Urgent Application for Removal of Etienne Jacques Naude by BoxCloud

Notice of Motion - Page

IN THE HIGH COURT OF SOUTH AFRICA

GAUTENG DIVISION, PRETORIA CASE NO.

ln the matter between

RUBTCON GROUP (PTY) LTD

Applicant

and

First Respondent

ETIENNE JACQUES NAUDE BUSINESS RESCUE PRACTITIONER OF SECOND RESPONDENT

LOUIS PASTEUR HOSPITAL HOLDTNGS (PTY) LTD

Second Respondent

BONITAS MEDICAL FUND

Third Respondent

SOUTH AFRICAN REVENUE SERVICES

Fourth Respondent

DENOSA

Fifth Respondent

MASTER OF THE HIGH COURT

Sixth Respondent

THE COMPANIES AND INTELLECTUAL PROPERTY COMMISSION

Seventh Respondent

THE CREDITORS OF THE SECOND RESPONDENT (AS PER ANNEXURE

Eighth Respondent

"8")

Ninth Respondent

HOSPERSA

NOTICE OF MOTION

Notice of Motion - Page 2 of

BE PLEASED TO TAKE NOTICE that the Applicant intends making application on 24 December 2018 for an order in the following terms

That this application be heard as an urgent application in terms

of Rule 6(12) of the Rules of the above Honourable Court and that the Applicant's non-compliance with the rules and practice directive pertaining to urgency and time periods and service of documents be condoned respectively. ln particular the applicant prays that service by means of email on the list of creditors as contained in annexure B to the founding affidavit (including the

Third Respondent and the Fourth Respondent), the Respondent and

Fifth

the Ninth Respondent be regarded

adequate service on those parties.

That the applicant be granted leave by the above Honourable Court in terms of section 133 (1) (b) of the Companies Act, Act 71 of 2008 to institute this application and to proceed therewith.

That the First Respondent be removed with immediate effect as

envisaged by section 130 or 139 of the Companies Act 71 of

2008 as Business Rescue Prctitioner

of the Second

Respondent.

That the board of the Second Respondent be authorised to appoint a new business rescue practitioner within 10 calendar days from the date of this order.

Notice of Motion - Page 3 of

That the First Respondent or his successor Gease all actions and attempts to set up and operate a pharmacy in competition with the Applicant.

That the First Respondent or his successor continue to honour

the obligations to supply the applicant with the cash flow required for the applicant to maintain its relationships with its suppliers and to pay its expenses including the salaries of its employees.

That the First Respondent pay the costs de bonis propriis in his personal capacity on the scale of attorney and client in the event

of any opposition from him.

Further and/or alternative relief

TAKE NOTICE FURTHER that the founding affidavit of Tendani Muligwe together with annexures hereto will be used in support of this application.

TAKE NOTICE FURTHER that the Applicant has appointed Manong Pilane Mokotedi Inc with address as stipulated below at which it will

accept notice and service of all documents and process in these proceedings.

BE PLEASED TO TAKE NOTICE FURTHER that if you intend to oppose this application, you must :

Notice of Motion - Page 4 of

(a) notify the Applicant's attorneys in writing on or before Thursday, 27 December 2018 at 16h00;

(b)

file your opposing affidavit, if any, on or before Monday

December 2018 at 16:00;

(c)

the applicant will then file its replying affidavit by 16:00 on Thursday 3 January 2019;

(d) the matter will then be enroled for hearing on Tuesday

January

2019 at 10:00 or as soon thereafter as the court may attend to the matter in the urgent court.

KINDLY enroll the matter accordingly.

THUS SIGNED AT JOHANNESBURG ON THIS

DECEMBER 2O1B

MOKOTEDI

Notice of Motion - Page 5 of

INC.

