| Tue 8 Jun 2010, 11:41 | | LHG - Litha - Acquisition of PharmAfrica and withdrawal of cautionary |
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LHG
LHG
LHG - Litha - Acquisition of PharmAfrica and withdrawal of cautionary
announcement
LITHA HEALTHCARE GROUP LIMITED
(Formerly Myriad Medical Holdings Limited)
(Registration number 2006/006371/06)
Share code: LHG, ISIN: ZAE000144671
"Litha" or "The Company"
ACQUISITION OF PHARMAFRICA AND WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT
INTRODUCTION AND RATIONALE
Shareholders are referred to the cautionary announcement released on SENS on 3
May 2010 and are advised that the Company and its 51% held subsidiary Litha
Healthcare Holdings (Pty) Ltd ("Litha Holdings") have concluded an agreement
with Pharmaceutical Consultants Limited, Selwyn Goott and John Peter Hilliar-
Zuyl (collective the "vendors") to acquire the 74% of Pharmafrica (Pty) Ltd
("Pharmafrica") not already owned by Litha Holdings ("the acquisition").
Pharmafrica markets and sells branded pharmaceutical and over the counter
pharmaceutical products. Litha Holdings acquired a 26% interest in Pharmafrica
with effect from March 2006 and the acquisition is in line with the group`s
strategy to grow its pharmaceutical division.
TERMS OF THE ACQUISITION
In terms of the acquisition Litha Holdings will acquire 44% of Pharmafrica,
increasing its shareholding to 70%, and the Company will directly acquire the
remaining 30%.
The Pharmafrica shares are being acquired from the vendors with an effective
date of 1 March 2010 for a total purchase consideration of R 58 925 676 which
will be paid as follows:
- R37,500,000 on the date on which the acquisition is implemented;
- R8,712,838 on 4 June 2011 (together with interest thereon at the prime rate
calculated from the effective date);
- R8,712,838 on 4 June 2012 (together with interest thereon at the prime rate
calculated from the effective date); and
- R4,000,000 on 30 September 2010 (together with interest thereon at the
prime rate calculated from the effective date).
The acquisition is unconditional and will be implemented on or about 11 June
2010. After the implementation of the acquisition the company will procure that
the articles of Pharmafrica will be amended to conform with the requirements for
subsidiaries of listed company set out in Schedule 10 of the JSE Listings
Requirements.
FINANCIAL EFFECTS
The pro forma financial information set out below has been prepared for
illustrative purposes only, to provide information on how the acquisition may
have impacted on the historical results and financial position of the group.
The pro forma Income Statement figures illustrate the possible financial effects
if the acquisition had taken place on 1 June 2009, whilst the pro forma Balance
Sheet figures have been based on the assumption that the acquisition had taken
place on 31 December 2009.
Because of its nature, the pro forma financial information may not give a fair
reflection of Litha`s financial position after the transactions, or the effect
of the transactions on Litha`s future earnings.
The calculation of the pro forma financial information is the responsibility of
the directors.
Shareholders are advised to take note that the pro forma financial effects set
out below are based on a 7 month period instead of a complete financial year in
order to coincide with the period of the company`s latest financial results.
After the
acquisition
of
After the Pharmafrica
rights and Litha
offer and Holdings
Litha and the
Holdings rights
Before acquisitio offer
(7 months n (7 (7 months
ended months Percent ended Percent
31 December ended age 31 December age
2009) 31 change 2009) change
December
2009)
Earnings per share 8.1 8.3 2% 8.7 7%
(cents)
Headline earnings 8.1 8.3 2% 8.7 7%
per share (cents)
Net asset value per 91.3 101.9 12% 103.9 14%
share (cents)
Net tangible asset 38.5 51.9 35% 33.9 (12%)
value per share
(cents)
Notes and assumptions:
1 The pro forma financial effects above are based on the published reviewed
consolidated results for Myriad Medical Holdings Limited (renamed Litha
Healthcare Group Limited) for the 7 months ended 31 December 2009.
2 The "After the rights offer and Litha Holdings acquisition" column
represents the adjustments in respect of the rights offer implemented on
26 April 2010 and the implementation of the acquisition of 51% of Litha
Holdings and the inclusion of the financial results of Litha Holdings for
the 7 months ended 31 December 2009 as extracted from their management
accounts for the 7 months ended 31 December 2009, together with the
recognition of the outside shareholders interest in respect of the
remaining 49% of Litha Holdings.
3 The "After the acquisition of Pharmafrica (Pty) Ltd, Litha and the rights
offer" represents the adjustments in respect of the rights offer and
acquisition of Litha Holdings described in 2. above as well as the
adjustments in respect of the acquisition and inclusion of the financial
results of Pharmafrica for the 7 months ended 31 December 2009 as
extracted from the management accounts of Pharmafrica for the 7 months
ended 31 December 2009.
4 The pro forma earnings and headline earnings per share figures illustrate
the possible financial effects if the above transactions had taken place on
1 June 2009.
5 The pro forma net asset value per share and net tangible asset value per
share have been based on the assumption that the above transactions took
place on 31 December 2009.
6 Interest on the second, third and fourth payments to the Pharmafrica
vendors as described above has been taken into account at the prime
lending rate (10%) for the 7 month period. Interest income has also been
reduced by the interest that would have been earned at 6% on the R37 500
000 up front payment.
7 Legal fees relating to the acquisition have been expensed. A taxation
deduction for the interest and legal fees has not been included in the
calculation as the expenses are of a capital nature.
8 The company is satisfied with the quality of the management accounts of
both Litha and Pharmafrica for the 7 months ended 31 December 2009.
WITHDRAWAL OF CAUTIONARY
Caution is no longer required to be exercised by LHG shareholders when dealing
in their securities.
CATEGORISATION OF THE ACQUISITION
The acquisition is a category 2 transaction in terms of section 9.5(a) of the
Listing Requirements of the JSE Limited.
8 June 2010
Sponsor
Java Capital (Proprietary) Limited
Date: 08/06/2010 11:41:01 Produced by the JSE SENS Department.
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