| Mon 30 May 2005, 10:37 | | Abridged Prospectus |
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Enaleni Pharmaceuticals Limited - Abridged Prospectus
Enaleni Pharmaceuticals Limited
(Incorporated in the Republic of South Africa)
(Registration number 2002/018027/06)
(JSE code: ENL ISIN: ZAE000067740)
(`Enaleni` or `the company`)
ABRIDGED PROSPECTUS
Listing of Enaleni ordinary shares (`shares`) on the JSE Securities Exchange
South Africa (`JSE`).
Warning: The listing of ordinary shares in the company is on ALTx. Investors
are advised of the risks of investing in a company listed on ALTx. Investors are
advised that the JSE does not guarantee the viability or the success of a
company listed on ALTx. In terms of the Listings Requirements, the company is
obliged to appoint and retain a Designated Adviser, which is required to, inter
alia, attend all board meetings held by the company to ensure that all the
Listings Requirements and applicable regulations are complied with, approve the
Financial Director of the company and guide the company in a competent,
professional and impartial manner. If the company fails to retain a Designated
Adviser, it must make arrangements to appoint a new Designated Adviser within 10
business days, failing which the company faces suspension of trading of its
securities. If a Designated Adviser is not appointed within 30 days of its
suspension, the company faces the termination of its listing without the
prospect of an appropriate offer to minority shareholders.
This abridged prospectus is not an invitation to the public to subscribe for
shares in Enaleni, but is issued in compliance with the Listings Requirements of
the JSE for information purposes only. The information in this abridged
prospectus has been extracted from a full prospectus issued by Enaleni on
26 May 2005 (`the detailed prospectus`), which is available as set in paragraph
8. At the date of listing the authorised share capital of Enaleni comprises 500
million ordinary shares with a par value of 0.1 cents each, of which, after a
private placing of 10 million ordinary shares at 100 cents per share (`the
placing`), 113 545 024 million shares will be in issue.
1. INTRODUCTION
1.1. Enaleni, Zulu for `place of promise`, has created a significant platform to
become the leading empowerment pharmaceutical company in South Africa and the
largest in KwaZulu-Natal through the initial successful implementation of a
Management Buy Out in January 2003 of the South African pharmaceutical
manufacturing plant of Reckitt Benckiser South Africa (`RBSA`) and selective
acquisitions in the growing emerging pharmaceutical, personal care, and vitality
and wellness markets.
2. GENERAL HISTORY OF THE COMPANY
2.1 Enaleni has developed into KwaZulu-Natal`s leading pharmaceutical
manufacturing and personal care company and one of South Africa`s leading
empowerment pharmaceutical companies.
2.2 Enaleni Pharmaceuticals (Pty) Limited was incorporated as a private company
on 25 July 2002 and, on 19 May 2005, the company converted to a public company
under registration number 2002/018027/06.
2.3 The Enaleni management team has successfully transformed the group from a
pharmaceutical contract manufacturer, with contract manufacturing previously
accounting for 100% of sales, to a brand owner with more than 50% of sales being
derived from its own brands, as well as from the pharmaceutical, personal care,
and vitality and wellness markets, and contract manufacturing customers, other
than RBSA.
3. NATURE OF BUSINESS AND PROSPECTS
3.1 Enaleni is a marketer and manufacturer of pharmaceutical, personal care,
vitality and wellness products and is ideally positioned through the aggressive
development of existing brands, and the acquisition of well-established brands
to target the growing emerging market.
3.2 Enaleni owns well-established brands that target the growing emerging
markets and the vitality and wellness market. Major opportunities exist to
expand these brands into new distribution channels, such as pharmacies, formal
retail and export markets. Major retailers are actively increasing their
purchases from BEE suppliers. This initiative bodes well for Enaleni
considering the group`s BEE status.
3.3 Enaleni`s current group structure comprises:
3.3.1 Consumer Division
3.3.1.1 The Consumer Division includes the OTC pharmaceutical and the personal
care markets. The major brands within the Consumer Division are: Hercules,
Caivil, Just for Baby, Black Chic, Grace, Kamillen, Healing Hands, Universal,
Gelusil, Sloans and Just for Kids.