Applicant's Attorneys 164 Katherine Drive Pinmil! Farffi, Bock G, Ground Floor

Sandown, Sandton Te!: 01 1 262 01 13 Fax: 011 262 0439 Email : tm@mpmlawyers. co.za

Ref: T Mokotedi/Rubicon C/O TSHAYA MASHABELA

ATTORNEYS INC. Unit G 01 1064 Arcadia Street Hatfield Pretoria 0028

Tel: (012) 942 871 0 Ref: T Mashabela/MPM !nc/Rubicon

AND TO

THE REGISTRAR OF THE ABOVE HONOURABLE COURT PRETORIA

ETIENNE JACQUES NAUDE First Respondent 739 Blesbok Street Rietfontein Agricultural Hold ings Mooikloof, Pretoria By Hand

AND TO

LOUIS PASTEUR HOSPITAL HOLDTNG (PTY) LTD Second Respondent Bth Floor, Louis Pasteur Medical Centre Room 842

Notice of Motion - Page 6 of

6 6

374 Francis Baard Street (Previously Schoeman Street) Pretoria Central, Pretoria By Hand

AND TO

BONITAS MEDICAL AID Third Respondent Gildenhuys Malatji Attorneys GMI House Harlequins Office Park 164 Totius Street Groenkloof, Pretoria

On Third Respondent's attorney By

amahomed@gminc.co .za

AND TO

SOUTH AFRICAN REVENUE SERVIGES Fourth Respondent 299 Bronkhorst Street Nieuw Muckleneuk Pretoria Byr email : sarsdebtmanagement2@sars.gov.za .za

AND TO

DENOSA Fifth Respondent 605 Bronkhorst Street Nieuw Muckleneuk Pretoria By email : siphoq(Odenosa.orq.za mamagad i k@denosa.org .za

AND TO

THE MASTER OF THE HIGH COURT Sixth Respondent 316 Thabo Sehume and Francis Baard Streets, Pretoria Central Pretoria By Hand

Notice of Motion - Page 7 of

AND TO

COMPANIES AND INTELLECTUAL PROPERTY COMMISSION Seventh Respondent DTl Campus, Block F 77 Meintjies Street Sunnyside, Pretoria By email : corporatelegalservices@cipc. co.za

AND TO

THE CREDITORS OF THE LOUIS PASTEUR HOSPTTAL HOLDINGS (PTY) LTD

HOSPERSA Ninth Respondent Block C 242 Jean Avenue Centurion, Pretoria Byr email : herbert@hospersa.co.za ersa.co.=a leg alservi ces@ hos pe rsa. co .za

Founding Affidavit - Page 1 of 33

IN THE HIGH GOURT OF SOUTH AFRICA

GAUTENG DIVISION, PRETORIA Case No:

ln the matter between:

RUBTCON GROUP (PTY) LTD

Applicant

and

ETIENNE JACQUES NAUDE (Business Rescue Practitioner of Second Respondent)

First Respondent

LOUIS PASTEUR HOSPITAL Second Respondent

HOLDTNGS (PTY) LTD

BONITAS MEDICAL FUND SOUTH AFRICAN REVENUE SERVICES

Third Respondent Fourth Respondent Fifth Respondent

DENOSA

MASTER OF THE HIGH COURT THE COMPANIES AND INTELLECTUAL PROPERTY COMMISSION THE CREDITORS OF THE SECOND IJB") RESPONDENT (AS PER ANNEXURE

Sixth Respondent

Seventh Respondent

Eighth Respondent Ninth Respondent

HOSPERSA

FOUNDING AFFIDAVIT

l, the undersigned,

A^"S

Founding Affidavit - Page 2 of 33

do hereby make oath and state as follows

DEPONENT AND AUTHORITY

I am a major male director of the Applicant that has its principal

place of employment at Louis Pasteur Building, 374 Francis Baard Street, Pretoria. I have no shareholding in the Applicant, but qualify for an approximately

,5o/o

of the shareholding in the

ultimate holding company of the Applicant.

The facts herein contained are within my own

personal

knowledge and belief, save where stated otherwise or appears

different from the context hereof, and are to the best of my knowledge, both true and conect.

I rely on information

from

others in respect of the history of the relationship between the applicant and the second respondent and wi!! refer to supporting

affidavits in that regard.

Where I make legal submissions, I do so on the advice of the Applicant's legal representatives which I believe to be correct.

I am duly authorised to depose to this affidavit on behalf of the

Applicant. I attach hereto the Applicant's resolution to this effect marked hereto as Annexure "A".

