Wrap Text
Unaudited Condensed Consolidated Quarterly Results For The 3 Months Ended 30 September 2012
LITHA HEALTHCARE GROUP LIMITED
(Registration number 2006/006371/06)
Share code: LHG, ISIN: ZAE000144671
("The group" or "LHG" or "Litha")
UNAUDITED CONDENSED CONSOLIDATED QUARTERLY RESULTS FOR THE 3 MONTHS ENDED 30 SEPTEMBER 2012
- First set of quarterly results as required by Toronto Stock exchange listed controlling
shareholder, Paladin
- Third quarter year to date EPS of 45.6 cents and HEPS 13,6 cents adjusted for once off costs
from continuing operations
- Integration of Pharmaplan well underway.
- Renewal of adult vaccine tender for additional 2 years
The unaudited condensed consolidated quarter three (Q3) results for the three months ended 30 September 2012
have not been audited in accordance with the requirements of the Companies Act. These unaudited condensed
consolidated quarterly results are being prepared as a result of the acquisition of a controlling interest in Litha by
Paladin Labs Inc. on 2 July 2012. Paladin Labs Inc., a Canadian specialty pharmaceutical company listed on the
Toronto Stock Exchange, is required to prepare quarterly financial statements. Litha Healthcare Group's results for
the three months ended 30 September 2012 are consolidated into Paladin's results.
These unaudited condensed consolidated quarterly results have been prepared in accordance with the framework
concepts and the measurement and recognition requirements of the International Financial Reporting Standards.
The results are based on management accounts and contain information required by the International Accounting
Standard 34 Interim Financial Reporting "IAS 34" and in the manner required by the Companies Act. However, the
Company does not provide comparative figures for the quarter ended 30 September 2011 as formal quarterly
reporting processes were only implemented this year, therefore comparative information would possibly be
misleading and inaccurate.
The results have been prepared by the group's chief financial officer, Martin Michael Kahanovitz, CA(SA).
CONSOLIDATED STATEMENT OF FINANCIAL
POSITION
Unaudited Audited
30 September 31 December
(R'000) 2012 2011
ASSETS
Non-current assets 1 296 658 533 614
Property, plant and equipment 19 473 186 860
Goodwill and intangible assets 888 020 318 500
Deferred taxation asset 15 190 15 734
Investment in joint venture 259 630 -
Loans to joint venture 102 687 -
Investment in associates 5 170 4 201
Other non-current assets 6 488 8 319
Current assets 436 403 901 366
Inventories 164 621 280 763
Trade and other receivables 200 561 442 371
Other current assets 24 095 27 995
Cash and cash equivalents 47 126 150 237
Non-current assets held for sale 377 7 765
Total assets 1 733 438 1 442 745
EQUITY AND LIABILITIES
Total equity 1 122 758 512 109
Share capital and premium 760 473 295 473
Reserves attributable to holders of the parent 341 458 138 938
Non-controlling interest 20 827 77 698
Non-current liabilities 341 719 196 871
Other financial liabilities 236 715 178 709
Deferred taxation liability 105 004 18 162
Current liabilities 268 760 733 050
Accounts payable and provisions 123 424 631 911
Other financial liabilities 82 714 61 139
Bank overdraft 54 691 40 000
Loans from joint venture 7 931 -
Liabilities of disposal groups 201 715
Total equity and liabilities 1 733 438 1 442 745
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Unaudited Unaudited
3 months ended 9 months ended
30 September 30 September
(R'000) 2012 2012
Revenue 240 644 1 190 480
Cost of sales (137 827) (893 130)
Gross profit 102 817 297 350
Operating expenses (84 342) (237 383)
Other income 135 22 559
Profit on deconsolidation of Biovac - 171 530
Loss from joint venture (6 404) -
Net profit (loss) from equity accounted investment 259 (432)
Operating profit 12 465 253 624
Non-operating interest paid (7 785) (18 085)
Profit before taxation 4 680 235 539
Taxation (2 789) (16 080)
Profit for the period from continuing operations 1 891 219 459
Loss from discontinued operations (206) (5 958)
Total comprehensive income for the period 1 685 213 501
Profit attributable to equity holders of Litha Healthcare
Group Limited