3.3.2 Vitality & Wellness Division
3.3.2.1 The Vitality & Wellness Division operates in the nutraceutical market,
in the vitamin and mineral, herbal, sports nutrition, herbal teas, slimming,
health bars and food supplement categories. The Division manufactures and
markets the following core brands:
- Muscle Science; and
- Bioharmony.
3.3.3 Contract Manufacturing Division
3.3.3.1 Enaleni`s pharmaceutical manufacturing facility, which comprises a
10 000 m? climate controlled facility in Durban, KwaZulu-Natal is approved by
the MCC and presently produces 7 000 tons of liquids and 850 million tablets per
annum.
3.3.3.2 Enaleni`s pharmaceutical manufacturing facility has manufacturing
capabilities in tablets, liquids, creams, powders, sachet filling, hard gelatine
capsules, effervescents, granulations and labelling. It is also able to
undertake laboratory testing and is in the process of acquiring additional
capabilities in tablet coating, tube filling and blister packing.
3.3.3.3 Enaleni has an exclusive manufacturing agreement to produce market
leading branded pharmaceuticals on behalf of RBSA. These brands are: Dettol,
Disprin, Gaviscon, Senokot, Codis and Steradent.
3.3.3.4 Enaleni has also secured contract manufacturing from large multi-
nationals such as Unilever, Huletts and others that are actively outsourcing
their manufacturing in line with international trends with a preference towards
appointing empowerment contract manufacturers.
3.3.4 Pharmaceutical Division
3.3.4.1 Enaleni finalised a strategic association agreement in May 2005 with
RBSA and is in the process of finalising a similar arrangement with another
multi-national pharmaceutical company to tender for the manufacture and supply
of pharmaceutical products to the Government, thereby establishing an important
bridgehead into the Government market.
3.3.4.2 Enaleni has created a platform, which enables the company to acquire
pharmaceutical brands and companies. The integration of these brands and
companies into the Enaleni manufacturing platform will result in substantial
synergies, economies of scale and cost savings.
3.4 Each business division is separately managed and run by highly experienced
executive teams focused on realising maximum value and potential for
shareholders and other stakeholders.
4. FINANCIAL INFORMATION AND PROFIT FORECASTS
Set out below is a summary of the historical and forecast financial information
of Enaleni for the financial periods ended 31 December 2004, ending
31 December 2005 and 31 December 2006.
Audited Forecast Forecast
31 Decembe 31 Decembe 31 Decembe
r 2004 r 2005 r 2006
R`000 R`000 R`000
Revenue (1) 120 473 213 704 260 994
Gross Profit 38 245 104 598 136 903
Less: Staff (14 007) (33 188) (38 106)
costs
Share- - (600) -
based payments
- (1 706) -
Retrenchment costs
Other (18 454) (53 629) (70 137)
operating expenses
EBITDA 5 784 15 475 28 660
Depreciation (766) (2 927) (3 893)
Profit before 5 018 12 548 24 767
interest and
taxation
Net interest paid (1 118) (2 928) (1 763)
Profit before 3 900 9 620 23 004
taxation
Taxation (848) (2 551) (6 671)
Profit after 3 052 7 069 16 333
taxation
Minority interests 277 (603) (1 350)
Add : Net non- - 745 -
recurring costs for
headline
earnings(2)
Headline earnings 3 329 7 211 14 983
attributable to
ordinary
shareholders
Less: Net non- - (745) -
recurring costs for
earnings(2)
Earnings 3 329 6 466 14 983
attributable to
ordinary
shareholders
Weighted average 47 770 700 98 478 686 113 545 02
shares in issue(3) 4
Earnings per share 7.0 6.6 13.2
(cents)
Headline earnings 7.0 7.3 13.2
per share (cents)
Dividend per share 0.7 - -
(cents)
Notes:
(1) The increase in revenue from 2004 to 2005 is mainly attributable to the fact
that the annualised effect of the acquisitions made by Enaleni in 2004 is fully
appreciated in 2005. In addition Enaleni acquired other companies and brands
after 31 December 2004.
(2) The non-recurring costs refer to retrenchment costs incurred in 2005 with
the integration of the new businesses.
(3) Pro forma calculation for 31 December 2004 is based on the conversion of the
original 100 weighted number of ordinary shares in issue to 47 770 700 on
19 May 2005.
(4) Additional non-recurring costs will be incurred in 2005 that refer to share-
based payments and restructuring costs to the amount of R1.066 million to
reflect sustainable earnings for Enaleni of R8.277 million, being 8.4 cents per
share.