THE PARTIES

IWB

Founding Affidavit - Page 3 of 33

The Applicant is RUBICON GROUP (PTY) LTD, a company registered according to the company laws of the Republic of South Africa, under Registration No. 1995/007175107, with its

principal place of business as stated above that canies on business as a supplier of medication and surgical supplies to the Second Respondent. lt was previously named Gudren Erasmus (Pty) Ltd.

The First Respondent is MR ETIENNE JACQUES NAUDE N.O. the business rescue practitioner of the Second Respondent and

who is cited herein in his official capacity. The First Respondent

resident and does business from 739 Blesbok Street,

Rietfontein Agricultura! Holdings, Mooikloof, Pretoria East. The

appointment

of the First Respondent as business

practitioner (practitioner

rescue

of the Second Respondent)

was

pursuant to a resolution of the board of directors of the Second

Respondent dated

5 June

2018, lodged with the Seventh

Respondent on 8 June 2018). He is also referred to as the Practitioner.

The Second Respondent is LOUIS PASTEUR HOSPITAL HOLDINGS (PTn LTD, a company registered according to the

company laws Registration

of the Republic of

No.

199212001696/07,

South Africa, under

with principal place of

business at 8th Floor, Louis Pasteur Medical Centre, corner

Founding Affidavit - Page 4 of 33

11 4

Schoeman and Prinsloo Streets, Pretoria, and registered address at 8th FIoor, Room 842,374 Schoeman Street, Pretoria

('LPHH"). LPHH canies on business as a health care service provider commonly known as a hospital.

The Third Respondent is BONITAS MEDICAL FUND, a medical aid scheme registered in terms of the Medical Schemes Act, No. 131 of 1998, C/o Gildenhuys Malatji Inc, GMI House, Harlequins

Office Park, 164 Totius Street, Groenklool Pretoria (Bonitas). !t is cited in its capacity as one of the major or main creditors of the Second Respondent.

The Fourth Respondent is THE SOUTH AFRIGAN REVENUE

SERVICES, with

its principal place of

business

299

Bronkhorst Street, Nieuw Muckleneuk, Pretoria. lt is cited in its capacity as one of the major or main creditors of the Second Respondent.

The Fifth Respondent is DENOSA, the Democratic Nursing Organisation of South Africa, with principal place of business at

605 Stanza Bopape Street, Pretoria. The Fifth Respondent is

cited in its own interests as a trade union or organisation representing the majority of the employees of LPHH. No order is sought against it.

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Founding Affidavit - Page 5 of 33

11.

The Sixth Respondent is THE MASTER OF THE HIGH COURT,

with principal place of business at 316 Thabo Sehume and Francis Baard Streets, Pretoria Central, Pretoria (the Master). The Master is cited for the interest it may have in this application and no order is sought against the Sixth Respondent.

12.

The Seventh Respondent is THE

COMPANIES AND

INTELLECTUAL PROPERTY COMMISSION, an entity created

in terms of the Companies Act, 71 of 2008, with its principal place of business at D71 Campus BIock F,77 Meintjies Street, Sunnyside, Pretoria. Similarly, the Seventh Respondent is cited

for any interests it may have in this application and no order is sought against it.

The Eighth Respondent is constituted by all the creditors of the

Second Respondent fully set out in the list annexed hereto

marked Annexure

"8". The creditors (including the Third

Respondent and the Fourth Respondent) will be given notice of

this application via email which is the established mode of communication between the creditors amongst each other and

with the First Respondent. An order authorising service of this application on the creditors in this manner will be sought.

14.

The Ninth Respondent is Hospersa, the Hospital Health and Other Services Trade union of South Africa, a registered trade

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Founding Affidavit - Page 6 of 33

13 6

union with its principal place of business at Block C, 242 Jean Avenue, Centurion, Pretoria. It is cited herein as a representative of the employees of the Second Respondent.

PURPOSE OF THE APPLICATION

The purpose of this application is to seek the assistance of the Honourable Court to prevent the Applicant from being destroyed

to the irreversible detriment of its ultimate shareholders, being mainly the staffof the Second Respondent and to the irreversible

detriment of the Second Respondent, of which the Applicant is a creditor and in fact a business associate. ln addition, some or

all of the employees of the Applicant may be left with no employment in the event of the demise of the Applicant.