Profit from continuing operations 2 851 188 216
Loss from discontinued operations (205) (5 957)
Profit attributable to equity holders of the group 2 646 182 259
Non-controlling interest (960) 31 241
Total profit for the period 1 686 213 502
Total comprehensive income attributable to:
Equity holders of Litha Healthcare Group 2 646 182 259
Non-controlling interest (960) 31 241
Total comprehensive income for the period 1 686 213 502
Earnings per share (cents) 0.5 42.1
From continuing operations 0.5 43.5
From discontinued operations - (1.4)
Diluted earnings per share (cents) 0.5 40.1
From continuing operations 0.5 41.4
From discontinued operations - (1.3)
COMMENTARY TO THE CONSOLIDATED STATEMENT
OF COMPREHENSIVE INCOME
Headline earnings reconciliation
Attributable profit 2 851 188 216
Adjusted for:
Profit on deconsolidation of subsidiary - (144 643)
Profit from disposal of property, plant and equipment (77) (133)
Discontinued operations 205 5 957
Tax effect of profit from disposal of property, plant and
equipment 22 38
Headline earnings from continuing operations 3 001 49 435
Loss from discontinued operations (205) (5 957)
Headline earnings 2 796 43 478
Headline earnings per share (cents) 0.5 10.0
From continuing operations 0.6 11.4
From discontinued operations (0.1) (1.4)
Diluted headline earnings per share (cents) 0.5 9.6
From continuing operations 0.5 10.9
From discontinued operations - (1.3)
Share Share Reserve Ordinary Non
capital based on equity Accumu- share- control-
and p payment transac- lated holders ing
(R'000) premium reserve tions profits interest interest Total
Audited balance at
1 January 2012 295 473 1 134 (70 155) 207 959 434 411 77 698 512 109
Total comprehensive income - - - 179 613 179 613 32 203 211 816
Share based payment reserve - 8 498 - - 8 498 - 8 498
Deconsolidation of Biovac - - 2 940 - 2 940 (88 114) (85 174)
Reviewed balance at
30 June 2012 295 473 9 632 (67 215) 387 572 625 462 21 787 647 249
Total comprehensive income - - - 2 646 2 646 (962) 1 686
Issue of shares 465 000 - - - 465 000 - 465 000
Share based payment reserve - 8 823 - - 8 823 - 8 823
Unaudited balance at
30 September 2012 760 473 18 455 (67 215) 390 218 1 1 101 931 20 827 1 1 122 758
CONSOLIDATED STATEMENT OF CASH FLOWS
Unaudited 3 months Unaudited 9 months
Ended ended
(R'000) 30 September 2012 30 September 2012
Cash generated by operating activities 839 148 636
Cash flows from operating activities (1 647) 149 113
Cash flows from investing activities (126 968) (181 334)
Cash flows from financing activities 120 903 96 727
Net (decrease)/increase in cash and cash equivalents (7 712) 64 506
Cash on deconsolidation of Biovac - (179 337)
Cash acquired on acquisition of subsidiary companies ( 2 971) (2 971)
Cash and cash equivalents at beginning of period 3 118 110 237
Cash and cash equivalents at end of period (7 565) (7 565)
Cash and cash equivalents included in discontinued operations 377 377
COMMENTARY
1. NATURE OF BUSINESS
Litha is a diversified healthcare business providing services, products and solutions to public and private hospitals,
retail pharmacy/fast-moving consumer goods (FMCG) markets and government healthcare programmes in Southern
Africa. It has three divisions Litha Biotech (biotechnology/vaccines), Litha Medical (medical devices and
consumables) and Litha Pharma (pharmaceuticals and complementary medicines).
2. RESULTS
Biovac deconsolidation
As previously disclosed, Biovac has been accounted for as a joint venture from 30 June 2012. Biovac's results have
therefore been fully consolidated for the first six months of the year. Its results have been included in the line "Loss
from joint venture" for the three months ended 30 September 2012.
Pharmaplan acquisition
The effective date for the acquisition of Pharmaplan was 2 July 2012. The results for Pharmaplan for the three
months ended 30 September 2012 have therefore been included in these results.
3. FINANCIAL OVERVIEW
Statement of Comprehensive Income
Revenue for the three months ended 30 September 2012 was R240.6 million and R1 190.5 million for the nine
months ended 30 September 2012. This included Biovac's turnover for the first six months, as explained above.
