ASCENDIS HEALTH LIMITED - Conclusion of a Sale Agreement in respect of the Isando Manufacturing Facility

Conclusion of a Sale Agreement in respect of the Isando Manufacturing Facility

Ascendis Health Limited
(Registration number 2008/005856/06)
(Incorporated in the Republic of South Africa)
Share code: ASC
ISIN: ZAE000185005
(“Ascendis Health” or “the Company” or “the Group”)

CONCLUSION OF A SALE AGREEMENT IN RESPECT OF THE ISANDO MANUFACTURING FACILITY

1. Introduction

   Shareholders are referred to the announcement released on SENS on 25 June 2018 in terms of
   which the Company advised that it had embarked on a strategic review if its business, with the
   objective of improving performance through focusing on organic growth, improved cash generation
   and enhanced profitability (“the Strategic Review”). A key element of the Strategic Review includes
   the divestment of non-core assets and businesses.

   The board of directors of the Company (“the Board”) is pleased to advise shareholders that it has
   entered into a sale agreement (“the Sale Agreement”) with Mylan Proprietary Limited (“Mylan”) in
   terms of which Mylan will acquire 100% of the shares in Ascendis Health International Proprietary
   Limited, (“AHI SPV”) for an aggregate cash consideration of R130 million (“the Disposal”). The
   Disposal is subject to approval by the Competition Commission.

   As part of the transaction, the Company has entered into a manufacturing and supply agreement
   with Mylan to continue producing the products that are currently being manufactured at the factory.

2. Information relating to AHI SPV

   AHI SPV houses the Isando-based manufacturing operations of Ascendis Health. The assets of
   AHI SPV, which are being sold as a going concern, comprise the following:

   -    the pharmaceutical manufacturing facility located in Isando, comprising c.28 000m2 of plant,
        warehouse and office space. The facility includes capsules, oral solids and semi-solids
        manufacturing and packaging as well as quality control laboratory with a state-of-the-art
        stability centre, which is used to conduct physiochemical and microbiological tests for
        pharmaceuticals and Complementary and Alternative Medicines (CAMS); and

   -    related business assets (equipment, staff etc.) which facilitate the manufacturing and
        packaging capabilities of the Isando manufacturing facility,

   (collectively, “Manufacturing Business”).

   As at the financial year ended 30 June 2018, the aggregate net book value of the Manufacturing
   Business was R103 million and, for the period then ended, the Manufacturing Business generated
   an aggregate net loss after tax of R46 million.

   The net asset value and net loss after tax disclosed above have been extracted from the audited
   annual financial statements of the Group for the year ended 30 June 2018 which were prepared in
   accordance with International Financial Reporting Standards.

3. Rationale for the Disposal

   Following an extensive evaluation of strategic options relating to its manufacturing requirements,
   Ascendis Health decided to sell selected manufacturing assets to reduce the complexity of its
   South African pharmaceutical operations. The Group will therefore be consolidating its
   manufacturing facilities into its facility in Wynberg, Gauteng. Based on the low utilisation of its
   Isando manufacturing facility, the Board believes it is in the Group’s best interest to dispose of this
   operation. The facility was acquired through the purchase of Akacia Healthcare in 2015.

4. Application of the sale proceeds

   The cash proceeds from the Disposal will be applied by the Company mainly to reduce debt levels
   and to fund working capital requirements. Part of the proceeds will be invested in upgrading the
   Company’s supply chain.

5. Effective date, condition precedent and warranties

   The approval of the Competition Commission is a condition precedent to the Disposal.

   The effective date of the Disposal will follow the approval of the Disposal by the Competition
   Commission.

   The Sale Agreement contains warranties and indemnities that are customary for agreements of
   this nature.

6. Categorisation

   The Disposal is a category 2 transaction in terms of the Listings Requirements of the JSE Limited
   and accordingly is not subject to approval by shareholders.


Johannesburg
20 December 2018

Sponsor
Questco Corporate Advisory Proprietary Limited

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