Wrap Text
Unaudited condensed consolidated results for the six months ended 30 June 2014
LITHA HEALTHCARE GROUP LIMITED
(Registration number 2006/006371/06);
Share code: LHG, ISIN: ZAE000144671
("the Group" or "Litha")
UNAUDITED CONDENSED CONSOLIDATED RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2014
- Revenue up 16.3% in H1 2014 compared to H1 2013
- EPS decreased from 4,0 cps in H1 2013 to (0,2) cps in H1 2014
- EBITDA decreased by 10,5% to R 61,5 million in H1 2014 from R 68,7 million in H1
2013 but increased from R 42,0 million in H2 2013
The unaudited condensed consolidated financial statements for the six months ended 30 June 2014 have been prepared
by the Group's Chief Financial Officer, Martin Michael Kahanovitz, CA (SA), who is also responsible for the preparation of
the Annual Financial Statements.
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Unaudited Unaudited Audited
(R'000) 30 June 2014 30 June 2013 31 December 2013
ASSETS
Non-current assets 1 278 949 1 326 858 1 296 670
Property, plant and equipment 72 161 75 409 73 869
Goodwill 469 799 469 799 469 799
Intangible assets 324 300 380 895 352 093
Investment in associates 9 363 6 546 10 066
Investment in joint venture 257 897 252 442 254 026
Loan to joint venture 117 762 108 884 113 200
Deferred taxation asset 21 113 26 395 18 251
Other non-current assets 6 554 6 488 5 366
Current assets 619 436 538 956 647 241
Inventories 338 003 275 750 328 789
Trade and other receivables 215 674 221 479 214 187
Taxation 5 846 4 336 3 006
Other current assets 6 766 10 945 17 332
Cash and cash equivalents 53 147 26 446 83 927
Non-current assets held for sale and disposal groups - 1 087 389
Total assets 1 898 385 1 866 901 1 944 300
EQUITY AND LIABILITIES
Total equity 1 149 910 1 132 549 1 148 521
Stated capital 792 263 760 473 792 263
Reserves attributable to holders of the parent 337 080 352 328 336 272
Non-controlling interest 20 567 19 748 19 986
Non-current liabilities 320 704 368 536 346 250
Long-term liabilities 185 993 219 430 203 231
Finance lease liability 58 127 58 279 57 932
Deferred taxation liability 76 584 90 827 85 087
Current liabilities 427 771 365 631 449 329
Trade and other payables 276 086 223 843 291 969
Other current liabilities 130 132 87 368 82 600
Bank overdraft 21 553 54 420 74 760
Liabilities of disposal groups - 185 200
Total equity and liabilities 1 898 385 1 866 901 1 944 300
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
(R'000)
Unaudited six Unaudited six
months ended months ended
30 June 2014 30 June 2013
Revenue 618 513 531 855
Cost of sales (410 707) (300 829)
Gross profit 207 806 231 026
Selling, distribution, regulatory and
administrative expenses (199 196) (184 282)
Other income - -
Net (loss)/income from associate (net of taxation) (1 069) 875
Net income/(loss) from investment in joint
venture (net of taxation) 3 871 (7 591)
Operating profit 11 412 40 028
Net Finance cost (11 735) (12 236)
(Loss)/profit before taxation (323) 27 792
Taxation (100) (7 971)
(Loss)/profit from continuing operations (423) 19 821
Profit from discontinued operations - 765
(Loss)/profit for the period (423) 20 586
Total comprehensive income for the period (423) 20 586
Profit attributable to equity holders of Litha
Healthcare Group Limited:
(Loss)/profit from continuing operations (1 004) 20 960
(Loss)/profit from discontinued operations - 765
(Loss)/profit attributable to equity holders of (1 004) 21 725
Litha Healthcare Group Limited
Non-controlling interest 581 (1 139)
Total (loss)/profit for the period (423) 20 586
Total comprehensive (loss)/income
attributable to:
Equity holders of Litha Healthcare Group
Limited (1 004) 21 725
Non-controlling interest 581 (1 139)
Total comprehensive (loss)/income for the (423) 20 586
period
Basic earnings per share (cents) (0,2) 4,0
From continuing operations (0,2) 3,9
From discontinued operations - 0,1
Diluted earnings per share (cents) (0,2) 3,8
From continuing operations (0,2) 3,7
From discontinued operations - 0,1
Headline earnings reconciliation
(Loss)/profit from continuing operations (1 004) 20 960
Adjusted for:
Write-off of intangible assets 318 242
Tax effect of write-off of intangible assets (89) (68)
Loss on disposal of property, plant and
equipment 135 20
Tax effect of loss from disposal of property, plant
and equipment (38) (5)
Headline earnings from continuing
