributions        21.3
             Share-based payment expense –
          Share options
             (refer to note 32)                           13.1
             Share-based payment expense –
          HPFL (refer to note 32)                          6.8
          Impairment of intangible assets                  0.3
          Impairment of land and buildings               14.6
          Operating lease charges                       479.8
             Land and buildings                           463
             Motor vehicles                              16.8
          Restructure costs                               280
          Share-based payment expense –
          HPFL (excluding amounts
          included in employee costs) (refer to           57.7
          note 32)
          Technical, managerial and secretarial
          services                                      108.8
          After crediting:
          Profit on disposal of property, plant and
          equipment                                        7.3
          Reversal of impairments of land and
          buildings

Note 22

                                                         Group
                                                         2006
                                                          Rm
22.       Financial income
          Dividends received                               1.2
          Fair value gain on cross-currency swap
          contracts (refer to note 30)                442.1

          Fair value adjustments on investments        16.1
          Profit on disposal of subsidiaries          111.1
          Interest received                           119.6
          Profit on disposal of investments             9.3
                                                      699.4

Note 23

                                                      Group
                                                      2006
                                                       Rm
23.       Financial expenses
          Foreign exchange losses (net)               453.8
          Fair value loss on interest rate swaps
          (refer to note 30)                           85.4
          Interest paid                                 962
          Impairment of goodwill                         2.1
          Impairment of investments                    20.6
                                                   1,523.90

Note 24

                                                      Group
                                                      2006
                                                       Rm
24.       Taxation
          South African normal taxation
            Current year                              385.7
            Prior years                               -54.3
            Capital gains tax                           8.1
                                                      339.5
          Foreign tax                                   3.7
          STC                                           2.4
          Income tax                                  345.6
          Deferred taxation
            Current year                             -130.5
            Prior years                                19.1
            Capital gains tax
            Rate change
                                                     -111.4
                                                      234.2
          Reconciliation of effective tax rate
          (%)
          South African normal tax rate                  29
          Adjusted for:
          Exempt income                                 3.7
          Unutilised tax losses                         0.4
          Capital gains tax                               1
          STC                                           0.3
          Different foreign tax rate                                                        -0.6
          Permanent differences                                                               -2
          Rate change
          Prior year adjustments                                                           -4.1
          Other                                                                            -0.3
          Effective taxation rate                                                          27.4
          Estimated taxation losses
          Unused tax losses available for set-off
          against future
          taxable income                                                                  783.8

Note 25



25.       Earnings per share
          25.1                                      Attributable earnings per share
                                                    Net profit attributable to ordinary
                                                    shareholders
                                                    Divided by the weighted average number
                                                    of shares (millions)
                                                    Attributable earnings per share (cents)
          25.2                                      Headline earnings per share
                                                    Net profit attributable to ordinary
                                                    shareholders
                                                    Impairment of goodwill
                                                    Impairment of investments
                                                    Impairment of land and buildings
                                                    Reversal of impairment of land and
                                                    buildings
                                                    (Profit)/loss on disposal of property, plant
                                                    and equipment
                                                    Capital restructuring costs
                                                    Profit on disposal of
                                                    subsidiaries/investments
                                                    Headline earnings
                                                    Divided by the weighted average number
                                                    of shares (millions)
                                                    Headline earnings per share (cents)
                                                    Fully diluted earnings and headline
          25.3                                      earnings per share
                                                    Weighted average number of shares
                                                    (millions)
                                                    Adjusted for: Dilutive effect of employee
                                                    share options (millions)
                                                    Fully diluted weighted average number
                                                    of shares (millions)
                                                    Fully diluted earnings per share (cents)
                                                    Fully diluted headline earnings per share
                                                    (cents)
                                                    Adjusted headline earnings and fully
          25.4                                      diluted headline earnings per share
                                                    Headline earnings
                                                    Adjusted for:

                                                    Share-based payment expense – HPFL
                                                    Litigation costs
                                                    Adjusted headline earnings
                                                    Adjusted headline earnings per share
                                                    (cents)
                                                    Adjusted fully diluted headline earnings
                                                    per share (cents)

Note 26

26.       Acquisitions

          The following significant business combinations took effect during the year:

          International

           12 May 2006: The Group indirectly acquired 52,6% of the interests in General Healthcare Group Limited.

          South Africa

           28 February 2006: The Group acquired 100% of Prime Cure Holdings (Proprietary) Limited.
           26 September 2006: The Group acquired the remaining 53,7% in Netpartner Investments Limited. Netpartner w
           associated company.

          From the dates of acquisition to 30 September 2006, the following amounts have been included in the Group’s in

                                                                                      General
                                                                                    Healthcare
                                                                                        Group
                                                                                           Rm
          Revenue                                                                      3 158.8
          Operating profit                                                               215.3

          Netpartner’s earnings are included in attributable earnings of associates up to 26 September 2006.

          The following tables reflect the carrying values of net assets pre-acquisition and the fair values at acquisition:

                                                                                Carrying value
          General Healthcare Group*                                                        Rm
          Property, plant and equipment                                               5,648.20
          Intangible assets                                                               39.4
          Investments                                                                      5.2
          Inventories                                                                    217.7
          Accounts receivable                                                            919.8
          Cash and cash equivalents                                                      661.5
          Long-term debt                                                             -7,697.40
Financial liability – Derivative financial
instruments                                                              -825.5
Deferred taxation                                                     -1,021.80
Accounts payable                                                         -851.4
Provisions including post-retirement
benefits                                                              -1,226.00
Taxation payable                                                          -15.3
                                                                      -4,145.60
Minority interest                                                          -3.8
Fair value of net assets acquired
Goodwill
Purchase consideration
Consideration satisfied by:
Cash

*Including South Manchester Imaging Plc.

                                                                 Carrying value
Prime Cure Holdings                                                         Rm
Property, plant and equipment                                              11.5
Accounts receivable                                                        17.8
Cash and cash equivalents Long-term
debt                                                                 (3,2) (27,3)
Accounts payable                                                            -26.3
Fair value of net assets acquired                                           -27.5
Goodwill
Purchase consideration                                                      125
Consideration satisfied by:
Cash                                                                        125


                                                                    Fair value*
Netpartner                                                                  Rm
Intangible assets                                                     4,221.00
Cash and cash equivalents                                                  32.7
Long-term debt                                                           -721.5
Financial liability – Derivative financial
instruments                                                              -287.7
Accounts payable                                                           -5.6
Taxation payable                                                           -1.8
                                                                       3,237.10
Minority interest                                                          74.7
Fair value of net assets acquired                                      3,311.80
Investment in Netpartner (previously
associate)                                                               -540.4
Negative goodwill                                                        -819.8
Purchase consideration                                                 1,951.60
Consideration satisfied by:
Issue of shares                                                        1,951.60

*The carrying value is equal to the fair value at acquisition.
Note 27




27.       Contingent liabilities
          27.1                     Guarantees
                                    Guarantee to secure a loan finance
                                    obligation of Community Healthcare
                                    Holdings (Proprietary) Limited, which is
                                    a 43,75% shareholder in Community
                                    Hospital Group (Proprietary) Limited
                                    (“Community”). Community is a black
                                    empowerment hospital group, in which
                                    the Group also has a 43,75% interest.
                                    Guarantees covering the obligations of
                                    certain subsidiaries of Community.
                                    Guarantees covering certain
                                    educational loan obligations of
                                    Guarantee to secure bank facilities
                                    provided to a business partner of
                                    Netpartner Investments Limited.
                                    The Company has provided guarantees
                                    in respect of securing certain
                                    subsidiaries’ loan finance obligations.
                                    Termination guarantees in the United
                                    Kingdom.
                                    Guarantee and indemnity provided to a
                                    supplier of a subsidiary in the United
                                    Kingdom.
                                    Guarantee provided for certain
                                    obligations of its subsidiary in the United
                                    Kingdom relating to the Company’s
                                    obligation under sales contracts.
          27.2                     Sureties
                                    Guarantee to secure obligations of
                                    Community Hospital Management
                                    Limited, in which the Group has a 25%
                                    interest.
                                    Surety for certain performance
                                    obligations relating to the construction
                                    of hospital buildings for the Free State
                                    Health Department.
                                    Surety for certain obligations of
                                    subsidiaries relating to the provision of
                                    supplies and services to various
                                    overseas enterprises.

                                     Guarantees to banks.
          27.3                     Litigation
                                     Litigation, current or pending, is not
                                     considered likely to have a material
                                     adverse effect on the Group.
                         Litigation, current or pending, is not
                         considered likely to have a material
                         adverse effect on the Group.

Note 28




28.       Commitments
                        Capital expenditure commitments to
          28.1          be incurred:
                        Authorised and contracted for
                        Land and buildings
                        Plant and equipment

                        Authorised but not yet contracted for
                        Land and buildings
                        Plant and equipment
                        SAP and Shared Services

                        This expenditure will be financed from
                        internally generated
                        funds and existing banking facilities
                        To be expended
                        Within one year
                        Over one year
          28.2          Operating lease commitments
                        The Group has entered into various
                        operating lease
                        agreements on properties, motor vehicles
                        and equipment.
                        Leases on properties are contracted for
                        periods between
                        21 months and 125 years (2005: 1 and 20
                        years) with
                        renewal options of between 2 and 10
                        years. Rental
                        escalations on properties vary between
                        nil% and 11%
                        (2005: 8,0% and 11,0%) per annum.
                        Motor vehicle leases are contracted for
                        periods between
                        18 and 60 months with rentals linked to
                        prime.
                        Leases on equipment are contracted for
                        periods between
                        1 and 5 years with rentals linked to prime.

                        At 30 September 2006 future non-
                        cancellable minimum
                        lease rentals are payable during the
                        following financial
                        years:
                                                   Properties
                                                   Within 1 year
                                                   1 – 5 years
                                                   5 – 10 years
                                                   > 10 years
                                                   Motor vehicles
                                                   Within 1 year
                                                   1 – 5 years
                                                   Equipment
                                                   Within 1 year
                                                   1 – 5 years


Note 29

29.       Transition to IFRS

          This is the first year that the Group is reporting under International Financial Reporting Standards (“IFRS”). The a
          preparing the financial statements for the year ended 30 September 2006, all comparative information and the op
          transition to IFRS.

