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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 Supplied by www.sharenet.co.za 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.