operations (678) 21 149
Profit from discontinued operations - 765
Headline earnings (678) 21 914
Headline earnings per share (cents) (0,1) 4,0
From continuing operations (0,1) 3,9
From discontinued operations - 0,1
Diluted headline earnings per share (cents) (0,1) 3,8
From continuing operations (0,1) 3,7
From discontinued operations - 0,1
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Share-
based Reserve Accum- Total
payment on equity ulated attributable to Non-controlling
(R'000) Stated Capital reserve transaction profits equity holders interest Total
Balance at 1 January 2014 792 263 15 679 (67 213) 387 806 1 128 535 19 986 1 148 521
Total comprehensive
income - - - (1 004) (1 004) 581 (423)
Share based payment
reserve adjustment - 1 812 - - 1 812 - 1 812
Balance 30 June 2014 792 263 17 491 (67 213) 386 802 1 129 343 20 567 1 149 910
Balance at 1 January 2013 760 473 20 027 (67 215) 373 424 1 086 709 20 887 1 107 596
Total comprehensive income - - - 21 725 21 725 (1 139) 20 586
Share based payment reserve
adjustment - 4 367 - - 4 367 - 4 367
Balance 30 June 2013 760 473 24 394 (67 215) 395 149 1 112 801 19 748 1 132 549
CONSOLIDATED STATEMENT OF CASH FLOWS
Unaudited Six Unaudited six Audited
months ended months ended year ended
30 June 2014 30 June 2013 31 December 2013
(R'000)
Cash generated by operating activities 53 826 31 842 82 027
Cash flows from operating activities 13 525 18 322 64 125
Cash flows from investing activities (3 763) (11 462) (18 922)
Cash flows from financing activities 12 666 (21 424) (22 626)
Net increase/(decrease) in cash and
cash equivalents 22 428 (14 564) 22 577
(Decrease)/increase in cash in (389) (230) 158
discontinued operations
Cash and cash equivalents at beginning 9 555 (13 180) (13 180)
of period
Cash, cash equivalents and bank 31 594 (27 974) 9 555
overdraft at end of period
Cash and cash equivalents included in
discontinued operations - 303 389
NOTES TO THE FINANCIAL STATEMENTS
1. ACCOUNTING POLICIES
These unaudited condensed consolidated financial statements for the six months ended 30 June 2014 ("H1 2014") have
been prepared and presented in accordance with the requirements of International Financial Reporting Standard ("IFRS"),
IAS 34 Interim Financial Reporting, the Listings Requirements of the JSE Limited and the requirements of the Companies
Act of South Africa.
These financial statements should be read in conjunction with the audited financial statements for the year ended
31 December 2013. The unaudited condensed financial statements for the six months ended 30 June 2014 were
prepared using the same accounting policies as the audited financial statements for the year ended 31 December 2013.
The condensed consolidated financial statements for the six months ended 30 June 2014 have not been audited by
KPMG Inc., the Group's auditors. The directors take full responsibility for the preparation of these condensed
consolidated financial statements and warrant that the financial information herein has been correctly extracted from the
underlying condensed financial statements for the six months ended 30 June 2014.
The preparation of condensed consolidated 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 revenue 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 IN ISSUE
Unaudited six Unaudited six Audited
months ended months ended year ended
30 June 2014 30 June 2013 31 December 2013
Weighted average number of shares 555 913 554 540 929 406 542 168 100
Weighted average share options outstanding 18 794 708 34 550 696 33 506 772
Diluted weighted average number of shares 574 708 262 575 480 102 575 674 872
3. SUBSEQUENT EVENTS
There have been no events that are material to the understanding of this report in the period between 30 June 2014 and
the date of this report.
4. RELATED PARTY TRANSACTIONS
All transactions with related parties are carried out in the normal course of operations. The accounts payable to related
parties are on normal commercial terms and conditions.
Interest earned on the loan to its Biovac joint venture was R4,5 million for H1 2014 (H1 2013: R4,1 million).
Litha Medical Logistics Proprietary Limited charged cold chain logistics fees to The Biologicals and Vaccines Institute of
Southern Africa Proprietary Limited (Biovac), a joint venture, of R26,4 million for H1 2014 (H1 2013: R22,5 million).