Revenue is now disclosed net of any discounts given to customers, whereas previously these were included in
operating expenses.
Operating profit was R12.5 million for the three months ended 30 September 2012 and R253.6 million for the nine
months ended 30 September 2012. The impact of the profit on deconsolidation of Biovac was a positive R171.5
million. The deconsolidation required a fair value adjustment to recognise the investment in Biovac as a joint venture
from 30 June 2012 which resulted in the profit on deconsolidation.
The group believes the operating profit for Q3 was negatively impacted by a number of factors including:
- A weakening Rand during the period
- The effect of transport strikes which affected the Litha Medical and Litha Pharma divisions
- Reduced revenues in the Forensics business unit within Litha Medical as detailed in the 30 June 2012
results announcement
- Increases in provisions in Litha Biotech and Litha Pharma amounting to R8.7 million, partly as a result of
aligning policies on provisions with Paladin. This is therefore a once-off impact
- Once-off transaction costs relating to Pharmaplan, as well as merger costs relating to the merging and
integration of recently acquired pharmaceutical businesses amounting to R4.5 million
Including these impacts, earnings per share from continuing operations were 0.5 cents per share for the three
months ended 30 September 2012 and 43.5 cents for the nine months ended 30 September 2012. Headline
earnings per share from continuing operations, which excludes the once-off profit on deconsolidation and other
unusual items, were 0.6 cents per share for Q3 and 11.4 cents per share for the nine months ended 30 September
2012.
Adjusting for the after tax effect of the increased provisions and transaction costs above, headline earnings per
share and earnings per share for the nine months ended 30 September 2012 would have been 13.6 and 45.6 cents
per share respectively.
Non-operating interest expense of R7.8 million (Nine months 30 September 2012: R18.1 million) relates to interest
expense on the Rand Merchant Bank (RMB) Preference Shares raised for the cash portion of the acquisition of
Pharmaplan, the initial RMB term loan raised in June 2011 and the IDC and Technology and Innovations Agency of
South Africa loans within the Litha Biotech division.
The effective tax rate for Q3 was 59.6% due to the non-deductibility of once-off transaction related expenses and the
fact that the substantial interest on the RMB preference share loan is not tax deductible.
As outlined in the June 2012 results, management have provided for the full R6 million of the previously disclosed
discontinued operations of the Capex and Cardiac business units. This can be seen in the results for the nine
months to 30 September 2012. Despite this provision, a process is in place to recover as much of the amount as
possible.
Reconciliation to EBITDA
Management believes that EBITDA (earnings before interest, taxes, depreciation and amortisation) has become a
more meaningful measure to the group due to the large amortisation of intangibles post recent large acquisitions.
With the recent large acquisitions the amortisation of intangibles, in accordance with IFRS 3, has become a material
number and needs to be highlighted when assessing the company's performance. In the third quarter of 2012 it
amounted to R11,453,000.
However, EBITDA does not have a standardised meaning under International Financial Reporting Standards
("IFRS") and therefore may not be comparable to similar measures presented by other companies. The Company
defines EBITDA as earnings before interest income/expense, other expense/income, taxes, amortisation,
depreciation, foreign exchange gain/losses, income/loss from joint ventures and equity accounted investments and
unusual items; such as write-downs and gains/losses on investments. EBITDA is calculated and presented
consistently from period to period. The Company believes EBITDA to be an important measurement that allows it to
assess the operating performance of its on-going business on a consistent basis without the impact of amortisation
and depreciation expenses. The Company excludes depreciation and amortisation expenses as their level
substantially depends on non-operating factors such as the historical cost of property, plant and equipment and
intangible assets.
3 months ended 9 months ended
30 September 2012 30 September 2012
Profit before taxation 4 680 235 539
Add back:
Interest expense 7 785 18 085
Depreciation expense 1 367 7 672
Amortisation expense 11 453 17 954
Net Ioss from Joint Venture 6 404 6 404
Net (profit) loss from equity accounted (259) 432
investment
Foreign exchange loss (gain) (3 807) 2 379
Less:
Interest income 2 617 10 698
Other Income 135 22 559
Profit on deconsolidation of Biovac - 171 530
EBITDA 24 871 83 678
In the next quarter the group will refer to an EBITDA to provide relevant quarter on quarter comparisons. This will
allow comparison without non-operating impacts. This is also in line with the group's main shareholder Paladin's
mechanism of assessing their performance.
