Mzwandile Jacks JSE-listed Netcare Group, which operates private hospital groups in South Africa and the United Kingdom (UK), has increased its 2015 capital expenditure to R2bn ($170.1 million) for growth in the next coming years, CFO Keith Gibson said.
Netcare remains on-track with its capital investment programme, Gibson said. Gibson said the increase in capex – the biggest in the company’s history – is attributable to continued demand for private healthcare in South Africa. This is likely to remain robust over the next few years, he said.
The R2bn ($170.1m) capital expenditure will be used only in South Africa with the money covering green and brown-fields expansion projects and other refurbishments. These include the building of a brand new 100-bed hospital in Pinehaven, west of Johannesburg.It also includes a new 170-bed hospital in Polokwane in South Africa’s Limpopo Province. Hiring of contractors is expected to take place late in the 2015 financial year.
The new Netcare Christiaan Barnard Memorial Hospital in Cape Town is also on track to open in 2016. In total, the company’s expansion and refurbishment projects will see the construction and completion of 510 new beds in 2015, including the newly-acquired Ceres Private Hospital. This represents a 5.4 percent increase in the number of registered beds.
Gibson said the company’s strategy is focused on adding capacity to existing hospitals and building new ones where the company has no presence. The company continues to investigate growth opportunities in other markets, Gibson said, declining to identify the markets. The company will look at growth opportunities which will make sense in respect of the group’s competitive advantages and targeted rates of return, he said. Gibson said in February 2014, the group raised a R550 million ($46.2 million) five-year note and a R250 million ($21 million) three-year note under its Domestic Medium Term Note programme.
He said this will improve the maturity profile of the SA debt position and secure the group’s funding needs over the medium term. He said these funds were raised as part of Netcare’s domestic medium term note programme to finance maturing notes and to fund its general working capital requirements.