Payments made to an associate, Firefly, relates to a finance lease and were R3,4 million for H1 2014 (H1 2013: R3,3
million).
Litha also paid non-executive director fees of R0 for H1 2014 (H1 2013: R0,3 million) to Blackstar and R0,2 million for H1
2014 (H1 2013: R0,4 million) to Paladin Labs, both of which are associates of the Group.
Litha paid interest of R1,9 million to Paladin in connection with the R40 million working capital loan which was raised in
April 2014.
5. INVESTMENT IN JOINT VENTURE
Investment in Biovac
The Group holds an effective 44.6% interest in Biovac. The Group owns 85.0% of the Biovac Consortium Proprietary
Limited, which in turns owns 52.5% of Biovac. The interest in Biovac is accounted for using the equity method of
accounting. There have been no changes in the risk associated with Biovac during the current financial year. Biovac is a
joint venture with the Government of South Africa and is involved in the production and commercialisation of vaccines in
South Africa and the Southern African Development Community. Biovac is situated in Cape Town, South Africa. The joint
venture was initially recorded at fair value and adjustments are made to include the Group's share of Biovac's net income.
The Group's share of the net profit/ (loss) from the joint venture is adjusted to reflect the amortisation of the intangible
assets recognised less the deferred taxation effect thereon.
Unaudited Unaudited Audited
six months ended six months ended year ended
R'000 30 June 2014 30 June 2013 31 December 2013
Carrying value, beginning of period 254 026 260 034 260 034
Share of net profit/(loss) for the
period before adjustments 7 252 (4 210) 755
Adjustments to net income/(loss):
Amortisation of fair value
adjustments (4 696) (4 696) (9 392)
Deferred taxation effect 1 315 1 315 2 629
Share of net income/(loss) for the
period 3 871 (7 591) (6 008)
Carrying values, end of period 257 897 252 442 254 026
The Group is presenting selected financial information derived from Biovac's IFRS compliant unaudited management
accounts for the six months ended 30 June 2014, the six months ended 30 June 2013 and the year ended 31 December
2013.
Biovac's statement of Unaudited Unaudited Unaudited
comprehensive income data 6 months ended 6 months ended year ended
R'000 30 June 2014 30 June 2013 31 December 2013
Revenue 761 660 641 761 1 280 241
Cost of sales (684 147) (568 634) (1 137 609)
Gross income 77 513 73 127 142 632
Operating expenses (50 873) (74 300) (124 449)
Earnings/(loss) before items 26 640 (1 173) 18 183
noted here-under
Interest, depreciation and income (12 829) (6 846) (16 745)
taxes
Net income/(loss) for the period 13 811 (8 019) 1 438
Biovac's Statement of Financial
Position data Unaudited Unaudited Unaudited
R'000 30 June 2014 30 June 2013 31 December 2013
Current assets 544 258 623 859 605 450
Long-term assets 351 263 243 670 312 844
Current liabilities (619 573) (609 935) (672 292)
Long-term liabilities (125 996) (121 640) (120 817)
Net Assets 149 952 135 954 125 185
6. CAPITAL COMMITMENTS
Biovac has entered into agreements to purchase R5,8 million (2013: R29,3 million) of equipment and to make improvements
to the manufacturing facility. This is expected to take place during 2014.