16.

The threat to the Applicant's continued existence has arisen as a result of what I consider to be not only the misguided conduct, but also illegal acts and malicious conduct on the part of the First

Respondent. The First Respondent on behalf of the Second Respondent presently repudiates and

is in the

process of

withdrawing from a contractual relationship that exists between

the Applicant and the Second Respondent for more than 20 years already. The First Respondent at present for no good reason attempts

to unlawfully establish a rival pharmacy to

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Founding Affidavit - Page 7 of 33

replace the longstanding arrangement between the Applicant and the Second Respondent.

17.

The abovementioned contractual arrangement was and still is extremely favourable for the Second Respondent. ln fact the Applicant made no profit over the many years during which the arrangement was in place, but served the Second Respondent by effectively supplying it with medicines at cost, as will appear below.

18.

The continued existence of the Applicant is also vital for the survival and future success of the Second Respondent.

I will set out reasons why it should be concluded that the First

Respondent is not pursuing the best interests of the Second Respondent and is thus no longer a fit and proper person to continue as the Practitioner of the Second Respondent. The

Applicant asks for his removal in terms of section 139(2)(a) and/or (b) and/or (c) and/or (e) of the Companies Act No 71 of 2008, alternatively section 131(b) thereof.

20.

It is obvious that the First Respondent will not grant leave to the

applicant to launch this application. However I contend that it is in the interests of not only the Applicant but also of all affected

persons

of the Second Respondent and the Second

IrK IA

Founding Affidavit - Page B of 33

15 8

Respondent itself that the serious allegations against the First

Respondent be considered by this Honourable Court. The Applicant thus asks for an order that the Applicant be granted leave by the above Honourable Court in terms of section 133

(1 )

(b) of the Companies Act, Act 71 of 2008 to institute this application and to proceed therewith.

The Applicant offers, as in the past, to continue to provide supplies to the Second Respondent at cost for the foreseeable future. This is betterthan anything that the First Respondent can

possibly obtain from another supplier or can put together, as

wil! spell out below.

22.

The Applicant urgently requires the relief as set out in the notice

of motion in order to survive. It is in the interest, not only of the Applicant, but also

of the Second Respondent and all the

affected persons of the Second Respondent that the Practitioner

in control of the Second

Respondent should conduct the

business of the Second Respondent in such a way that both the

Applicant and the Second Respondent can survive.

THE NATURE OF SECOND RESPONDENT'S BUSINESS AND ITS RELATIONSHIP WITH THE APPLICANT

$..4-'S

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Founding Affidavit - Page 9 of 33

16 I

The Second Respondent conducts a hospital business. I am advised that it is a legal requirement for any hospital to have

within the same vicinity a pharmacy. As matters stand the Applicant operates a pharmacy in the same building where the

hospital is conducted that provides medication and surgical supplies to the Second Respondent, as would be required

a continuous24 hour basis.

24.

It is common cause between the Applicant and the First Respondent that his primary duty as a practitioner is to prevent

the Second Respondent from being liquidated by rescuing the Second Respondent and thereby return it to solvency by among

others producing a viable business rescue plan without undue delay.

The First Respondent has published a so-called final business

rescue plan on 19 November 2018 but has postponed the meeting of creditors to consider and vote on the proposed plan to 22 January 2019.1 am informed that the First Respondent is

obliged to seek condonation from

a court in the event

that

business rescue proceedings exceed three months. The First Respondent is also obliged to deliver an update at the end of each month pertaining to the proceedings to, among others, all affected persons. I contend that the First Respondent has not complied with its obligations in this regard. I annex a copy of this

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Founding Affidavit - Page 10 of 33

17 10

proposed plan as Annexure

"C".

This plan does not mention

that the Applicant will be replaced by a new pharmacy to make supplies to the Second Respondent, nor does it mention that the relationship between the Applicant and the Second Respondent

contributed

to the difficulties

Respondent.

experienced

by the Second

I am informed that the directors of the Second

Respondent through the chairman of the board have written a

Ietter to the First Respondent in which they have raised fundamental flaws on the contents of the business plan. I have attached a copy of the letter marked Annexure "D".