          Accounting policies applied are consistent with those used in preparing the 30 September 2005 financial stateme
          IFRS, referred to below.

          29.1                                     Transitional arrangements
                                                   The Group has adopted the following transitional arrangements:

                                                   IFRS 1 First-time adoption
                                                   Fair value or revaluation as deemed cost
                                                   A first-time adopter may elect to use the fair value of individual property,
                                                   Group has elected to continue accounting on the historical cost basis.

                                                   Employee benefits
                                                   The Group has elected not to use the corridor approach that leaves som
                                                   elected to recognise all actuarial gains and losses directly in equity in the

                                                   Cumulative translation differences
                                                   The cumulative foreign currency translation reserve existing on transition

                                                   IFRS 2 Share-based payments
                                                   The Group has elected not to apply the provisions of IFRS 2, Share-bas
                                                   November 2002, or to awards granted after that date but which had vest

                                                   IFRS 3 Business combinations
                                                   The Group has elected not to retrospectively apply the requirements of I
                                                   occurred prior to 1 October 2004 and consequently no adjustment has b


          29.2                                     IFRS effects
                                                   In accordance with IAS 19, Employee benefits, the Group has recognise
                                                   million) arising on the defined benefit plan directly in equity.
          29.2



                                                   In accordance with the requirements of IFRS 2, the Group has recognise
                                                   credit to equity, representing the fair value of share-based payments. Th
                                                   vesting period. Refer to note 32.

                                                   The adoption of IFRS 2 has resulted in:




                                                   Balance sheet
                                                   Reserves

                                                   Increase in share-based payment reserve
                                                   Decrease in opening retained income
                                                   Non-current assets
                                                   Increase in investment in subsidiaries

                                                   Income statement
                                                   Increase in share-based payment
                                                   expense

          29.3                                     Balance sheet reclassifications
                                                   The following balance sheet reclassifications have been made:

                                                   Intangible assets
                                                   Acquired computer software, previously reflected in property, plant and e

                                                   Joint venture loans
                                                   Loans to and from joint ventures have been reclassified to accounts rece

                                                   Post-retirement benefit obligations
                                                   The post-retirement benefit obligations previously shown as provisions u
                                                   been reclassified to non-current liabilities.

                                                   Derivative financial liability
                                                   The derivative financial liability has been separately disclosed on the fac

Note 30

30.       Financial instruments
          The Group has a central treasury function that manages the financial risks relating to the Group’s operations. Ke
          and the United Kingdom, but due authority is obtained from central treasury. The treasury function is a sub-sectio
          least monthly to discuss treasury risks. The Group’s liquidity, credit, interest rate and foreign exchange risks are
          comprehensive risk management process to monitor and control these risks. Risk management relating to each


          Derivative instruments are used by the Group for hedging purposes. Such instruments include currency option co
          speculate in the trading of derivative instruments.

          30.1                                     Liquidity risk
30.1
       The Group manages liquidity risk by monitoring forecast cash flows and
       maintained. Appropriate probability factors are applied to cash flow forec
       three year cash flows are updated on a regular basis.

       Debt financing with the Group’s subsidiary, General Healthcare Group L
       assets of GHG without recourse to Netcare South Africa.

30.2   Credit risk
       The principal area of credit risk consists of trade accounts receivable wh
       and consist of a large number of individual patient accounts. It is Group
       patients have medical insurance, which comprises the majority of the pa
       advance deposits from patients. Credit risk is also mitigated by developm
       requirements on medical aids relating to the build-up of reserves, accred


       The concentrated risk around the Road Accident Fund has dissipated w
       2006, compared to R105,1 million at 30 September 2005.

30.3   Interest rate risk
       This is the risk that fluctuations in interest rates adversely impact on the
       managed by maintaining an appropriate mix between fixed and floating r
       to 75% of local debt is hedged.

       The Group makes use of interest rate swap contracts to generate the de
       interest rate fluctuations.

       Interest rate derivatives
       As at 30 September 2006, the Group had nine interest rate swap contra




       Fixed for floating interest rate swaps

       Rand
       Pound sterling


       The fair value loss at 30 September 2005 was R7,0 million.

30.4   Foreign exchange risk
       Foreign exchange risks are managed through the Group’s financing poli

       Foreign currency exchange derivative contracts are supported by underl

       Currency swaps are valued at fair value with the resultant profit or loss in
       portion of cash flow hedges where profits or losses are recorded directly
       transaction affects income or are included in the initial acquisition cost o


       Currency derivatives
       As at 30 September 2006, the Group had a number of cross currency sw
       Details are as follows:
       Cross-currency swap contracts
       Pound Sterling

       The Pound Sterling liabilities within the United Kingdom are offset by ass
       translation of the United Kingdom operations into Rands.

       During the year an exchange gain of R1 426,9 million was made on the
       gain has been credited directly to the foreign currency translation reserv

30.5   Other risk
       Zero-cost collar
       Sixty million put options were acquired from Investec Bank Limited who,
       premium was payable on the acquisition of the options.

       The call options have been priced in such a manner as to cap the upside
       options, the settlement of the options can be settled in either cash or in s

       Each put option held by the subsidiary has been ceded as security for th


       The salient features of the options outstanding are as follows:

       Options held by subsidiary
       European-styled put options to acquire Netcare shares


       Expiration date
       23 September 2008
       23 March 2009
       23 September 2010
       23 March 2010
       23 September 2010

       Options held by Investec
       European-styled call options to acquire Netcare shares



       23 September 2008
       23 March 2009
       23 September 2010
       23 March 2010
       23 September 2010

30.6   Fair value of derivative financial instruments
30.6



       Non-current derivative financial
       instruments
       Cross-currency swaps
       Interest rate swaps
       Zero cost collar


       * This cross-currency swap asset is reflected in both the Group and Com



       Current derivative financial instruments
       Interest rate swaps

30.7   Maturity profile and fair value of financial instruments
       The maturity profile of financial assets and liabilities are summarised as



                                                2006
       Financial assets
       Accounts receivable
       Cash and cash equivalents
       Financial asset – Derivative financial
       instruments
       Held-for-trading investments
       Loans

       Financial liabilities
       Accounts payable
       Bank overdrafts
       Financial liability – Derivative financial
       instruments
       Short-term debt
       Long-term debt


       * R26 419,0 million has been refinanced subsequent to 30 September 2



                                                2005
       Financial assets
       Accounts receivable
       Cash and cash equivalents
       Held-for-trading investments
       Loans

       Financial liabilities
       Accounts payable
       Financial liability – Derivative financial
       instruments
                                                  Short-term debt
                                                  Long-term debt


Note 31

31.       Related parties
          Related party relationships exist within the Group. Transactions are on commercial terms. Details of certain trans
          disclosed elsewhere in the financial statements are set out below.

          31.1                                    Joint venture
                                                  During the year certain subsidiaries of the Group, in the ordinary course
                                                  rental arrangements with its joint venture, the Ampath Holdings Trust. Th
                                                  less favourable than those arranged with third parties. The amount of re
                                                  amounted to R7,7 million (2005: R9,8 million). The chief executive office
                                                  non-executive director of the Group.

          31.2                                    Netpartner Investments Limited
                                                  On 26 September 2006 Netpartner Investments Limited which holds 340
                                                  and which was previously accounted for as an associate in terms of IAS
                                                  to a Scheme of Arrangement. Prior to that date, the Company held 46,3%
                                                  Limited, which held 20% of Medicross Healthcare Group (Pty) Limited. T
                                                  Medicross Healthcare Group (Pty) Limited.

                                                  On 26 September 2006 Netpartner Investments Limited which holds 340
                                                  and which was previously accounted for as an associate in terms of IAS
                                                  to a Scheme of Arrangement. Prior to that date, the Company held 46,3%
                                                  Limited, which held 20% of Medicross Healthcare Group (Pty) Limited. T
                                                  Medicross Healthcare Group (Pty) Limited.

          31.3                                    Key management personnel
                                                  Key management personnel are directors and those executives having a
                                                  planning, directing and controlling the activities of the Group. Directors o
                                                  management personnel have been classified as “key management pers

                                                  The Group has many different operations, where Group personnel may
                                                  entered into during the year with key management personnel were on te
                                                  favourable than those available to other employees, customers or suppli
                                                  respect of the employee option plans, contracts of employment and reim
                                                  other transactions which are domestic in nature.

                                                  Directors
                                                  Details relating to executive and non-executive directors’ remuneration a
                                                  remuneration report.

                                                  Information pertaining to directors’ interests in the share capital of the Co
                                                  pertaining to share options outstanding and benefits in terms of share op
                                                  directors’ remuneration report.

                                                  Certain relatives of executive directors entered into consultancy arrange
                                                  commercial terms with a total value of R0,5 million (2005: R0,6 million).
                                 One of the non-executive directors is the Company’s legal counsel. Serv
                                 commercial arms length basis and amounted to R1,7 million (2005: R0,9

                                 Certain administrative and logistical services are provided by the Group
                                 dispensing organisation which is owned by one of the directors. Such se
                                 length basis.

                                 Senior management personnel
                                 Netcare South Africa Exco – 10 posts (2005: 8 posts) on average GHG
                                 2006) – 6 posts

                                 Remuneration paid to senior management personnel is as follows:


                                 Netcare South Africa Exco
                                 Salaries and allowances
                                 Company contributions
                                 Bonuses

                                 Leveraged phantom share bonus scheme
                                 Fair value of options granted *

                                 GHG (UK) Exco
                                 Salaries and allowances
                                 Company contributions
                                 Bonuses
                                 Fair value of options granted*


                                 *The fair value of options granted is the annual expense determined by I

Note 32

32.       Share-based payments

          32.1                   The Netcare Share Incentive Scheme (as amended)
                                 The Netcare Share Incentive Scheme was adopted on 7 November 199

                                 Participants in the scheme may be officers or other employees of the Gr


                                 Participants may be offered the opportunity to acquire shares in terms o
                                 the scheme, all offers are granted at the closing market price of the Com
                                 the day on which the relevant options are granted.