5. DIRECTORS, COMPANY SECRETARY AND REGISTERED OFFICE
The full names, ages, occupation and business addresses of the directors of
Enaleni are outlined below:
Full name Age Occupation Business
Address
Penuell 32 Managing 13 Crompton
Cornwell Director of Road Pinetown,
Sibusiso Ithala Limited KwaZulu-Natal,
Luthuli * 3601
(Chairperson)
Dali David 46 Chairperson 13 Erlswold Way
Thabo Tambo * and Chief Saxonwold,
Executive Gauteng, 2196
Officer of
Koketso
Holdings (Pty)
Limited
Trevor Doyle 47 Chief 1474, South
Edwards Executive Coast Road
Officer Mobeni, KwaZulu-
Natal, 4060
Umesh Parusnath 34 Managing 1474, South
Director Coast Road
Contract Mobeni, KwaZulu-
Manufacturing Natal, 4060
Pamela Adline 48 Logistics 1474, South
Pillay Director Coast Road
Mobeni, KwaZulu-
Natal, 4060
Nhlanhla 44 Production and 1474, South
Maxwell Sithole Business Coast Road
Transformation Mobeni, KwaZulu-
Leader Natal, 4060
Stanley 54 Chief 1474, South
Whitfield Financial Coast Road
Officer Mobeni, KwaZulu-
Natal, 4060
David Ellis 46 Quality 1474, South
Wolfson Assurance, Coast Road
Business Mobeni, KwaZulu-
Integration Natal, 4060
and
Information
Technology
* Non-executive
All directors, other than Stanley Whitfield who is British, are South African
citizens.
5.2 Company secretary and registered office are:
Stanley Whitfield (FCA)
1474 South Coast Road
Mobeni
KwaZulu-Natal, 4060
(PO Box 32003, Mobeni, 4060)
6. THE PLACING
6.1 The salient features of the private placing are as follows:
- Offer price per ordinary share (cents) 100
- Par value per ordinary share (cents) 0.1
- Premium per ordinary share (cents) 99.9
- Number of ordinary shares offered in 10 000 000
terms of private placing
- Issue consideration before expenses R10 million
6.2 The opening and closing dates of the private placing
are as follows:
- Opening date of the private placing at Monday,
09:00 on 30 May 2005
- Closing date of private placing at Monday,
12:00 on 6 June 2005
- Anticipated listing date on ALTx on Friday,
10 June 2005
Note:
These dates are subject to change at the discretion of the company. Any changes
will be released on SENS.
6.3 Enaleni holds irrevocable undertakings from institutions to subscribe for
9 047 500 shares in terms of the private placing, amounting to 90.5% of the
private placing shares.
6.4 Should the private placing be oversubscribed the directors will allocate
5 000 000 ordinary shares to the institutional investors that have given
irrevocable undertakings and the balance of 5 000 000 ordinary shares will be
allocated on an equitable basis in Enaleni`s sole discretion.
6.5 The placing has not been underwritten and is not subject to a minimum
subscription, being achieved.
7. LISTING ON THE JSE
The JSE has approved the listing of 113 545 024 million shares on ALTx with
effect from the commencement of business on Friday, 10 June 2005. The shares
will trade under the abbreviated name `Enaleni` and the JSE code `ENL`.
8. COPIES OF THE PROSPECTUS
Copies of the prospectus, in English, may be obtained, during business hours,
prior to the closing of the private placing, from the registered offices of
Enaleni, Exchange Sponsors and the transfer secretaries, details of which are
set out below:
- the registered office of the company - 1474 South Coast Road, Mobeni,
KwaZulu-Natal, 4060;
- the offices of Exchange Sponsors (Pty) Limited - 39 First Road, Hyde Park,
2196;
- the offices of Computershare Investor Services (Pty) Limited - Ground Floor,
70 Marshall Street, Johannesburg, 2001;
- the web-site of Enaleni at www.enaleni.com.
Johannesburg
30 May 2005
Designated Adviser
Exchange Sponsors
Attorneys
Deneys Reitz Inc
Auditors and reporting accountants
KPMG Inc
www.enaleni.com
Date: 30/05/2005 09:46:28 AM
Produced by the JSE SENS Department