A fully functional pharmacy is essential to the operations of a hospital because medical supplies are required on a continuous

basis and on some occasions on an urgent basis. lt is and was

therefore at all stages essentia! that the Practitioner should

ensure that the pharmacy that supplies medication to the Second Respondent is enabled, as far as the First Respondent

could do so, to function in an efficient manner. The First Respondent has not only failed to maintain this situation, but,

believe, embarked upon

a process

intended

to destroy

the

Applicant for an ulterior purpose. For a considerable time the Applicant and I remained unaware of this strategy.

27.

The recent conflict that has come to the fore between the Applicant and the Practitioner may well cause doctors to prefer

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Founding Affidavit - Page 11 of 33

to make use of other hospital facilities

to the ineversible

detriment of both the Second Respondent and the Applicant.

suspect that some such damage has already started to materialise. For this reason alone the present application is very urgent.

The Second Respondent operates in

highly competitive

environment. The pricing of pharmaceutical products is thus of

prime importance for the successful rescue of the Second Respondent, as well as for the future profitability thereof. lt should be clear that the Applicant is best placed to ensure that

medical supplies as required are available to the Second Respondent at the Iowest possible cost.

The Practitioner would therefore not be in a good position to turn around and save the business of the Second Respondent if he destroys the Applicant or if the Second Respondent loses the benefit of the favourable contractua! relationship between it and the Applicant that existed over so many years.

30.

The Practitioner over an extended period of time since

his

appointment has not paid the Applicant fully for the products

supplied. The Practitioner has only paid certain amounts to employees and some suppliers of the Applicant. The lack of full

payment for the supplies that the Applicant provided to the

[A"D

Founding Affidavit -

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Second Respondent over time gave rise to the Applicant experiencing serious cash flow problems. By October 2018

discussed that with the Practitioner, but this did not bear any fruit.

The Applicant is licensed to and operates a pharmacy in a portion of the same building as the Second Respondent. The relationship between the Applicant and the Second Respondent

is a longstanding one which has over the years resulted in an intimate understanding of each other's business. An illustration

of the interdependent nature of the Applicant and the Second Respondent's business is situated therein that the parties have

shared services in respect of amongst others the following: accounting and financial management, information technology

and infrastructure services, leave administration

services,

pension and retirement services administration, and salary and payroll services (l refer to these as "shared services"). Due to the Second Respondent having a significantly higher number of employees who require the shared services, the personnelwho

provided these services are primarily employed by the Second Respondent. This is, of course, a cost effective arrangement.

The Applicant many years ago, on or about 1 March 1996, entered into an informal contractual agreement with the Second Respondent in terms of which the Applicant has over the years

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Founding Affidavit - Page 13 of 33

supplied medication and surgical supplies Respondent

to the

Second

- effectively at cost. The Second Respondent on

behalf of the Applicant paid all the Applicant's expenses in operating the pharmacy on its behalf and made available to it

the premises as part of the deal on a nominal rental basis. ln

turn the Second Respondent on

a regular basis levied a

management fee for the services rendered by it to the Applicant,

which amounted thereto that the Applicant made no profits. Sometimes this objective was partly attained by fixing an amount

for rental payable by the Applicant.

have attached the

Applicant's financial statements indicating payment of rental in respect of the business premises marked Annexure "E". This

fact is confirmed in the financia! statements of the Second Respondent attached marked Annexure "M". The fact is thus

that the Applicant over the years existed for the benefit of the Second Respondent and the Second Respondent was thus enabled to offer

a highly

competitive service to doctors and

patients.

!n confirmation of the above alrangement that existed over the years I refer to the confirmatory affidavit of Frederick Herselman Lloyd, being Annexure

34.

"F"

hereto.

Some years ago there was a restructuring of the ultimate holding

companies of the Second Respondent and the Applicant with

M"a -/ ).