                                 In the event of death, serious disability, retrenchment or retirement of a p
                                 event. In the event of resignation of a participant, options which have be
                                 cancelled.
The rules of the scheme provide that the aggregate number of shares w
than 12,5% of the total issued ordinary share capital of the Company. Pu
cumulative number of shares available for allocation under the scheme i
participant is entitled shall not exceed 1% of the ordinary shares in issue

As at 30 September 2006, the cumulative number of options granted (ne
number of shares available for allocation under the scheme was 6 606 9

*A resolution to increase the maximum cumulative quantity available for
of the directors’ report, viz. 12,5% of 1 782 490 221 amounting to 222 81
with the annual report.

The scheme did not hold any shares in the Company at 30 September 2

Share options
Movement in the number of share options outstanding was as follows:




Balance at beginning of year
Granted
Exercised
Expired/forfeited
Balance at end of year

Analysis of exercise dates and prices




Vested

Unvested




*Weighted average price
Refer to the directors’ remuneration report for details on share options h

Share options outstanding at 30 September 2006 have the following term



Financial year of grant
                                      2001
                                              2004
                                              2005
                                              2006
       Balance at 30 September 2006

       The fair value of options granted since 7 November 2002 was calculated

       The table below sets out the valuation thereof.




       Financial year of grants
                                              2004
                                              2005
                                              2006


       Share option cost expensed in 2005 was R4,8 million.

       The following assumptions were used to value the share options granted


       Volatility
       Forfeiture rate
       Risk-free interest rate
       Dividend yield

32.2   Health Partners for Life (BEE transaction)
       The Group implemented the Health Partners for Life (“HPFL”) initiative o
       participation and transformation within the Netcare Group and in the priv

       A broad grouping of predominantly historically disadvantaged individuals
       The HPFL trusts that are participants to the transaction are The Patient
       Mother & Child Trust and The Healthy Lifestyle Trust. The objective of th
       purchase of trust units, the assets and liabilities of the trusts and the ma
       commitment to broad-based black economic empowerment.

       The terms of the trusts are as follows:

       The Patient Care and Passionate People Trust and The Physician P
       The Patient Care and Passionate People Trust will indirectly assist the G
       this trust will be in addition to any awards participants may receive under
       will only be entitled to participate under the share incentive trust and not

       The Physician Partnerships Trust will assist the Group in attracting and r

       The awards to beneficiaries of these trusts will be effected by the trustee
       benefits of a specified number of Netcare shares in tranches of 20% ove
       their participation.
Beneficiaries who are Netcare employees will cease to be entitled to hol
Beneficiaries who are medical doctors will cease to be entitled to hold tru
good standing with the relevant professional board or council.

Dividends or other distributions received on HPFL shares shall be applie
and thereafter distributed to holders of the trust units entitled thereto.

The Mother & Child Trust and The Healthy Lifestyle Trust
The Mother & Child Trust will fund the provision of healthcare assistance
selected women’s groups and children’s organisations.

The Healthy Lifestyle Trust will promote a healthy lifestyle through wellne

Dividends and cash distributions made in respect of the Netcare shares
applied firstly towards servicing the third party funding obligation. A porti
applied to the benefit of or distributed to the beneficiaries.

Details of the trust units at the end of the year are as follows:




Trust
The Patient Care and Passionate People
Trust
The Physician Partnerships Trust
The Mother & Child Trust
The Healthy Lifestyle Trust


Movement in the number of units was as follows:




Issued
Forfeited
Balance at end of year

The fair value of the units issued was calculated using the Monte Carlo s

The table below sets out the valuation thereof.




Trust
                                     The Patient Care and Passionate People
                                     Trust
                                     The Physician Partnerships Trust
                                     The Mother & Child Trust
                                     The Healthy Lifestyle Trust


                                     The following assumptions were used to value the units issued:


                                     Volatility
                                     Risk-free interest rate
                                     Dividend yield

Note 33

33.       Segment report
                                                                       Revenue
                                                                         2006
                                                                          Rm
          South Africa                                               8,184.30
          Hospitals and trauma                                       6,526.40
          Ancillary healthcare and
          corporate office                                           1,657.90

          United Kingdom                                             3,431.60
          Private services                                           3,158.80
          Public services                                               272.8

                                                                    11,615.90


                                                      Revenue




                                                                   Debt net of cash
                                         2006
                                          Rm
South Africa                         5,443.90
United Kingdom                      25,724.10
                                    31,168.00

                 Debt net of cash
tements


th International Financial Reporting Standards (“IFRS”) for the first time. The disclosures required by IFRS 1 concerning the transition from S




prepared on the historical cost basis, except for certain financial instruments that are stated at fair value.

nancial results

 (including special purpose entities) over which the Group has an interest of more than half the voting rights or otherwise has power to exerc

 from the date on which control is transferred to the Group and are no longer consolidated from the date that control ceases. The purchase m

alances and unrealised gains on transactions between Group companies are eliminated. Unrealised losses are also eliminated unless the tra

 tements, investments in subsidiaries are stated at cost less any impairment losses.


oup has significant influence but not control, are accounted for by the equity method of accounting. Under this method the Group’s share of p

 tements, investments in associates are stated at cost less any impairment losses.


controlled entities is accounted for by proportionate consolidation. The Group combines its share of the joint venture’s individual income and


tly attributable to qualifying assets are capitalised. Qualifying assets are those assets that necessarily take a substantial period of time to pre

 ecognised in the income statement in the period in which they are incurred.




s recognised in the income statement.

– Defined contribution pension plans
 bution plans are recognised in the income statement.

– Defined benefit pension plans
 ect of defined benefit pension plans is actuarially calculated by deducting the fair value of the plan assets from the gross obligation for post-r

ed using the discount rate to determine its present value. Independent actuaries perform this calculation annually using the projected unit cre

sing from experience adjustments and changes in actuarial assumptions are recognised in full as they arise outside of the income statement
ised immediately to the extent that the benefits are already vested. Otherwise they are amortised on a straight-line basis over the average pe

d the gross obligation, the asset recognised is limited to the total of unrecognised net actuarial losses, unrecognised past service costs relate

– Medical funds
ement healthcare benefits to certain of its retirees in South Africa only. Employees who joined the employment of the Group prior to 1 Novem

cted future defined benefit obligation is quantified to the extent that service has been rendered, and is reflected on the balance sheet as a lia

flect additional service rendered by employees as well as any variation resulting from changes in the employee composition, and all actuarial

its – The Netcare Share Incentive Scheme
ns to certain employees under The Netcare Share Incentive Scheme. The fair value of the employee services received in exchange for the g

its – Health Partners for Life
h Partners for Life trusts hold trust units which entitle them to the economic benefits of a specified number of Netcare shares over a vesting p




ounted for on transaction date and are initially measured at fair value, including transaction costs. Subsequent to initial recognition, financial i


-trading are classified as current assets and are stated at fair value, with any resultant gain or loss recognised in the income statement.

 ld by the Group are classified as being available-for-sale and are stated at fair value, with any resultant gain or loss being recognised directly

ent market value where a regulated market exists. Otherwise fair value is determined utilising appropriate methodology including discounted


 re classified as loans and receivables and are measured at amortised cost less allowances for doubtful debts, which is determined as set ou


e measured at fair value, with changes in fair value being included in the income statement.


 es are initially measured at amortised cost, unless they are designated on initial recognition to be measured at fair value. Fair value changes


sing the effective interest rate method. The effective interest rate is the rate that exactly discounts estimated future cash payments or receip

quent measurements
 n available-for-sale investments are recognised directly in equity until the disposal or impairment of the relevant investment, at which time th

a change in the fair value of financial instruments that are not part of a hedging relationship are included in the income statement in the period

hedge accounting
are measured at fair value, with changes in fair value being included in the income statement other than derivatives designated as cash flow

e resulting gain or loss is dependent on the item being hedged. The Group designates certain derivatives as one of the following on the date

e the exposure to changes in fair value of a recognised asset or liability;
 e the exposure to variability in cash flows that is either attributable to a particular risk associated with a recognised asset or liability or a forec
 a foreign entity.

s which meet the conditions for hedge accounting, any gain or loss on the hedged item attributable to the hedged risk is included in the carryi

s which meet the conditions for hedge accounting, the portion of the gain or loss on the hedging instrument that is determined to be an effect

cast transaction subsequently results in the recognition of a financial asset or financial liability, the gains or losses recognised in equity are tra

 ction subsequently results in the recognition of a non-financial asset or non-financial liability, the associated gains or losses that had previou

nvestment in a foreign entity which meet the conditions for hedge accounting, the portion of the gain or loss on the hedging instrument that is

 ued on a prospective basis when the hedge no longer meets the hedge accounting criteria (including when it becomes ineffective), when the


 ised once the contractual right to receive cash flows has been transferred or has expired and substantially all the risks and rewards of owne

gnised when the relevant obligation has either been discharged, cancelled or has expired.



 ty are accounted for in its measurement currency. The consolidated financial statements are presented in South African Rand.


foreign currencies are translated at the rate of exchange ruling at the transaction date. Monetary items denominated in foreign currencies are


 ssified as foreign entities for the purposes of foreign currency translation. The financial statements of foreign entities are translated into Sout

of exchange ruling at balance sheet date;
h flow items at weighted average rates; and
 ate ruling when they arose.

nces are reflected in a foreign currency translation reserve as part of shareholders’ equity. On disposal, such translation differences are recog


s accumulated impairment losses.

 when an entity is acquired. On acquisition date, fair values are attributed to the identifiable assets and liabilities.

assets and liabilities are determined with reference to market values of those or similar items, where available, or by discounting expected fu

disposal or termination of an entity is calculated after taking into account the carrying value of any related goodwill.

 e of the net identifiable assets of the entity acquired exceeds the cost of acquisition, the excess is recognised in the income statement on ac