Statement of Financial Position
Due to the deconsolidation of Biovac, the statement of financial position varies from the prior period.
The increase in goodwill and intangible assets relates to the intangible assets realised on the purchase price
allocation exercise done on the acquisition of Pharmaplan and further intangible assets recognised as a result of the
Cpoint Capital transaction announced on SENS on 2 November 2012.
The investment in joint venture relates to the investment in Biovac, as discussed above. A fair value exercise was
done which resulted in a profit on deconsolidation of R171.5 million for Litha's 52.5% interest in Biovac.
The funding for Biovac's manufacturing facility was raised at the Biovac Consortium Proprietary Limited level, a
holding company of Biovac and an 85% held subsidiary of Litha. These funds were on-lent to Biovac, resulting in the
loans to joint venture of R102.7 million. As discussed in the past, the debt relating to Biovac operations should not be
used in gearing calculations as Biovac does not rely on the group to provide funding and is operationally separate.
The table below shows the gearing excluding and including debt related to Biovac.
Excl. Biovac Incl. Biovac
September 2012 December 2011 September 2012 December 2011
Interest bearing debt (R'000) 188 968 95 766 291 655 111 663
Equity (R'000) 760 473 407 152 760 473 502 258
% 24.8% 23.5% 38.4% 22.2%
Cash Flow
Cash outflow from operations amounted to R1.7 million (nine months to September 2012: R149.1 inflow).
Cash outflow from investing activities amounted to R127.0 million (nine months to September 2012 R181.3 million).
In Q3, the vast majority of cash outflow from investing activities relates to the cash portion of the acquisition price of
Pharmaplan amounting to R125 million. The remainder of the cash outflow relates to additions to property, plant and
equipment and internally generated intangible assets.
Cash inflows from financing activities amounted to R120.9 million (nine months to 30 September 2012: R96.7
million). In Q3, the inflow from financing activities related mainly to the R125 million raised from Rand Merchant Bank
less underwriting fees of R5 million. Litha also refinanced its leasehold improvements to its Midrand premises for an
amount of R5.9 million. Debt repayments amounted to R4.5 million.
4. OPERATIONAL REVIEW
With the conclusion of the Pharmaplan acquisition and the consolidation of most of the business units into one
facility, the group's shared services strategy has gained significant momentum, with specific focus on the following:
- Implementation of single invoicing for both the Pharmaceutical and Medical divisions from January 2013
- Evaluating outsourcing of all Pharmaceutical logistics to one of the specialised distributors in South Africa,
thereby allowing the group to further consolidate other operations into its Midrand facility
- Aligning HR processes, job profiling, policies, grading and transformation policies following recent
acquisitions.
- Centralising IT and rolling out an Enterprise Resource Planning system which will bring consistency of
processes and procedures and enable the group to extract more meaningful data from information systems
- Starting to participate in more export business opportunities in the countries around South Africa for our full
range of products.
Litha Biotech Division
Due to the deconsolidation of Biovac at 30 June 2012, the divisional revenue of R765.0 million for the nine months
ended 30 September 2012 only includes six months of Biovac's revenue. In Q3, Biovac was accounted for as a joint
venture and its net loss of R6.4 million was included in the operating loss for the quarter. The profit of R236.6 million
for the nine months to September includes the once-off gain on deconsolidation of Biovac of R171.5 million.
The loss from joint venture (Biovac) resulted from lower sales due to excess stock of pneumococcal vaccine in
clinics following the pneumococcal vaccine campaign earlier in the year. This led to less orders for the company.
Biovac also experienced foreign exchange losses of R3.6 million. The Biovac facility is still on track for a Good
Manufacturing Practice inspection in late 2012, with all pre-audits completed. The company is also in discussions to
finalise another technology transfer agreement.
Revenue in Litha Vaccines was very strong with significant sales of rabies vaccine in KwaZulu-Natal and Gauteng.
However, this business unit had a once-off stock write off of R5.1 million which had a large impact on margin. Litha
Vaccines has historically enjoyed the lion's share of the tender for adult vaccines and has once again been
successful in this tender, which was awarded in October 2012 for another two years.
Litha Medical Division
Litha Medical achieved revenues of R77.6 million for Q3 and R210.5 million for the nine months to September 2012.