Founding Affidavit -

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the result that the staff of the Second Respondent were given the bulk of the shareholding in the ultimate holding company

(

Louis Pasteur Empowerment Consortium Ltd "LPEC" )-of the Applicant and LPEC was also given 16.10/o ( Sixteen point one

Percent)

of the shareholding of Louis Pasteur

Medical

lnvestments Ltd which is a major shareholder in the Second Respondent holding 74o/o of the shareholding of the Second Respondent.

35.

After this restructuring the arrangement that the Second Respondent could levy a management fee to be determined by the Second Respondent up to an amount that would remove all profit from the Applicant, remained in place. Any profits that the

Second Respondent would allow the Applicant to retain would

then be to the advantage of the ultimate shareholders of the Second Respondent as they as the ultimate shareholders would receive value. This again would benefit the Second Respondent

in that it would promote loyalty on the part of the Second Respondent's staff towards the Second Respondent. However such a situation, namely where profits would be allowed to be

retained by the Applicant, has not materialised: the Second Respondent continued to levy management fees that drained all

the profits of the Applicant.

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Founding Affidavit - Page 15 of 33

36.

Nevertheless the plan was and still is that the staff should in future benefit from the shareholding, however that is on the basis

that

it should not detract from the Second

Respondent's

enjoyment of the advantage of receiving supplies at cost.

As pointed out above the Applicant's finances are in essence managed by employees

of the Second Respondent.

This

ensures complete transparency for the Second Respondent and

enables that any inefficiency that may be perceived

to be

present can be addressed by the Second Respondent.

The Second Respondent is presently overwhelmingly the main client of the Applicant. However, some patients purchase their prescribed medicine from the Applicant, which is sold to them at

retail pricing. So far the benefit of this was also reaped by the Second Respondent in the final analysis.

The Applicant's competitive advantage is that it has traded for more than 20 years and has earned a good reputation amongst its suppliers. lt belongs to a large buying group namely UPD. A

new pharmacy or a small pharmacy will not in practice qualify for

membership of such

a buying group. ln the result the

new

pharmacy that the Practitioner wishes to set up in collusion with

the Applicant's suspended head pharmacist, Ms Maria Jacoba

Aletta van Rensburg ("Ms Van Rensburg") will not be able to

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Founding Affidavit -

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render supplies to the Second Respondent at the same low pricing structures.

Having ordered various medical supplies from the Applicant since his appointment, the First Respondent has refused without

any cause to make payment in full for these supplies. The Applicant procures medical supplies from various suppliers on

strict payment terms. Because the Second Respondent

recent times failed to supply the cash flow for the expenses of

the Applicant and payment of medical supplies procured from

the suppliers, the Applicant incurred a huge

indebtedness

towards its suppliers. The failure on the part of the Applicant to pay the suppliers has led to various suppliers serving letters of

demand on the Applicant and some already refuse to provide

further supplies to the Applicant. This wil! in the foreseeable future lead to the inability of the Applicant to procure adequate supplies, with the resultant inability to supply medication to the

Second Respondent. The letters

of demand are attached

marked annexure 'G". A situation will soon be reached where the Applicant will no longer enjoy the trust of its suppliers and may Iose the favourable pricing structures that it presently still

enjoys and which were built up over many years. lrreparable harm as a result of the breach of the contractual relationship between the Applicant and the Second Respondent by the

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Founding Affdavit - Page 17 of 33

Second Respondent under control of the First Respondent is developing.

The practitioner commenced with his strategy to replace the Applicant in a secretive manner. As pointed out above the Practitioner

did not in the Business Rescue Plan that

developed which

is dated I

September 2018, nor

subsequent amended plan dated and published

the

November 2018, mention that there was any problem with the quality or cost of the supplies rendered by the Applicant. Nor was it mentioned that there would be any reason, as part of the

rescue process, to effect any changes to the relationship between the Applicant and the Second Respondent. Nor did the

Practitioner

at any stage complain to the directors or

management

of the Applicant about any aspect of

the

relationship unti! after the Applicant by the end of October 2018 placed the Second Respondent on terms to pay for the medical

supplies on a cash on delivery basis.

42.