Group’s assets are reviewed at each balance sheet date to determine whether there is any indication of impairment. If any such indication exi

e higher of an asset’s net selling price and value in use. The net selling price is the amount obtainable from the sale of an asset on an arm’s
 , a previously recognised impairment loss is reversed if the recoverable amount increases as a result of a change in the estimates used to d


 nt charged for accommodation, theatre fees and medical consumables, but excludes value added tax. Revenue within the Group is eliminat

ents is recognised when the service giving rise to this revenue is rendered, based on the stage of completion.

 tration fees is recognised on the accrual basis in accordance with the substance of the relevant agreements.

 e proportion basis, taking account of the principal outstanding and the effective rate over the period to maturity, when it is determined that su

en the shareholders’ right to receive payment is established.


 cost less accumulated amortisation and accumulated impairment losses.

 ed if it is probable that future economic benefits will flow to the entity from the assets and the costs of the assets can be reliably measured.

ed on a straight-line basis over their estimated useful lives.

stimated useful lives for the 2006 financial year were as follows:

              Over contract period
              3 – 7 years
              7 years
              Over contract period

 software is depreciated when brought into use.


cognised as an expense when it is incurred.

 the design and testing of new or improved products, systems or processes, are recognised as intangible assets when it is probable that the


 al consumables held by contracted entities are valued at the lower of cost and net realisable value on a first-in first-out basis. Net realisable

 crockery, cutlery, linen and soft furnishings, are valued at average cost and written down with regard to their age and condition.



 roup assumes substantially all the benefits and risks of ownership are classified as finance leases. Finance leases are capitalised at the fair


 roup does not assume substantially all the benefits and risks of ownership are classified as operating leases. Payments made in respect of o


t are stated at cost less accumulated depreciation and any impairment losses. Land is not depreciated.

 or components with different useful lives, these components are accounted for as separate items.

t is depreciated to its estimated residual value on a straight-line basis over its expected useful life. The depreciation methods, estimated rem
stimated useful lives for the 2006 financial year were as follows:

              Indefinite
              3 – 75 years
              3 – 7 years
              8 – 10 years
              3 – 10 years
              5 years
              Useful life based on the number of hours used
              2 – 12 years


 of uncertain timing or amount. Provisions are recognised when the Group has a present legal or constructive obligation as a result of past e


 are offset and the net amount reported in the balance sheet when there is a legally enforceable right to set-off the recognised amounts and


able calculated on the expected taxable income for the year, using the tax rates substantially enacted at the balance sheet date, and any ad

or using the balance sheet liability method, based on temporary differences. Temporary differences are differences between the carrying am

ised to the extent that it is probable that future taxable profits will be available against which the associated unused tax losses and deductible


diary companies are deducted from share capital and premium on consolidation. These shares are not included in the number of shares in i


ssified or restated where necessary to afford a proper and more meaningful comparison of results as set out in the affected notes to the fina


atements in conformity with International Financial Reporting Standards requires management to make estimates and assumptions that affec

ve been identified as involving particularly complex or subjective judgements or assessments, as follows:


Combinations, the company has allocated, at the date of acquisition, the cost of the GHG acquisition by recognising GHG’s identifiable asset

ew was conducted over liabilities and contingent liabilities to recognise the fair value of the future outflow from the Company of resources em


t is depreciated over its useful life taking into account residual values, where appropriate. The actual lives of the assets and residual values a


nised to the extent it is probable that taxable income will be available in future against which they can be utilised. Future taxable profits are e


ed in terms of The Netcare Share Incentive Scheme is determined using the binomial option valuation model. The fair value of the trust units


airment at least annually. Property, plant and equipment and intangible assets are considered for impairment if there is any reason to believe
 be generated by the assets are projected, taking into account market conditions and the expected useful lives of the assets. The present va


its are provided for certain existing and former employees. Actuarial valuations are based on assumptions which include employee turnover,


ancial instruments is based on the market situation at balance sheet date. The value of the derivative instruments fluctuates on a daily basis


s concerning the future and other key sources of estimation uncertainty at the balance sheet date that management have assessed as havin




                  Accumulated depreciation and
                              impairments Rm                Carrying value Rm


                                              -437.3                   24,983.00
                                                                           224.2
                                              -172.7                       151.8
                                              -168.9                       124.8
                                           -1,247.20                    1,568.30
                                               -17.9                        42.2
                                               -44.2                         152
                                           -2,088.20                   27,246.30


                                              -206.1                    2,307.60
                                              -155.1                        46.3
                                              -149.7                        70.8
                                           -1,029.30                       618.2
                                               -12.1                        37.3
                                               -20.2                        28.5
                                           -1,572.50                    3,108.70


Schedule 4 of the Companies Act, is available for inspection by members at the Company’s registered office.

during the year and are included in “Additions” in the movement summary.

t Valuation Surveyors carried out an external valuation of the South African properties based on open market values effective 30 September

ternational Property Advisors) in the current year to determine the fair value of properties at acquisition of the foreign subsidiary. The valuatio


ity for long-term and short-term debt as reflected in note 14.
        2005
         Rm
       834.1



Freehold and         Assets     Computer    Furniture     Medical
   leasehold          under    equipment         and    equipment
     land and   construction         Rm    equipment          Rm
    buildings            Rm                       Rm
          Rm




    2,513.70                       201.4        220.5     1,647.50
       456.9           154.6        45.5         32.3        290.6
       -43.6                       -11.3         -7.6        -53.1
   18,147.70           120.3        73.5         40.6        668.8
                                    -0.8
         2.9           -71.9        -2.2         -2.7         77.9
    4,342.70            21.2        18.4         10.6        183.8
   25,420.30           224.2       324.5        293.7     2,815.50


       -206.1                     -155.1       -149.7    -1,029.30
       -173.9                        -40        -29.8       -257.3
                                      19          8.7         51.7
                                     0.8
        -14.6
         -0.1                        3.7          2.9         -4.5
        -42.6                       -1.1           -1         -7.8
       -437.3                     -172.7       -168.9    -1,247.20

   24,983.00           224.2       151.8        124.8     1,568.30


    2,314.60                       185.4        226.7     1,494.00
       199.1                        23.7          3.9        192.5
                                    -7.7        -10.1          -39
    2,513.70                       201.4        220.5     1,647.50


       -180.2                     -121.8       -139.9       -925.4
        -35.7                        -41        -19.4       -142.4
                                     7.7          9.6         38.5
          9.8
       -206.1                     -155.1       -149.7    -1,029.30
2,307.60                   46.3   70.8   618.2




   2005
    Rm


     411
    -102
     309

   211.5
     0.8
   116.6
   -19.9

    309



           Development
Software    expenditure   Total
     Rm             Rm     Rm



   184.6           33.7    304

    -6.1          -13.7   -33.1
   178.5             20   270.9

    25.4            16     41.4
    41.6                  110.8
   102.6            8.6   111.2
    -5.8           -7.7   -25.4
                   -0.3    -0.3
                   -0.6    -0.6
    14.7              4    33.8

   178.5            20    270.9


    25.4           21.6     47

                   -5.6    -5.6
    25.4             16    41.4

                   15.7    15.7
    25.4            2.6      28
                     -3.4        -3.4
                      1.1         1.1

         25.4         16        41.4




Group           Company
        2005        2006        2005
         Rm          Rm          Rm


                 2,614.40    1,338.00
                 2,926.70       391.7
                    -83.4   -1,127.80
                 5,457.70       601.9




Group           Company
        2005        2006        2005
         Rm          Rm          Rm

        559.8
        168.6
        728.4
        823.9




Group           Company
        2005        2006        2005
         Rm          Rm          Rm




                               527.7
         62.8                   31.4
            62.8              559.1

            49.9
                        4.7    49.9
           25.9
           75.8         4.7    49.9
          138.6         4.7     609



Group              Company
           2005        2006   2005
            Rm          Rm     Rm

          235.2

            39.4

          274.6


Group              Company
           2005        2006   2005
            Rm          Rm     Rm

        1,065.60
          -101.6
             964
            38.9
            21.9

           345.3       60.9
        1,370.10       60.9



Group              Company
           2005        2006   2005
            Rm          Rm     Rm


          292.9
                      109.1       3
                                 -2
          292.9       109.1       1




            4.2
            2.6
          286.1       109.1      3
                           -2
   292.9    109.1           1



Group                   Company
   2006      2005       2006       2005
    Rm        Rm         Rm         Rm




      25       25         25         25

    17.8     17.1
                         17.8      17.1
1,479.00    580.1    1,523.70     471.6
   580.1      844       471.6     792.3
1,686.10     44.2    1,686.10      44.2
   -10.2     -0.3       -10.2      -0.3
  -386.4               -132.7
  -390.6    -307.8     -491.1     -364.6

1,496.80    597.2    1,541.50     488.7




-5,555.00   -897.5




-4,058.20   -300.3   1,541.50     488.7
  264.1       257.5

                 6.2

     0.5         0.4
    160
  340.4

  -168.8
   596.2      264.1




  714.7       734.6      714.7      734.6
    6.6        55.1
                            6.6       55.1
  721.3       789.7
                         721.3      789.7




1,446.20    1,425.80   1,710.40   1,683.40
   198.7          27      198.7         27
  -130.4                 -130.4
                -6.2

     -0.5       -0.4
    -160
  -340.4

   168.8
1,182.40    1,446.20   1,778.70   1,710.40
Group               Company
            2005        2006       2005
             Rm          Rm         Rm

             -13
           225.7       161.7      161.7




             -0.5
              5.8       83.4        5.8
                       476.8      476.8
             218       721.9      644.3



         Group                     Company
            2006        2005       2006      2005
             Rm          Rm         Rm        Rm



               5                      5




             3.3                     3.3
           640.6
                                  640.6
           643.9                  643.9




         Group                     Company
            2006        2005       2006      2005
             Rm          Rm         Rm        Rm

        30,451.40       906.3   2,592.50
        -1,227.40      -413.4
29,224.00    492.9    2,592.50


    311.3      286
       9.6   303.2
         5      5.7
        91
      750
 2,820.10    311.4    2,592.50
 3,987.00    906.3    2,592.50

26,421.10
     21.8
     21.5
26,464.40
30,451.40    906.3    2,592.50


 Group                   Company
    2006     2005        2006      2005
     Rm       Rm          Rm        Rm




               286




      310




      1.3
    311.3      286




      9.6    303.2
       5      5.7




      91




     750




 2,592.50           2,592.50




    218.3
      9.3   311.4
 2,820.10   311.4   2,592.50
 3,987.00   906.3   2,592.50




26,419.00




      2.1
      2.1
26,421.10




     21.8



     21.5
26,464.40




    1–2        2–3     3–4       >4
    years      years   years   years
      Rm         Rm      Rm      Rm



   799.8    1,469.30   64.5    426.2


26,419.20        0.3    0.3     44.4
27,219.00   1,469.60   64.8    470.6




   134.3      193.1    87.5      78
       Group
                                                2005
                                                 Rm

                                                65.4



                                                65.4

nefits
ement healthcare benefits to certain of its retirees in South Africa only.
 ployment of the Group prior to 1 November 2004 are entitled to a post-
y and in the case of Ampath Trust, 1 August 2006.

rmed every three years. The post-retirement medical benefit is unfunded.
scheme are set out below.