Operating profit was R11.5 million for Q3 and R36.0 million for the nine months to September 2012. The operating
margin percentage for Q3 was 15% and 17% for the nine months to September. Operating margin was impacted by
the transport strike, which forced business units to airfreight goods into the country. The margin was also impacted
by investment costs in new agency development. The benefit of these new agencies is expected to flow in 2013.
Filterworks and ICU Medical SA posted strong third quarter results. Manta Medical performed particularly well,
primarily due to non-tender buyouts.However, this strength was partially offset by slower sales in Earth Medical
where sales were 88% of the same quarter last year, partly due to reduction in surgeries taking place as a result of
the significant amount of training and congresses taking place in this quarter. Resources were focused on the
anticipated rolling out of the Ophthalmic and Robotic surgery focus area.
The forensic tender outlined at interim is still being adjudicated. If awarded to Manta Forensic, the benefit will reflect
in the first half of 2013.
We expect initially, small revenue flows accruing to the Litha Medical division in 2013 from a newly established local
assembly and packaging facility, which will include an Ethylene Oxide steriliser. This will enable the division to align
with local manufacturing initiatives as well as expanding our own brand of surgical devices/consumables business.
Litha Pharma Division
Litha Pharma achieved revenue of R132.8 million for the third quarter and R215.0 million for the nine months ended
30 September 2012. Operating profit was R12.4 million for Q3 and R21.3 million for the nine months ended 30
September 2012. The operating margin percentage for Q3 was 9% and 10% for the nine months to 30 September
2012. Margin was affected by once-off costs around the Pharmaplan transaction and integration of the entire
division.
Pharmaplan sales were down for the quarter primarily based on lower sales in Oncology and Aesthetics which were
delayed into the fourth quarter due to transportation strikes. In addition, during the quarter, significant once off costs
related to the merger with the Pharmaplan business were incurred.
The merger of Litha Pharma and Pharmaplan is ahead of schedule and the restructuring and integration of the
businesses are being finalised.
The employment costs of the previous vendors of certain of the Litha Pharma businesses were R3.5 million per
annum which came to an end in September 2012.
PROSPECTS
Litha is continuing to drive their acquisitive strategy ensuring that new opportunities are continually pursued and
assessed by management.
In the Shared Services division, finance is finalising the integration of Litha Pharma's accounting systems for
January 2013. The Transformation Committee has been taken over by the newly appointed Group HR Executive and
the strategy is under review for rollout next year. HR will implement the new Code of Ethics and they are currently
standardising job grading and job descriptions across the Group.
The Litha Medical division has started to invest in existing local assembly and manufacturing facilities to expand its
own brand portfolio. Earth Medical is preparing the launch of the da Vinci® Surgery Intuitive Robotic system in a
South African hospital which has been very well received.
The first Litha Pharma products have been approved for marketing by the MCC and are being prepared for launch in
2013. The centralising of the warehouse and distribution of all Litha Pharma products will be complete with an
imminent decision being made regarding the outsourcing to an independent contractor in the next few weeks. New
products are continually being prepared for MCC submission bulking up the pipeline for the future.
5. CHANGES TO THE BOARD OF DIRECTORS
Gerardus Adrianus Hoogland (Pharmaplan CEO) was appointed as an executive director and Mark Beaudet and
Mark Henry Nawacki (Paladin Labs) were appointed as non-executive directors on 2 July 2012. Nkululeko Leonard
Sowazi replaced Andrew David Bonamour as chairman of the board on 11 July 2012.
NOTES TO THE FINANCIAL STATEMENTS
1. ACCOUNTING POLICIES
The condensed unaudited consolidated results have been prepared in accordance with the framework concepts and
the measurement and recognition requirements of the International Financial Reporting Standards and containing
information required by the IAS 34 Interim Financial Reporting and in the manner required by the Companies Act,
except, as discussed earlier, comparative figures have not been provided. The interim report has also been prepared
in accordance with and containing the information required by AC 500 series as issued by the Accounting Practices
Board. The reviewed condensed consolidated interim financial statements are prepared on the historical cost basis,
with the exception of certain financial instruments which are measured at fair value. The results of the interim period
are not necessarily indicative of the results for the entire year. These financial statements should be read in
conjunction with the audited financial statements for the year ended 31 December 2011. The condensed
consolidated interim financial statements for the period ending 30 September 2012 have not been audited.
