ADVANCED HEALTH LIMITED - Detailed terms announcement regarding investment in METWEST

Detailed terms announcement regarding investment in METWEST

ADVANCED HEALTH LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 2013/059246/06)
(“the Company” or “Advanced Health”)
ISIN Code: ZAE000189049        JSE Code: AVL


DETAILED TERMS ANNOUNCEMENT REGARDING INVESTMENT IN METWEST


1 INTRODUCTION AND BACKGROUND TO THE TRANSACTION
    Shareholders are advised that as per the Share Sale Agreement dated 1 April 2019 between
    Presmed Australia Pty Limited (“PMA”), in which Advanced Health currently owns 59.66%, and
    Hereward Pty Ltd (Hereward/Metwest Surgical/day hospital) and Kingham Pty Ltd
    (Kingham/consulting practice/Metwest Eye Centre), (collectively “METWEST”), PMA exercised
    a call option to acquire a further 19% interest in both Hereward and Kingham for a total
    Transaction consideration of AUD 1,459,308.86 (approximately ZAR16 510 620) (the
    “Transaction”).

     PMA previously had a non-controlling interest of 19% in both entities. Following the
     Transaction, PMA’s total shareholding in both Hereward and Kingham has increased to 38%
     respectively.

2 BACKGROUND TO HEREWARD AND KINGHAM
    METWEST consists of an ophthalmology consulting practice (Kingham) and a day hospital
    (Hereward), both located on the same premises. There are six consulting suites, feeding
    surgery into a one theatre specialised ophthalmology day hospital, with 14 consulting
    ophthalmologists, of which 11 operate at the day hospital. METWEST has been in existence
    for almost 30 years, with both Kingham and Hereward being well established, profitable and
    located in highly sought area in the north west Sydney area.

3 RATIONALE FOR THE TRANSACTION
    METWEST is the only ophthalmic specific private day hospital in the area, and PMA recognises
    the opportunity to add further value to this business, assist it with further growth and
    therefore further bolt it on to PMAs day hospital portfolio. Of the 11 surgeons operating at
    METWEST, a number of these surgeons concurrently work at other PMA facilities, ensuring
    strong collegiate connections between PMA and METWEST.

     PMA sees this as an exciting opportunity to increase its shareholding in both profitable and
     well-established entities, and therefore increase PMA’s attributable EBITDA and consolidated
     profits. This will assist in placing PMA in a stronger position within an ever-changing day
     hospital environment.

4 KEY TERMS OF THE TRANSACTION

   4.1 Transaction consideration
       The total Transaction consideration of AUD AUD1,459,308.86 (approximately ZAR16 510
       620), was settled in cash by PMA.

   4.2 Conditions precedent and Effective date
       The effective date of the Transaction was 18 November 2020. At the date of this
       announcement, there are no outstanding conditions precedent to the Transaction, as all the
       conditions precedent were fulfilled.

   4.3 Warranties and indemnities
       The Transaction agreement contains legal warranties and indemnities which are considered
       normal in respect of a transaction of this nature.

   4.4 Options granted to PMA
       In terms of the Share Sale Agreement, PMA has one additional separate call option (to be
       exercised at PMA’s discretion), to acquire another 19% in both entities after 1 July 2021.

       PMA has a three month period in which to exercise the call option commencing from the
       date on which the financial accounts for Hereward and Kingham (for each financial period)
       are approved by the board of directors and provided to PMA.

   5. PROFIT AND NET ASSET VALUES ATTRIBUTABLE TO METWEST
      The net assets of METWEST as per the unaudited financial statements for the 12 months
      ended 30 June 2020, were ZAR93.5 million. The profit after tax attributable to the net assets
      of METWEST for the same period were ZAR12.2 million.

       The unaudited annual financial statements for METWEST were prepared in accordance with
       Australian Accounting Standards and Interpretations.

   6. CATEGORISATION OF THE TRANSACTION
      The Transaction constitutes a category 2 acquisition for the Advanced Health group, in terms
      of the Listings Requirements of the JSE Limited and is therefore not subject to Advanced
      Health shareholder approval.


Johannesburg
8 December 2020

Designated Advisor
Grindrod Bank Limited

Date: 08-12-2020 02:01:00
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