                                                            30 September 2004
                                                                31 March 2006
                                                                 Projected unit
                                               2006                      2005
                                                  %                         %
                                                 6.8                       6.8
                                          7,3 – 10,0                        10
                                               2006                      2005
                                                 Rm                        Rm




                                                86.7                         65.4



                                                65.4                         55.1
                                                 7.5                          5.9
                                                 8.4
                                                  6.7    5.4
                                                 -1.3     -1
                                                 86.7   65.4



                                                  7.5    5.9
                                                  8.4
                                                  6.7    5.4
                                                 -1.3     -1

                                                 21.3   10.3


fits
 are covered by defined contribution schemes.
, of which two are closed to new entrants. The
der the control of trustees. The defined
erned by the Pension Funds Act.

yees are covered by defined contribution schemes
. There are currently nine defined contribution
closed to new entrants. The defined benefit
 trants in July 2003. Details of the defined benefit



                                30 September 2006
                                     Projected unit
                                             2006
                                                %
                                                 5
                                               4.5
                                               2.9
                                                 7

   assets is calculated as the weighted average of
 dividual asset class. The expected return on
 , the dividend yield, economic growth and
 urn on bonds is the current market yield on long-
urn on property has been set equal to the expected
 ed return on other assets is a long-term estimate
h.



                                               2006
                                                 Rm
                                              878.6
                                                15.4
                                                18.8
                                                 1.6
              5.1
            -4.7
             214
              1.1
        1,129.90

           711.7
            22.5
           -16.1
             5.1
            30.2
            -4.7
           174.2
           922.9

           737.9
            83.2
            14.2
            87.6
           922.9


        1,129.90
          -922.9
             207


            15.4
             1.6
            18.8
           -22.5

            13.3




Group               Company
           2005         2006   2005
            Rm           Rm     Rm


           152.9
             6.6
           159.5


           159.5
         31.7
         89.1
         38.7
        159.5




Group                       Company
        2005        2006       2005
         Rm          Rm         Rm


        160.2       40.1         7.1

        -117        -28.7       10.1


         -0.1                   22.9
         43.1       11.4        40.1

        -18.7
         61.8       11.4        40.1
         43.1       11.4        40.1


          4.5
        160.6
          7.8
        -22.1
          -19
        -63.5
        -42.6
        -18.7
         36.1       11.4        40.1
         43.1       11.4        40.1



Group           Company
        2005        2006       2005
         Rm          Rm         Rm

        336.9
        104.7
         62.1

         10.2
           646.1       17.8    4.3
        1,160.00       17.8    4.3



Group              Company
           2005        2006   2005
            Rm          Rm     Rm




            500



          413.4
                        7.2
          913.4         7.2




          913.4         7.2



Group              Company
           2005        2006   2005
            Rm          Rm     Rm



        5,927.80
        1,424.80


           181.1
        7,533.70




Group               Group
           2005        2006   2005
            Rm          Rm     Rm


             3.4
            8.9
              8
            0.9
          248.2

            23.5




            22.5

              1

        2,404.70

        2,281.40
           108.2
            10.3



             4.8




          152.4
          137.5
           14.9



                       57.7


            54.3


             1.4

             9.8




Group              Group
           2005       2006    2005
            Rm         Rm      Rm

                   1,511.80
         29.2       16.1    19.3


         46.5       143.3   27.1
                      6.2
         75.7    1,677.40   46.4




Group            Group
        2005        2006    2005
         Rm          Rm      Rm

          1.2      123.4
            7

          176       78.4
         19.9
         29.3          6
        233.4      207.8



Group            Group
        2005        2006    2005
         Rm          Rm      Rm


        270.4                6.7
        142.6        -2.1    3.1
          3.5         8.1
        416.5           6    9.8


        416.5          6     9.8

         24.9       -28.7    6.9
         -138
           1.4               3.4
          -5.3              -0.2
         -117       -28.7   10.1
        299.5       -22.7   19.9


           29
    -1.7
    -0.5
     0.4

    27.2



    105




   2006       2005    2006   2005
    Rm         Rm      Rm     Rm



  729.3      813.6

1,447.70   1,431.50
    50.4       56.8


  729.3      813.6
    2.1       19.9
   20.6       29.3
   14.6

               -9.8

   -4.2         6.1
  171.8

  -120.4
   813.8     859.1

1,447.70   1,431.50
    56.2         60



1,447.70   1,431.50

     62        42.3

1,509.70   1,473.80
    48.3       55.2

    53.9       58.3
                                                  813.8               859.1


                                                   64.5
                                                                        2.5
                                                  878.3               861.6

                                                   60.7                60.2

                                                   58.2                58.5




year:



n General Healthcare Group Limited.



s (Proprietary) Limited.
tpartner Investments Limited. Netpartner was previously accounted for as an


ounts have been included in the Group’s income statement:


                                             Prime Cure
                                               Holdings               Total
                                                    Rm                  Rm
                                                  161.7            3,320.50
                                                     6.2              221.5

es up to 26 September 2006.

sition and the fair values at acquisition:

                                              Fair value
                                                     Rm
                                              19,131.70
                                                   108.6
                                                     5.2
                                                   217.7
                                                   919.8
                                                   661.5
                                               -7,697.40
    -825.5
 -5,067.10
    -862.2

 -1,269.10
     -15.3
  5,307.90
      -3.8
  5,304.10
 13,139.60
 18,443.70

 18,443.70




Fair value
       Rm
      11.5
      17.8

(3,2) (27,3)
       -27.2
       -28.4
      153.4
Group                 Group
   2006   2005      2006      2005
    Rm     Rm        Rm        Rm


    70      70        70        70




    86      86        86        86

    20      20        20        20

          37.7                37.7


                 1,768.30


   30.5

   14.5              14.5


  101.7            101.7




            25                  25



    51      51        51        51



          91.4                91.4



   36.3              36.3
Group                Group
   2006    2005    2006      2005
    Rm      Rm      Rm        Rm




  394.3     260
     57


    603
            42.5
            87.8
1,054.30   390.3




1,031.20   280.5
    23.1   109.8
                                              143.4                       83.4
                                                436                      331.4
                                              265.7                      297.5
                                           2,427.80                         72

                                                 9.4                        9.2
                                                 5.4                        5.1

                                               21.8
                                               42.2
                                           3,351.70                      798.6




ancial Reporting Standards (“IFRS”). The accounting policies set out in note 1 have been applied in
006, all comparative information and the opening IFRS balance sheet at 1 October 2004, being the date of


g the 30 September 2005 financial statements, except for changes made as a result of the adoption of



ollowing transitional arrangements:


deemed cost
to use the fair value of individual property, plant and equipment at transition date as the deemed cost. The
 accounting on the historical cost basis.


use the corridor approach that leaves some actuarial gains and losses unrecognised. The Group has
ial gains and losses directly in equity in the year in which they arise.

rences
cy translation reserve existing on transition has been retained.

nts
 apply the provisions of IFRS 2, Share-based payments, to equity-settled awards granted on or before 7
 granted after that date but which had vested prior to 1 October 2004.

ons
 retrospectively apply the requirements of IFRS 3, Business combinations, for business combinations that
004 and consequently no adjustment has been made for historical business combinations.



mployee benefits, the Group has recognised actuarial losses amounting to R12,0 million (net of tax of R5,1
 benefit plan directly in equity.
ements of IFRS 2, the Group has recognised an expense in the income statement, with a corresponding
 he fair value of share-based payments. The fair value at the grant date is charged to income over the
32.

esulted in:

                                           Group                                          Company
                                              2006                         2005           2006          2005
                                               Rm                           Rm             Rm            Rm



                                                77.6                         5.8          77.6               5.8
                                                                               1

                                                                                          19.9               5.8



                                                77.6                         4.8          57.7

ons
eclassifications have been made:


previously reflected in property, plant and equipment is now reflected as an intangible asset.


es have been reclassified to accounts receivable and accounts payable.

gations
bligations previously shown as provisions under current liabilities on the face of the balance sheet, have
 nt liabilities.


y has been separately disclosed on the face of the balance sheet.




 isks relating to the Group’s operations. Key functions are managed from the Head Office in South Africa
asury. The treasury function is a sub-section of the Finance and Investment Committee which meets at
 erest rate and foreign exchange risks are continuously monitored. The Group has developed a
e risks. Risk management relating to each of these risks is discussed under the headings below.


uch instruments include currency option contracts and interest rate swap agreements. The Group does not
risk by monitoring forecast cash flows and ensuring that adequate unutilised borrowing facilities are
ability factors are applied to cash flow forecasts, when forecasts are not certain. Monthly, quarterly and
ated on a regular basis.