Yet it appears from the Practitioner's own version of events, as contained in his letter of 14 December 2018, to which I will refer below, that he sometime during October 2018 already decided

to terminate the relationship between the Applicant and the Second Respondent and decided, as from 1 November 2018 to stop to make payments to suppliers of the Applicant

as was

Founding Affidavit - Page 18 of 33

the arrangement prior to that date. This, as far as it concerned payments to suppliers of the Applicant, and termination of the relationship with the Applicant were secret decisions on the part of the practitioner .. without prior consultation with the Applicant

and were only communicated to the Applicant by the First Respondent in his Ietter of 14 December 2018.

43.

What the Practitioner did can be summarised as follows:

43.1

he starved the Applicant of cash flow;

43.2.

he secretly decided to set up a rival pharmacy;

43.3.

he however continued to obtain supplies from the Applicant without full payment for these, in concert with Ms Van Rensburg,

the applicant's employee -r who

ignored the instructions

of the Applicant to her to

withhold supplies unless paid for in cash (with the exception of medicines required on an urgent basis, which she was instructed to continue to supply without immediate payment).

44.

The Applicant only on 7 December 2018 became aware of the First Respondent's strategy to set up a riva! pharmacy. I learnt

about this when the First Respondent informed doctors about

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Founding Affidavit -

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this. I attach a copy of the communication dated 6 December 2018 from the First Respondent to the doctors as Annexure "H".

45.

On learning that the Applicant was continuing to medication

supply

to the Second Respondent on credit terms

immediately confronted Ms Van Rensburg. She contended that

she could not refuse to supply to the Second Respondent because that could cause her to be liable in case of a patient suffering as a result of lack of medical supplies. I cannot accept

this explanation. The fact is that the Second Respondent could

obtain medical supplies validly from the Applicant by making

payment

or payment arrangements with the Applicant or

alternatively could have sourced

its supplies from other

pharmacies. Genuine emergency situations would under such

circumstances be few and far between.

It is clear that she

collaborated with the first respondent to bring the applicant to its knees so that they could establish a new pharmacy.

In the result the Applicant addressed a letter to the said Ms Van

Rensburg, suspending her and setting out the charges against

her. See Annexure "1" hereto.

47.

From the letter by the First Respondent to the Applicant dated

14 December 2018 it now appears that the First Respondent attempts to use the suspension of the said Ms Van Rensburg as

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Founding Affidavit -

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an excuse for officially employing her and to take the stance that

the applicant can no longer trade Iegitimately. That obviously cannot hold water.

I contend that the conduct of the First Respondent is in stark contrast to what could be expected of a practitioner who acted

bona fide. I refer now to the First Respondent's letter of 14 December 2018, a copy of which is attached hereto asAnnexure ..Jrr.

48.1

Firstly, a bona fide practitioner would have conducted a

thorough investigation of the situation before making any decisions. The First Respondent in his letter of 14 December 2018 alleges that he did

so. However, it is

now the first time that this is alleged. Furthermore, such

investigation would have consisted of the Practitioner seeking cooperation and information from me and the

other representatives of the Applicant. That never happened. I therefore contend that the alleged thorough investigation never took place. A bona fide and thorough

investigation in any event would have brought to light

that the said relationship serves the interests of the Second Respondent excellently.

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Founding Affidavit - Page 21 of 33

48.2.

However should a practitioner, despite what I contend

for above, have concluded (incorrectly) during October

2018 that the relationship was detrimental for the Second Respondent and should be terminated, a bona

fide practitioner would immediately have written to the Applicant informing the Applicant of the finding and inviting the applicant to comment thereon.

48.3.

Should that not have resulted in a positive response a bona fide practitioner would have given a formal notice

of his intention to terminate the relationship.

48.4.

Such

practitioner would then have sought the

cooperation

of the Applicant to

terminate the

relationship in an orderly manner, allowing time for the practitioner

to set up a new pharmacy or to

source

supplies, preferably by asking for tenders from reputable

pharmacies

in order to replace the service of

the

Applicant. At the same time the applicant would have

been given time to seek alternative clients or to wind down its business

48.5.

The practitioner would have given the Applicant notice to vacate the premises occupied in the hospital or would

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have put it on terms in future to pay a market related rental for the occupation of the premises.

49.

contend that the First Respondent's conduct is in stark contrast

to the above.