7. SEGMENT INFORMATION
Segment Litha Pharma Litha Medical Litha Biotech Group
Six months ended
30 June 2014
(R'000)
Revenue 280 975 231 251 106 287 618 513
Reportable segment profit 12 316 15 536 21 609 49 461
Head Office costs (38 049)
Operating profit (before taxation) 11 412
Total Assets 1 199 887 203 676 494 822 1 898 385
Six months ended
30 June 2013
(R'000)
Revenue 286 265 152 328 93 262 531 855
Reportable segment profit 50 515 17 349 11 917 79 781
Head Office costs (39 753)
Operating profit (before taxation) 40 028
Total Assets 1 036 713 367 408 462 780 1 866 901
8. FINANCIAL ASSETS BY CATEGORY
R'000 Loans and receivables At fair value through
profit or loss
30 June 2014
Cash and cash equivalents 53 147 -
Loans receivable 4 688 -
Loans to joint venture 117 762 -
Trade and other receivables 202 765 -
Forward exchange contracts** - 780
31 December 2013 -
Cash and cash equivalents 83 927 -
Loans receivables 4 687 -
Loans to joint venture 113 200 -
Trade and other receivables 184 580 -
Forward exchange contracts** - 16 708
FINANCIAL LIABILITIES BY CATEGORY
Financial Liabilities at At fair value through
R'000 Amortised cost profit or loss
30 June 2014
Long term liabilities* 236 061 -
Trade and other payables 212 144 -
Bank overdraft 21 553 -
Forward exchange contracts** - -
31 December 2013
Long term liabilities* 317 962 -
Trade and other payables 256 795 -
Bank overdraft 74 760 -
Forward exchange contracts** - -
* Included in long-term liabilities and other current liabilities
** Included in other current assets or other current liabilities for prior year
FAIR VALUE HIERARCHY DISCLOSURES
R'000 Level 1 Level 2 Level 3
30 June 2014
FEC assets (other current assets) - 780 -
31 December 2013
FEC assets (other current assets) - 16 708 -
Categorisation within the hierarchy has been determined on the basis of the lowest level input that is significant to the fair
value measurement of the relevant levels, as follows:
Level 1 - valued using quoted prices in active markets for identical assets
Level 2 - valued by reference to valuation techniques using observable inputs other than quoted prices within
Level 1; and
Level 3 - valued by reference to valuation techniques using inputs that are not based on observable market data.
There have been no transfers during the year between levels 1 and 2.
COMMENTARY
1. NATURE OF BUSINESS
Litha Healthcare Group Limited is a diversified healthcare business providing services, products and solutions to public and
private hospitals and government healthcare programmes in Southern Africa. It has three divisions - Litha Pharma
(pharmaceuticals and complementary medicines), Litha Medical (medical devices, equipment and consumables) and Litha
Biotech (human vaccines).
2. FINANCIAL OVERVIEW
Reconciliation to EBITDA
EBITDA does not have a standardised definition under IFRS and therefore may not be comparable to similar measures
presented by other companies. The Group defines EBITDA as earnings before interest income/expense, other
expense/income, tax, amortisation, depreciation, foreign exchange gains/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.
EBITDA breakdown Unaudited Unaudited Unaudited
R'000 6 months ended 6 months ended 6 months ended
30 June 2014 30 June 2013 31 December 2013*
(Loss)/Profit before taxation (323) 27 792 (3 624)
Add back:
Interest expense 16 060 16 154 16 639
Depreciation expense 5 337 4 659 5 104
Amortisation expense 27 475 28 794 28 803
Net (profit)/loss from joint venture (3 870) 7 591 (1 583)
Net loss/(profit) from associate 1 068 (875) -
Restructuring expense 10 500 - -
Foreign exchange loss/(gain) 9 294 (11 511) 1 105
Write off of intangible assets 318 242 -
Other income 135 - (233)
Other finance expense 713 714 713
Less:
Interest income 5 038 4 889 5 145
EBITDA 61 534 68 671 42 012
* An analysis of H2 2013 versus H1 2014 has been done to highlight the impact of its restructure and cost reduction program initiated in
response to a number of factors they were confronted with in 2013, including commoditisation of certain generic products and devaluation
of the Rand. The Group calculated the H2 2013 EBITDA by subtracting H1 2013 EBITDA from the EBITDA for the year ended 31 December 2013
Statement of Comprehensive Income
- Revenue increased by 16.3% to R618,5 million for H1 2014 from R531,9 million in H1 2013
- EBITDA decreased by 10.5% to R61,5 million in H1 2014 from R68,7 million in H1 2013
- EBITDA increased by 46.5% to R61,5 million in H1 2014 from R42,0 million in H2 2013
Revenue increased in H1 2014 primarily as a result of the sale of robotic equipment in Litha Medical and strong flu sales
in Litha Biotech. Despite effective cost control over general and administrative expenses, EBITDA fell by 10.2%, mainly
due to product mix in Litha Medical and pricing pressure and commoditisation in Litha Pharma. Operating profit was
further negatively impacted by foreign exchange losses incurred on revaluation of foreign exchange contracts.
EBITDA decreased by 10.5% or R7,2 million to R61,5 million in H1 2014 compared to R68,7 million in H1 2013. While
EBITDA declined compared to the prior year, it increased by 46.5% or R19,5 million compared H2 2013. This increase
follows a restructuring process that took place in late 2013 and which resulted in significant cost savings. As indicated at
the time, the full effects of the restructure will only be felt in H2 2014.