’s subsidiary, General Healthcare Group Limited (“GHG”), in the United Kingdom is secured against the
se to Netcare South Africa.


k consists of trade accounts receivable which are governed by clearly defined credit and collection policies
 of individual patient accounts. It is Group policy to obtain confirmation in respect of those accounts where
 ce, which comprises the majority of the patient accounts. In other cases indebtedness is secured by
ts. Credit risk is also mitigated by developments in the medical aid industry resulting in the imposition of
 relating to the build-up of reserves, accreditation and quarterly reporting.


 the Road Accident Fund has dissipated with an amount outstanding of R54,6 million at 30 September
llion at 30 September 2005.


 s in interest rates adversely impact on the Group’s earnings, assets, liabilities and equity. The risk is
ppropriate mix between fixed and floating rate borrowings. All the offshore debt has been hedged, while up
d.

 est rate swap contracts to generate the desired interest profile and to manage the Group’s exposure to



 Group had nine interest rate swap contracts. Details are as follows:

                                            Notional                                                 Fair value
                                             amount                      Interest       Maturity           loss
                                                 Rm                      rate (%)          date             Rm

                                            1,470.80                     7,8 – 9,6 2007 – 2011
                                           26,872.70                     4,8 – 5,8 2015 – 2031               85.4
                                                                                                             85.4

ember 2005 was R7,0 million.


anaged through the Group’s financing policies and selective use of cross currency swaps.

erivative contracts are supported by underlying commitments or receivables.

 fair value with the resultant profit or loss included in income. The only exception related to the effective
here profits or losses are recorded directly in equity and either transferred to income when the hedged
are included in the initial acquisition cost of the hedged assets or liabilities where appropriate.



 Group had a number of cross currency swap contracts which were designated as cash flow hedges.
                                           Foreign                                   Fair value
                                           notional                    Maturity            gain
                                           amount                          date             Rm
                                              180.3                 2007 – 2009           442.1

within the United Kingdom are offset by assets and no cross-currency hedging has been taken out on the
dom operations into Rands.

gain of R1 426,9 million was made on the currency translation arising from the consolidation of GHG. The
y to the foreign currency translation reserve in equity.



acquired from Investec Bank Limited who, in turn, acquired sixty million call options. A zero option
acquisition of the options.

ced in such a manner as to cap the upside potential at the applicable call strike price. At the expiry of the
options can be settled in either cash or in scrip.

ubsidiary has been ceded as security for the relevant Investec derivative loan as described in note 14.


ions outstanding are as follows:


o acquire Netcare shares

                                              Strike                 Number of
                                               price                    options
                                                6.01                 12,000,000
                                                6.34                 12,000,000
                                                6.66                 12,000,000
                                                6.99                 12,000,000
                                                7.31                 12,000,000


o acquire Netcare shares

                                              Strike                 Number of
                                               price                    options
                                              10.08                  12,000,000
                                                10.4                 12,000,000
                                              10.73                  12,000,000
                                              11.05                  12,000,000
                                              11.38                  12,000,000

ncial instruments

                                            2006
                                             Assets                    Liabilities
                                                 Rm           Rm

                                              422,1*
                                               412.2   -1,864.30
                                                          -287.7
                                               834.3   -2,152.00

 set is reflected in both the Group and Company.

                                             2005
                                             Assets    Liabilities
                                                Rm            Rm
                                                              -2.2

ue of financial instruments
al assets and liabilities are summarised as follows:

                                                 <1         1–4          >4         Total
                                                year        year        year         Rm
                                                 Rm          Rm          Rm

                                            2,706.70                             2,706.70
                                            1,462.70                             1,462.70

                                                            427.4      406.9        834.3
                                                 4.7                                  4.7
                                                46.8           12        0.9         59.7
                                            4,220.90        439.4      407.8     5,068.10

                                            2,587.10                             2,587.10
                                               454.1                                454.1

                                                              290    1,862.00    2,152.00
                                            2,952.60                             2,952.60
                                                       28 753,4*        470.6   29,224.00
                                            5,993.80   29,043.40     2,332.60   37,369.80

refinanced subsequent to 30 September 2006.

                                                 <1         1–4          >4         Total
                                                year        year        year         Rm
                                                 Rm          Rm          Rm

                                            1,370.10                             1,370.10
                                               292.9                                292.9
                                                49.9                                 49.9
                                                25.9         31.5        31.3        88.7
                                            1,738.80         31.5        31.3    1,801.60

                                            1,160.00                             1,160.00

                                                 2.2                                  2.2
                                              913.4                                        913.4
                                                                           414.9   78      492.9
                                           2,075.60                        414.9   78   2,568.50




 commercial terms. Details of certain transactions with related parties not



iaries of the Group, in the ordinary course of business, entered into various
 int venture, the Ampath Holdings Trust. These arrangements are on terms no
anged with third parties. The amount of rental received by the Group
 5: R9,8 million). The chief executive officer of the Ampath Holdings Trust is a
Group.

ited
 rtner Investments Limited which holds 340,4 million shares in the Company
ounted for as an associate in terms of IAS 28, became a subsidiary pursuant
 Prior to that date, the Company held 46,3% in Netpartner Investments
edicross Healthcare Group (Pty) Limited. The Company also owns 80% of
 Pty) Limited.

 rtner Investments Limited which holds 340,4 million shares in the Company
ounted for as an associate in terms of IAS 28, became a subsidiary pursuant
 Prior to that date, the Company held 46,3% in Netpartner Investments
edicross Healthcare Group (Pty) Limited. The Company also owns 80% of
 Pty) Limited.


re directors and those executives having authority and responsibility for
ling the activities of the Group. Directors of the Company and certain senior
been classified as “key management personnel”.

  operations, where Group personnel may be transacting. Transactions
ith key management personnel were on terms and conditions no more
e to other employees, customers or suppliers and include transactions in
n plans, contracts of employment and reimbursement of expenses, as well as
 omestic in nature.


nd non-executive directors’ remuneration are disclosed in the directors’


tors’ interests in the share capital of the Company, as well as information
tstanding and benefits in terms of share options exercised, are reflected in the
.

directors entered into consultancy arrangements with Group companies on
value of R0,5 million (2005: R0,6 million).
ctors is the Company’s legal counsel. Services rendered are billed on a
 and amounted to R1,7 million (2005: R0,9 million) for the year.

istical services are provided by the Group to a pharmacy purchasing and
 is owned by one of the directors. Such services are contracted on an arms’


 nel
10 posts (2005: 8 posts) on average GHG (UK) Exco (subsidiary since 12 May


management personnel is as follows:

                                                2006                       2005
                                                  Rm                        Rm
                                                 11.9                          7
                                                  0.9                        0.6
                                                  9.1                        2.7

                                                 9.8
                                                 1.3                         0.2
                                                  33                        10.5

                                                 4.8
                                                 0.4
                                                 0.4
                                                 0.1
                                                 5.7

 ted is the annual expense determined by IFRS 2.




e Scheme (as amended)
Scheme was adopted on 7 November 1996. Amendments to the scheme were made on 26 September 2005.

ay be officers or other employees of the Group, including, but not limited to, executive directors, selected by the Board.


 e opportunity to acquire shares in terms of the offer to purchase scheme and the option scheme. In terms of the rules of
nted at the closing market price of the Company’s shares on the JSE Limited on the trading day immediately preceding
options are granted.

disability, retrenchment or retirement of a participant, options may be taken up and paid for within twelve months of such
ion of a participant, options which have been vested may be taken up and paid for and the balance of any shares will be
de that the aggregate number of shares which may be made available for the purposes of the scheme may not be more
 ordinary share capital of the Company. Pursuant to an ordinary resolution passed on 26 September 2005, the maximum
available for allocation under the scheme is 213 510 858*. The number of Netcare ordinary shares to which any eligible
exceed 1% of the ordinary shares in issue.

 cumulative number of options granted (net of lapsed) was 206 903 947. Accordingly, at 30 September 2006, the net
r allocation under the scheme was 6 606 911.

maximum cumulative quantity available for allocation under the scheme to 12,5% of the issued share capital at the date
,5% of 1 782 490 221 amounting to 222 811 277 will be proposed in the Notice of AGM which will be posted together


shares in the Company at 30 September 2006.


hare options outstanding was as follows:

                                              2006                                        2005
                                                                    Weighted                     Weighted
                                             Number                  average       Number         average
                                             of share                exercise      of share       exercise
                                              options                   price      options           price
                                                                       Cents                        Cents
                                          42,077,266                     319     74,237,683           255
                                          48,790,000                     902            250           436
                                         -13,716,023                     204    -26,982,746           165
                                            -254,385                     394     -5,427,671           220
                                          76,896,858                     714     42,077,266           319

 nd prices

                                                 2006                                  2005
                                             Number                                Number
                                             of share                Exercise      of share      Exercise
                                              options                   price      options          price
                                                                       Cents                       Cents
                                          13,090,129                     265     15,572,466          265
                                           2,360,329                     436
                                                                                  8,958,300           265
                                          12,656,400                      436    17,546,500           436
                                          48,790,000                     902*
                                          76,896,858               42,077,266


 ration report for details on share options held by directors.

30 September 2006 have the following terms:

                                                                      Unexer-
                                                                        cised        Vested      Unvested
              Financial year of lapse                                 options       options       options
                                                 2010              13,090,129    13,090,129
                                                 2013                  14,766,729        2,360,329    12,406,400
                                                 2014                     250,000                        250,000
                                                 2015                  48,790,000                     48,790,000
                                                                       76,896,858       15,450,458    61,446,400

 ed since 7 November 2002 was calculated using the binomial asset pricing model.

 aluation thereof.