The condensed consolidated interim financial statements are prepared using the same policies and method of
computation as the audited financial statements for the year ended 31 December 2011, except for applying IFRS 10,
Consolidated Financial Statements, IFRS 11 Joint Arrangements and IFRS 12 Disclosure of Interests in Other
Entities as well as IAS 28(R) Investments in Associates and Joint Ventures. The application of these standards as
well as the revised IAS 28 resulted in the Group needing to reassess its investments applying the principle of control
as defined in IFRS 10. All subsidiaries, excluding Biovac, continue to be consolidated. The investment in Biovac
was determined to be a joint venture in accordance with the requirements of IFRS 11, it is now equity accounted in
accordance with the requirements of IAS 28(R). IFRS 12 is a disclosure standard, the full effect of which will be seen
in the annual financial statements. The early adoption of these standards has not resulted in a change in the prior
year reported amounts. The preparation of condensed consolidated interim financial statements requires the use of
estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent
assets and liabilities at period end and the reported amounts of turnover and expenses during the reporting periods.
Although these estimates are based on management's best knowledge of current events and actions that the group
may undertake in the future, actual results may differ from those estimates.
2. WEIGHTED AVERAGE NUMBER OF SHARES
Unaudited 3 months ended 30 Unaudited 9 months ended 30
September 2012 September 2012
Weighted average number of shares 541 601 720 432 991 747
Diluted weighted average number of shares 570 261 655 454 879 346
3. SUBSEQUENT EVENTS
No events material to the understanding of the report have occurred in the period between 30 September 2012 and
the date of this report.
4. ACQUISITION OF PHARMAPLAN (PTY) LTD (PHARMAPLAN)
Effective 2 July 2012, the group acquired 100% of the issued share capital of Pharmaplan from Paladin Labs Inc.
("Paladin") for a total consideration of R590 million. The purchase price was settled through the issue of 169 090 909
shares at a price of R2.75, the remaining R125 million being settled with cash. The cash portion of this acquisition
was financed through the issue of 125,000 redeemable, no par value Preference Shares at R1,000 per share to
Rand Merchant Bank ("RMB").
Pharmaplan is a pharmaceutical company which represents small to medium sized international Principals in South
Africa and other selected sub-Saharan territories. The company offers a full service of registering, importing,
promoting and distributing the products of its principals exclusively to all wholesalers, hospitals and clinics in South
Africa and selected neighbouring countries. According to IMS data(1), Pharmaplan is ranked the 8th top generic
company in South Africa.
The acquisition of Pharmaplan achieves Litha's objective of becoming a diversified healthcare business and delivers
on its strategy of creating scale through acquisitions within Litha's Pharma Division. The merging of the Litha
Pharma Division with Pharmaplan boosts Litha Pharma's current portfolio, broadens its access to international
research and development pipelines and improves its current platform for expansion into new therapeutic markets.
In addition, the strategic relationship with Paladin, which now owns 44.5% of the Litha, provides Litha with access to
Paladin's portfolio of products for the South African and sub-Saharan markets. Paladin intends to play an active role
in opening up international licensing opportunities from a product pipeline and investment perspective. It is
anticipated to produce increased deal flow and future product acquisition success rates for Litha.
Qualitative factors which make up goodwill include: its ability to attract suppliers of innovative and biotechnology
pharmaceuticals due to its historic success and reputation over many years; the wealth of experience of its executive
team to source and ultimately commercialise pharmaceutical products within South Africa and its strong relationships
with the private and public healthcare sectors. In addition, the benefits that Pharmaplan's scale will bring to the group
and the extensive range of products that span across different therapeutic groups can be used as a platform for
existing and new product ranges.
The acquisition was accounted for using the acquisition method of accounting and the results of Pharmaplan are
included in the Company's consolidated financial statements from 2 July 2012, the effective date of the transaction.
The purchase price was allocated as follows:
2 July 2012
100%
Net book value of identifiable assets acquired 65 099
Definite life intangibles 348 498
Indefinite life intangibles 6 325
Future income tax liabilities (97 580)
Goodwill 267 658
Acquisition price 590 000
During the period 2 July 2012 to 30 September 2012, Pharmaplan recorded revenue of R88.1 million and net income
of R19.8 million.