The effective tax rate before loss from joint venture and income from associate was 4% for H1 2014, compared to 37,8%
in H1 2013, mainly due to the de-recognition of previously assessed tax losses.
Due to the factors outlined above, as well as a significant foreign exchange loss in the current half versus a foreign
exchange gain in the prior year, EPS decreased from 4,0 cps in H1 2013 to (0,2) cps in H1 2014.
Statement of Financial Position
- Inventory increased by R9,2 million to R338,0 million as at 30 June 2014 from R328,8 million as at
31 December 2013
- Accounts payable decreased by R15,9 million to R276,1 million as at 30 June 2014 from R292,0 million as at
31 December 2013
- Trade and other receivables increased by R1,5 million to R215,7 million as at 30 June 2014 from R214,2 million as
at 31 December 2013
Inventory increased mainly in the Vaccines division, in which a significant vaccine order was received towards the end of
H1 2014. Overall, while inventory increased, day sales in inventory decreased from 115 days as at 31 December 2013 to
100 days as at 30 June 2014 following a concerted effort by management to improve stock control.
Accounts payable decreased due to the timing of payments made to suppliers in Litha Vaccines and Litha Medical during
the first half of the year.
Trade and other receivables increased mainly due to a one time prepayment which was required in the medical division
and which related to the sale of the da Vinci Surgical Robotic Systems. Trade receivables decreased overall, primarily due
to quicker collections in the Pharma division. The day sales outstanding improved by 13 days against the position of 65
days at 31 December 2013.
The decrease in intangibles of R27,8 million during H1 2014 arose primarily from the amortisation of intangible assets.
The decrease in investment in associates during H1 2014 was primarily due to a net loss from Litha's 30% share of Firefly
Investments 223 (Pty) Ltd ("Firefly"), an entity which owns the Group's office/warehousing building in Midrand. The impact
of Litha's investment in The Dental Warehouse was immaterial in H1 2014.
The investment in joint venture relates to Litha's 52.5% holding in Biovac. During H1 2014, the investment increased by
R3,9 million due to income from Biovac, partially offset by the amortisation of intangibles recognised on the deconsolidation
of Biovac. Refer to note 5 above.
Other non-current assets relate to a social responsibility loan to the Disability Empowerment Concerns Trust.
Other current assets relate to amounts receivable from the joint venture for logistics services provided, pre-payments,
deposits and the revaluation of outstanding foreign exchange contracts.
Funding for Biovac's manufacturing facility was raised at The Biovac Consortium Proprietary Limited level, a holding
company for Biovac and an 85% subsidiary of Litha. These funds were on-lent to Biovac, resulting in the loans to the joint
venture. As previously noted, the debt relating to Biovac should not be used in determining the Group's gearing, as Biovac
does not rely on the Group to provide funding and is operationally ring fenced. The table below shows the gearing excluding
and including debt related to Biovac.
Excluding Biovac Including Biovac
R'000 June 2014 December 2013 June 2014 December 2013
Interest bearing debt 201 397 275 398 323 284 392 723
Equity 1 149 910 1 148 521 1 149 910 1 148 521
Percentage 17.5% 24.0% 28.1% 34.2%
Condensed Consolidated Statement of Cash flows
Cash generated from operating activities decreased by R22,8 million to (R7,1 million) in H1 2014 from R15,7 million in H1
2013. Cash flow from operating activities decreased to R13,5 million in H1 2014 compared to R18,3 million in H1 2013.
This decrease was mainly due to decreased EBITDA and a one-time R12,0 million prepayment required in connection with
the sale of the da Vinci Surgical Robotics System.
Cash outflow from investing activities was R3,8 million in H1 2014 compared to R11,5 million in H1 2013. Cash outflow
during H1 2014 consisted primarily of a net investment in property, plant and equipment of R3,8 million. In H1 2013 the
outflow was driven by an investment in intangible assets of R10 million.
Cash inflow from financing activities was R12,7 million in H1 2014 compared to an outflow of R21,4 million in H1 2013.
Cash generated in H1 2014 arose from a new shareholder loan of R40,0 million and R17,1 million which was generated
from the issuance of new shares following the exercise of employee stock options. This was partially offset by repayments
made pursuant to existing loans.
Cash and cash equivalents, net of overdraft, at the end of June 2014 were R31,6 million (H1 2013: (R28,0 million)).