                                                                                                           To be
                                                                            To be             To be   expensed
                                                                        expensed         expensed       in more
                                           Expensed                        within            within         than
                                         for the year                      1 year       1 – 5 years      5 years       Total
                                                    R                           R                 R            R           R
                                           4,144,815                    2,529,035        2,588,015                 9,261,865
                                               92,790                     134,861          218,115                   445,766
                                           8,872,058                   43,177,350       91,810,466     3,701,557 147,561,431
                                          13,109,663                   45,841,246       94,616,596     3,701,557 157,269,062

n 2005 was R4,8 million.

 re used to value the share options granted:

                                                  %
                                       23,56 – 38,12
                                        5,05 – 11,00
                                        8,95 – 10,05
                                         2,84 – 5,48

E transaction)
Health Partners for Life (“HPFL”) initiative on 1 October 2005, a strategy to effect broad-based black economic
on within the Netcare Group and in the private healthcare sector.

antly historically disadvantaged individuals, through their participation in the HPFL trusts, will acquire Netcare shares.
cipants to the transaction are The Patient Care and Passionate People Trust, The Physician Partnerships Trust, The
 Healthy Lifestyle Trust. The objective of the HPFL trusts is to manage and administer the award, settlement and re-
sets and liabilities of the trusts and the making of income awards, if applicable, in a manner consistent with Netcare’s
lack economic empowerment.

 follows:

onate People Trust and The Physician Partnerships Trust
 ate People Trust will indirectly assist the Group in attracting and retaining management and staff. Awards made under
any awards participants may receive under the Netcare Share Incentive Trust. Directors and other senior management
ate under the share incentive trust and not in the HPFL transaction.

rust will assist the Group in attracting and retaining quality medical professionals.

  these trusts will be effected by the trustees. The beneficiaries will hold trust units which will entitle them to the economic
r of Netcare shares in tranches of 20% over five years commencing on the fifth anniversary of the commencement of
 employees will cease to be entitled to hold trust units if they resign or are dismissed from their employment.
 doctors will cease to be entitled to hold trust units if they emigrate from South Africa or cease to be a practising doctor in
nt professional board or council.

s received on HPFL shares shall be applied first to meet funding obligations and administrative and operating expenses,
olders of the trust units entitled thereto.

nd The Healthy Lifestyle Trust
fund the provision of healthcare assistance to women and children historically and previously disadvantaged, through
 children’s organisations.

l promote a healthy lifestyle through wellness programmes and selected national screening initiatives.

 ns made in respect of the Netcare shares held by The Mother & Child Trust and The Healthy Lifestyle Trust shall be
g the third party funding obligation. A portion of the remainder of any such dividends and cash distributions shall be
tributed to the beneficiaries.

 end of the year are as follows:

                                              Shares
                                           allocated                         Units
                                             to trust                    in issue

                                         92,000,000                   66,712,140
                                         48,000,000                   26,621,000
                                         12,000,000                    6,000,000
                                          8,000,000                    4,000,000
                                        160,000,000                  103,333,140

nits was as follows:

                                         The Patient                         The

                                          Care and                    Physician             The Healthy
                                        Passionate                 Partnerships The Mother     Lifestyle
                                       People Trust                       Trust     & Child        Trust      Total
                                                                                      Trust
                                          74,491,340                 26,621,000   6,000,000   4,000,000 111,112,340
                                          -7,779,200                                                     -7,779,200
                                          66,712,140                 26,621,000   6,000,000   4,000,000 103,333,140

 ed was calculated using the Monte Carlo simulation valuation method.

aluation thereof.

                                                                                           To be        To be
                                                                          To be       expensed     expensed
                                          Expensed                    expensed            within     in more        Total unit
                                        for the year               within 1 year     1 – 5 years than 5 years       valuation

                                                    R                           R              R              R              R
                                      6,821,557             6,821,557      25,119,727    5,524,755  44,287,596
                                     41,475,166                                                     41,475,166
                                      9,741,517                                                      9,741,517
                                      6,494,345                                                      6,494,345
                                     64,532,585             6,821,557      25,119,727    5,524,755 101,998,624

re used to value the units issued:

                                             %
                                             30
                                            7.6
                                              3




     Revenue                                                                       EBITDA
                                           2005                                   2006       2005*
                                            Rm                                     Rm          Rm
                                       7,352.60                               1,617.10    1,438.10
                                       5,927.80                               1,361.80    1,171.60

                                       1,424.80                                  255.3       266.5

                                          181.1                                  504.5        23.1
                                                                                 490.5
                                          181.1                                     14        23.1

                                       7,533.70                               2,121.60    1,461.20


                            EBITDA                Operating profit        Total assets




 Debt net of cash                                         Interest paid
                    2005    2006   2005
                     Rm      Rm     Rm
                1,109.40   257.1    176
                       4   704.9
                1,113.40     962   176

Interest paid
concerning the transition from South African Statements of Generally Accepted Accounting Practice (“SA GAAP”) to IFRS are set out in note




or otherwise has power to exercise control over the operations. The existence and effect of potential voting rights that are currently exercisab

control ceases. The purchase method of accounting is used to account for the acquisition of subsidiaries. The cost of an acquisition is measu

re also eliminated unless the transaction provides evidence of an impairment of the asset transferred.




s method the Group’s share of post-acquisition profits or losses of associates is recognised in the income statement and its share of post-ac




venture’s individual income and expenses, assets and liabilities and cash flows on a line-by-line basis with similar items in the Group’s financ


substantial period of time to prepare for their intended use or sale. Capitalisation continues up to the date that the assets are substantially re




m the gross obligation for post-retirement benefits. The gross obligation is determined by estimating the future benefit attributable to employe

ally using the projected unit credit method.

utside of the income statement, with the exception of gains or losses arising from changes in the benefits regarding past services, which are
t-line basis over the average period until the amended benefits become vested.

gnised past service costs related to the improvements of the defined benefit pension plans and the present value of any future refunds from


nt of the Group prior to 1 November 2004 are entitled to a post-retirement medical aid subsidy and in the case of Ampath Trust, 1 August 200

ed on the balance sheet as a liability. Valuations of these obligations are carried out by independent actuaries every three years. The post-re

 e composition, and all actuarial gains and losses are recognised directly in equity.


 received in exchange for the grant of options is recognised as an expense with a corresponding increase in equity. The total amount to be e


Netcare shares over a vesting period. The fair value of the units is measured at grant date using the Monte Carlo simulation valuation metho




t to initial recognition, financial instruments are measured as set out below:


d in the income statement.

or loss being recognised directly in equity until the investment is disposed of or is determined to be impaired, at which time the cumulative ga

thodology including discounted cash flow models. If fair values cannot be measured reliably, the financial instrument is valued at cost less ac


s, which is determined as set out under impairment of assets in accounting policy note 1.8. Impairment of these assets is expensed in profit o




at fair value. Fair value changes are included in the income statement in the period the change occurs.


future cash payments or receipts through the expected life of the financial instrument to the net carrying amount of the instrument. All fees, t


ant investment, at which time the cumulative gain or loss previously recognised in equity is included in the income statement for the period.

e income statement in the period in which the change arises.


atives designated as cash flow hedges.

one of the following on the date the derivative contract is entered into:
 nised asset or liability or a forecasted transaction that could affect the income statement; and


ged risk is included in the carrying amount of the hedged item and recognised in the income statement.

 at is determined to be an effective hedge is recognised directly in equity and the ineffective portion is recognised in the income statement.

sses recognised in equity are transferred to income in the same period in which the asset or liability affects the income statement.

gains or losses that had previously been recognised in equity are included in the initial measurement of the acquisition cost or other carrying a

 n the hedging instrument that is determined to be an effective hedge is recognised directly in equity and the ineffective portion is recognised

 becomes ineffective), when the hedge is sold, terminated or exercised, when for cash flow hedges the forecast transaction is no longer expe


 the risks and rewards of ownership have been transferred.




 uth African Rand.


minated in foreign currencies are translated at the rate of exchange ruling at the balance sheet date. Gains or losses arising on translation are


 entities are translated into South African Rand as follows:




 ranslation differences are recognised in the income statement as part of the cumulative gain or loss on disposal.




e, or by discounting expected future cash flows using the discount rate to present values. The cost of acquisition is the fair value of the Group



d in the income statement on acquisition date.


 ment. If any such indication exists, the recoverable amount of the asset is estimated.

 e sale of an asset on an arm’s length basis while the value in use is the present value of estimated future cash flows expected to arise from
ange in the estimates used to determine the recoverable amount, but not to an amount higher than the carrying amount that would have bee


nue within the Group is eliminated on consolidation. Revenue also includes administration fees charged to third parties.




ty, when it is determined that such income will accrue to the Group.




ets can be reliably measured.




ets when it is probable that the products, systems or processes will be commercially and technically feasible and the costs can be measured


n first-out basis. Net realisable value is the estimated selling price in the ordinary course of business, less applicable variable selling expense

age and condition.



eases are capitalised at the fair value of leased property or, if lower, at the present value of the minimum lease payments and are depreciate


 Payments made in respect of operating leases with a fixed escalation clause are charged to the income statement on a straight-line basis o




ciation methods, estimated remaining useful lives and residual values are reviewed annually.
 obligation as a result of past events, for which it is probable that an outflow of resources embodying economic benefits will be required to se


ff the recognised amounts and there is an intention to settle on a net basis, or realise the asset and settle the liability simultaneously.


balance sheet date, and any adjustment of tax payable for the previous years.

 ences between the carrying amounts of assets and liabilities for financial reporting purposes and their respective tax bases. The amount of d

nused tax losses and deductible temporary differences can be utilised. Deferred tax assets are reduced to the extent that it is no longer prob


ded in the number of shares in issue for purposes of calculating earnings per share and certain other performance ratios.


in the affected notes to the financial statements. Refer to note 29 for further details.


ates and assumptions that affect the reported amounts and related disclosures. Actual amounts could differ from these estimates.




gnising GHG’s identifiable assets, liabilities and contingent liabilities at their fair values at that date. The difference between the cost of the ac

m the Company of resources embodying economic benefits.


he assets and residual values are assessed annually and may vary depending on a number of factors. In re-assessing asset lives, factors su


 ed. Future taxable profits are estimated based on business plans which include estimates and assumptions regarding economic growth, inte


. The fair value of the trust units issued in terms of the Health Partners for Life initiative is measured using the Monte Carlo valuation method


 if there is any reason to believe that an impairment may be necessary. Factors taken into consideration include the economic viability of the
es of the assets. The present value of these cash flows, determined using an appropriate discount rate, is compared to the current asset valu


hich include employee turnover, mortality rates, the discount rate, the expected long-term rate of return of retirement plan assets, healthcare


ents fluctuates on a daily basis and the actual amounts realised may differ materially from their value at the balance sheet date. The fair valu


ement have assessed as having a significant risk of causing material adjustment to the carrying amounts of the assets and liabilities within th