Details of debtors:
Trade receivables 60 072
The average debtors days outstanding are 44 days. Due to the short term nature of the trade receivables, cost is
considered to be fair value.
All trade receivables are expected to be collected.
5. RELATED PARTY TRANSACTIONS
All transactions with related parties are carried out in the normal course of business. The accounts payable to related
parties are on normal commercial terms and conditions and are non-interest bearing.
Litha Medical Logistics Proprietary Limited charged cold chain logistics fees to Biovac, which is classified as a jointly
controlled entity, for an amount of R8.9 million.
Litha Medical Proprietary Limited a 100% held subsidiary of Litha healthcare Group Limited paid rental fees to Firefly
Investments 223 Proprietary Limited, a significant influence investment, of R1.4 million.
Litha paid R5.0 million in underwriting fees to Blackstar Limited, a shareholder of the entity, of which the company is
an associate.
6. CAPITAL COMMITMENTS
The are no material capital commitments outstanding as at 30 September 2012.
7. INVESTMENT IN JOINT VENTURE
Investment in The Biological and Vaccines Institute of Southern Africa Proprietary Limited ("Biovac")
On June 30, 2012, the Company re-evaluated the accounting treatment of its investment Biovac. The government,
who is a 47.5% shareholder in Biovac, has taken an increasingly significant role in the business' decision-making of
Biovac and accordingly, under IFRS 11 Joint Arrangements, is considered to jointly control Biovac along with Litha.
As a result, effective June 30, 2012, Litha deconsolidated its interest in Biovac and recognised an investment in a
joint venture.
The deconsolidation required the Company to measure its share in the fair value of Biovac. The allocation of the fair
value of the investment in The Biovac Institute is identified below:
Ownership percentage: 52.5%
R'000
Litha's portion of fair value 266 034
Litha's portion of definite life intangibles (46 961)
Deferred taxation 13 149
Goodwill 232 222
R'000
Carrying value, beginning of period -
Recognition at 30 June 2012 266 034
Share of net loss for the period before adjustments (4 713)
Adjustments to net income:
Amortisation of fair value adjustments (2 348)
Deferred taxation effect 657
Share of net income for the period (6 404)
Carrying values, end of period 259 630
The Company is presenting selected financial information derived from Biovac's IFRS compliant unaudited
management accounts for the three months ended 30 September 2012.
Biovac's statement of income data R'000
Revenues 259 680
Cost of sales (231 460)
Gross income 28 220
Operating expenses (35 427)
Earnings before under-noted items (7 207)
Interest, depreciation and income taxes (1 770)
Net income for the period (8 977)
Biovac's Statement of Financial Position data R'000
Total assets 887 638
Total liabilities 767 880
8. SEGMENT INFORMATION
Medical Device Pharmaceutical Biotechnology
Segment Division Division Division Group
R'000
Unaudited 3 months ended
30 September 2012
Turnover 77 594 132 808 30 242 240 644
Reportable segment profit 11 462 12 411 (3 122) 20 751
Head Office costs (16 071)
Operating profit (before taxation) 4 680
Total assets 393 582 775 965 563 891 1 733 438
Medical Device Pharmaceutical Biotechnology
Segment Division Division Division Group
R'000
Unaudited 9 months ended
30 September 2012
Turnover 210 461 215 037 764 982 1 190 480
Reportable segment profit 35 991 21 343 236 625 293 959
Head Office costs (40 335)
Operating profit (before taxation) 253 624
Total assets 393 582 775 965 563 891 1 733 438
9. DIVIDEND
In line with an annual dividend policy, no dividend has been recommended or declared for the period. The group will
review its dividend declaration policy annually.
For and on behalf of the board
N Sowazi, Chairman
Johannesburg
13 November 2012
Directors: AD Bonamour*, S Kahanovitz, M Makhoana, M Kahanovitz, G Hoogland, N Sowazi*, W Marshall-Smith*,
M Mzimba*, F Hendricks*, I Jacobson*#, V Mcobothi*, M Beaudet*+, M Nawacki*+
(*non-executive) (+Canadian) (#British)
Sponsor
Rand Merchant Bank
Auditors
Mazars
Transfer Secretaries
Computershare Investor Services
Registered Office
106 16th Road
Midrand
1686
Date: 13/11/2012 01:30:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
Sharenet Sites 