3. DIVISIONAL OPERATIONAL OVERVIEW
Litha Pharma - 25% of Group operating profit before head office expenses
- Revenue decreased by 1.8% to R281,0 million for H1 2014 compared to R286,3 million in H1 2013
- Margins continue to be affected by the depreciation of the Rand and provisions for stock obsolescence
Revenue in Litha Pharma decreased R5,3 million to R281,0 million in H1 2014 from R286,3 in H1 2013, mainly due to
increased commoditisation and continued pricing pressure on certain generic products.
Operating profit decreased R38,2 million to R12,3 million in H1 2014 from R50,5 million in H1 2014. The sharp decline
was partly due to the shortfall in sales coupled with losses on revaluation of foreign exchange contracts in H1 2014. In H1
2013 there was a significant gain on revaluation of forward exchange contracts. This was partially offset by cost savings
which accrued following a restructuring activity. The full effect of the restructure will be felt in H2 2014.
The division contributed 25% to the Group's operating profit before head office expenses in H1 2014 (H1 2013: 63%).
Litha Medical - 31% of group operating profit before head office expenses
- Revenue increased by 51.9% to R231,3 million in H1 2014 compared to R152,3 million in H1 2013, mostly due to
the sale of the da Vinci Surgical Robotic Systems and the strong performance of the forensic business
- Margins continue to be impacted by the depreciation of the Rand and low margins on the da Vinci Surgical
Robotic Systems
Litha Medical had a strong first half of 2014, primarily driven by the sale of the da Vinci Surgical Robotic Systems, which
were in-licensed during H2 2013. Sales in the forensics business unit were stronger than the prior year due to a full six
months of tender sales in H1 2014 compared to H1 2013 when tender sales only started to flow through in the latter part of
the half.
Operating profit decreased by R1,8 million to R15,5 million in H1 2014 compared to R17,3 million in H1 2013. The decrease
was primarily driven by product mix and continued pricing pressure during H1 2014. Losses on revaluation of foreign
currency debtors and creditors further impacted operating profit and margins for the first half.
The division contributed 31% to the Group's operating profit before head office expenses in H1 2014 (H1 2013: 22%)
Litha Biotech - 44% of Group operating profit before head office expenses
- Revenue increased by 14,0% to R106,3 million in H1 2014 compared to R93,3 million in H1 2013 due to the
strong flu vaccine sales
- Operating profit increased by R9,7 million to R21,6 million in H1 2014 from an operating profit of R11,9 million in
H1 2013, due to increased income from its Biovac joint venture
Litha Biotech revenue increased in H1 2014 due to an exceptionally strong flu campaign in H1 2014. The strong sales of
the flu vaccine were partially offset by weaker sales and backorders of other vaccines.
Operating profit for the Litha Biotech division in H1 2014 was R21,6 million compared to an operating profit of R11,9
million for H1 2013. The main contributor to the 81.5% increase in operating profit in H1 2014 was the income from joint
venture, which increased by R11,4 million from a loss of R4,2 million in H1 2013 to income of R7,3 million in H1 2014.
The increase in Biovac was driven by strong sales in the first half and successful cost control initiatives.
The division contributed 44% to group operating profit before head office expenses in H1 2014 (H1 2013: 15%).
Prospects
The Group engaged in a restructuring exercise during H1 2014. The Group has already experienced significant cost
savings following this exercise; the full impact however will be felt in H2 2014. In addition to anticipated cost savings,
revenue from the sale of consumables for the da Vinci Surgical Robotics Systems sold during H1 2014 is expected to
start to flow through.
DIVIDEND
No dividend has been recommended or declared for the period. It is anticipated that while the Group continues with its
growth strategy, it will continue to reinvest any profit generated back into the businesses. The Group will review its dividend
declaration policy in the medium term.
For and on behalf of the board
N Sowazi, Chairman
S Kahanovitz, Chief Executive Officer
Johannesburg
26 September 2014
Directors: N Sowazi*, S Kahanovitz, M Makhoana, M Kahanovitz, M Mzimba*, F Hendricks*, I Jacobson*#, V Mcobothi*,
M Beaudet*+, M Nawacki*+
(*non-executive) (+Canadian) (#British)
Sponsor
One Capital
Registered auditors
KPMG
Transfer Secretaries
Computershare Investor Services
Registered Office
106 16th Road
Midrand
1686
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