.



    values effective 30 September 2005. This valuation

    foreign subsidiary. The valuation was based on market
       Motor     Plant and       Total
vehicles and    machinery         Rm
     aircraft          Rm
         Rm




        49.4          48.7    4,681.20
        11.9          45.9    1,037.70
        -1.5          -5.7      -122.8
                      91.9   19,142.80
                                  -0.8
         0.2         -4.2
         0.1         19.6     4,596.40
        60.1        196.2    29,334.50


        -12.1        -20.2   -1,572.50
         -7.1        -20.1      -528.2
            1                     80.4
                                   0.8
                                 -14.6
                      -2.3        -0.3
          0.3         -1.6       -53.8
        -17.9        -44.2   -2,088.20

        42.2          152    27,246.30


        16.7          32.7    4,270.10
        34.7          16.8       470.7
          -2          -0.8       -59.6
        49.4          48.7    4,681.20


          -10        -12.8   -1,390.10
         -2.1         -7.6      -248.2
                       0.2          56
                                   9.8
        -12.1        -20.2   -1,572.50
37.3   28.5   3,108.70
Operating profit             Total assets
    2006         2005*        2006          2005
     Rm            Rm          Rm            Rm
1,350.10     1,193.80     7,155.00      6,205.40
1,146.80         975.1    5,519.90      4,417.70

   203.3        218.7     1,635.10     1,787.70

   217.9         15.8    43,345.90           77
   215.3                 43,167.00
     2.6         15.8        178.9           77

1,568.00     1,209.60    50,500.90     6,282.40
 A GAAP”) to IFRS are set out in note 29.




 ng rights that are currently exercisable or convertible are considered when assessing whether the Group controls another entity.

 s. The cost of an acquisition is measured at the fair value of assets acquired, equity instruments issued and liabilities incurred or assumed at




me statement and its share of post-acquisition movements in reserves is recognised in equity. The cumulative postacquisition movements are




 th similar items in the Group’s financial statements. Where the Group transacts with its jointly controlled entities, unrealised profits and losse


 e that the assets are substantially ready for their intended use or sale. Capitalisation is suspended during extended periods in which active d




 future benefit attributable to employees in return for services rendered to date.



 ts regarding past services, which are recognised in the income statement.
 ent value of any future refunds from the plans or reductions in future contributions to the plans.


e case of Ampath Trust, 1 August 2006. Due to previous employment benefits offered, the Group has honoured its contractual commitment in

uaries every three years. The post-retirement medical obligation is valued by actuaries using the projected unit credit method.




se in equity. The total amount to be expensed over the vesting period is determined with reference to the fair value of the options granted on


nte Carlo simulation valuation method and is spread over the vesting period. The assumptions used to determine the fair value are detailed




ired, at which time the cumulative gain or loss previously recognised in equity is included in the income statement for the period.

al instrument is valued at cost less accumulated impairment.


of these assets is expensed in profit or loss.




 amount of the instrument. All fees, transaction costs and other premiums or discounts are included in the calculation.


he income statement for the period.
cognised in the income statement.

cts the income statement.

he acquisition cost or other carrying amount of the asset or liability.

 the ineffective portion is recognised in the income statement. The gain or loss recognised in equity is taken to the income statement on disp

orecast transaction is no longer expected to occur or when the hedge designation is revoked. Any cumulative gain or loss on the hedging ins




ns or losses arising on translation are credited to or charged against income. Non-monetary assets and liabilities that are measured in terms




quisition is the fair value of the Group’s contribution in the form of assets transferred, shares issued or liabilities assumed at the acquisition d




re cash flows expected to arise from the continuing use of an asset and from its disposal at the end of its useful life. Recoverable amounts a
carrying amount that would have been determined (net of depreciation or amortisation) had no impairment loss been recognised in prior year


 to third parties.




 sible and the costs can be measured reliably. Other development expenditure is recognised as an expense as incurred. Development costs


ss applicable variable selling expenses.




m lease payments and are depreciated at appropriate rates over the shorter of the estimated useful lives of the assets or the lease period. Fin


e statement on a straight-line basis over the lease term. All other lease payments are expensed as they occur. Minimum rentals due after yea
onomic benefits will be required to settle the obligation, and a reliable estimate of the amount of the obligation can be made.


 e the liability simultaneously.




espective tax bases. The amount of deferred taxation provided is based on the expected manner of realisation or settlement of the carrying a

 to the extent that it is no longer probable that the related tax benefit will be realised.


rformance ratios.




iffer from these estimates.




difference between the cost of the acquisition and the Company’s interest in the net fair value of GHG’s identifiable assets, liabilities and con




n re-assessing asset lives, factors such as technological innovation, product life cycles and maintenance programmes are taken into accoun


 ions regarding economic growth, interest, inflation, taxation rates and competitive forces.


ng the Monte Carlo valuation method. Additional details regarding the assumptions used to value the share options and trust units are detaile


n include the economic viability of the asset itself and where it is a component of a larger economic unit, the viability of the unit.
s compared to the current asset value and, if lower, the assets are impaired to the present value.


of retirement plan assets, healthcare inflation cost and rates of increase in compensation costs.


the balance sheet date. The fair value of financial instruments is calculated based on a discounted cash flow model using a number of key a


s of the assets and liabilities within the next financial year.
oup controls another entity.

ed and liabilities incurred or assumed at the date of exchange, plus costs directly attributable to the acquisition. Identifiable assets acquired a




mulative postacquisition movements are adjusted against the cost of the investment. Unrealised gains on transactions between the Group an




led entities, unrealised profits and losses are eliminated to the extent of the Group’s interest in the joint venture, except where unrealised los


uring extended periods in which active development is interrupted.
 honoured its contractual commitment in respect of post-retirement medical obligations before the change in policy.

ected unit credit method.




  the fair value of the options granted on grant date and is expensed on a straight line basis over the vesting period. The fair value is determin


 to determine the fair value are detailed in note 32.




me statement for the period.




 n the calculation.
s taken to the income statement on disposal of the foreign entity.

mulative gain or loss on the hedging instrument for a forecast transaction is retained in equity until the transaction occurs, unless the transac




nd liabilities that are measured in terms of historical cost or foreign currency are translated using the exchange rate at the date of the transa




r liabilities assumed at the acquisition date plus costs directly attributable to the acquisition. On acquisition date, goodwill is recognised when




f its useful life. Recoverable amounts are estimated for individual assets or, if it is not possible, for the cash generating unit. Impairment loss
ment loss been recognised in prior years.




pense as incurred. Development costs initially recognised as an expense are not recognised as an asset in a subsequent period.




es of the assets or the lease period. Finance lease payments are allocated using the effective interest rate method, between the finance cha


ey occur. Minimum rentals due after year-end are reflected under commitments.
obligation can be made.




 ealisation or settlement of the carrying amounts of assets and liabilities using tax rates enacted or substantively enacted at the balance shee




G’s identifiable assets, liabilities and contingent liabilities has been recognised as goodwill. The Company appointed independent appraisers t




 nce programmes are taken into account. Residual value assessments consider issues such as future market conditions, the remaining life o




 share options and trust units are detailed in note 32.


nit, the viability of the unit.
ash flow model using a number of key assumptions. The inter-bank rate used in fair value calculations has been adjusted in the case of inter
cquisition. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at the




s on transactions between the Group and its associates are eliminated to the extent of the Group’s interest in the associates; unrealised loss




nt venture, except where unrealised losses provide evidence of impairment.
ange in policy.




vesting period. The fair value is determined by using the binomial option valuation model and the assumptions used to determine the fair valu
e transaction occurs, unless the transaction is no longer expected to occur, in which case it is transferred to the income statement for the pe




exchange rate at the date of the transaction. Non-monetary assets and liabilities denominated in foreign currencies that are stated at fair val




sition date, goodwill is recognised when the cost of the acquisition exceeds the fair value of the Group’s interest in the net identifiable assets




e cash generating unit. Impairment losses are recognised in the income statement.
sset in a subsequent period.




st rate method, between the finance charge and the capital repayment.
bstantively enacted at the balance sheet date.




any appointed independent appraisers to determine the fair market value of property, plant and equipment and intangible assets. Manageme




e market conditions, the remaining life of the asset and projected disposal values.
s has been adjusted in the case of interest rate swaps to take into account credit risk to which the Group is exposed as an active market par
combination are measured initially at their fair values at the acquisition date, irrespective of the extent of any minority interest. The excess of




terest in the associates; unrealised losses are also eliminated unless the transactions provide evidence of impairment. The Group’s investm
umptions used to determine the fair value are detailed in note 32. No expense has been recognised for share options granted before 7 Nove
rred to the income statement for the period.




ign currencies that are stated at fair value are translated at foreign exchange rates ruling at the dates the fair value was determined.




p’s interest in the net identifiable assets of the entity acquired.
pment and intangible assets. Management conducted an internal review of other assets to ensure that they fairly reflect the expected associa
oup is exposed as an active market participant.
t of any minority interest. The excess of the cost of acquisition over the fair value of the Group’s share of the identifiable net assets acquired




ce of impairment. The Group’s investment in associates includes goodwill on acquisition. When the Group’s share of losses in an associate
or share options granted before 7 November 2002 that had not vested by that date.
s the fair value was determined.
t they fairly reflect the expected associated future benefits that will flow to the Company.
e of the identifiable net assets acquired is recorded as goodwill. If the cost of acquisition is less than the fair value of the net assets of the sub




Group’s share of losses in an associate equals or exceeds its interest in the associate, the Group does not recognise any further losses, unle
he fair value of the net assets of the subsidiary acquired, the difference is recognised directly in the income statement.




s not recognise any further losses, unless the Group has incurred obligations or made payments on behalf of the associate.
ncome statement.




behalf of the associate.

				
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