In addition, and subsequently to the above, the First Respondent

then promptly employed the Applicant's Ms Van Rensburg

instead of encouraging her to explain her conduct during a disciplinary hearing. Furthermore she ordered, on or about 14 December 2018 further supplies from a supplier of the Applicant in the name and on the account of the Applicant. She however requested that when the delivery would be made she should be

phoned on her cell phone so that she could alrange for the delivery not to be made to the Applicant's pharmacy but to a location which she would indicate. Upon being informed of this

telephoned one

of the employees of UPD, the Applicant's

suppliers, who informed me that the First Respondent had discussions with them at which he negotiated an increase in the

Applicant's credit facility and urged them to support endeavours to turn the hospitalaround. They could not refuse the request as in their view the hospital and the pharmacy constitute the same entity.

frA.r/

Founding Affidavit -

Pag

e 23 of 33

51.

The Applicant was fortunate enough to discover the above secret order and to draw the attention of the supplier to what was

happening.

annex hereto

Annexure

"K"

correspondence in this regard which shows the underhand conduct of the new rival pharmacy.

I contend that the First Respondent, not being a pharmacist, is in no position to set up a new pharmacy which could realistically

expect to be more effective than the Applicant is or could become (should any adjustment of its business be required). ln

this regard I point out that as the employees of the Second Respondent have full insight into the business of the Applicant at allstages, the Second Respondent is obviously in an excellent

position to suggest and to implement any improvements in the effective running of the Applicant's business, to the extent these

are required.

53.

Under the circumstances I contend that what happened in reality

is that the First Respondent pursued a hidden agenda, it appears, in conjunction with the said Ms Van Rensburg to create

a new business opportunity

but clearly not in the interests or

the benefit of the Second Respondent.

The First Respondent in his letter of 14 December 2018 denies that the Second Respondent owes the Applicant any money for

I^'rI / t

Founding Atridavit -

Pag

e 24 of 33

31 24

supplies rendered after commencement of rescue. This is without substance. I annex hereto as Annexure

"L"

a summary

of medical supplies provided to and invoiced by the Second Respondent to its patients together with a summary of payments

that were made by it to the Applicant. I contend this denial cannot possibly be bona fide.

55.

However the situation is viewed, it must be clear that it cannot be denied that the Applicant presently owes amounts in excess

of R 20 million to its suppliers. ln terms of the arrangement refened to above such a situation should never have occurred more particularly under the watch of a bona fide practitioner. !t

is thus clear that the Second Respondent

breached the

contractual obligation towards the Applicant, namely to fund the cash flow of the Applicant adequately in order that the Applicant

could maintain its good reputation and obtain the best possible

56.

all for the benefit of the Second Respondent.

discounts

I contend

that it is in the interest of the Second Respondent that

the status quo be restored and that the Second Respondent should take responsibility to ensure that all the suppliers of the Applicant are paid in respect of arrears in order to prevent the relationship between the Applicant and the distributors to be irretrievably destroyed.

r"\A // F

\./\

Founding Affidavit -

Pag

e 25 of 33

25 57

I point out that all and any profits that the Applicant might have made since the Iast occasion when management fees or rent in respect of the premises were levied have long been depleted by now.

As appears from the letter from the First Respondent dated 14 December 2018,

the First Respondent admits that

the

Second Respondent owes the Applicant a sum of more than R9 million for pre-rescue

debt. ! contend that this amount is in

fact much larger in that a further amount of R4 783 620.00 is also due in respect of the period prior to the commencement of

rescue. As the Second Respondent, and thus the

First

Respondent, has full access to all the relevant documentation

any denial of this fact cannot be bona fide. An extract of the financial statements of the Second Respondent which have been accepted as correct by the First Respondent is attached marked annexure "M".

59.

Furthermore

the position since rescue

commenced has

deteriorated. The First Respondent never made arrangements

with the Applicant

any

to furnish the Second

Respondent with post-commencement finance. He simply did

not comply with the obligations in terms of the contractual relationship. I am informed that the Second Respondent owes the Applicant for purchases since rescue commenced at Ieast R

04 I

Founding Atridavit -

Pag

e 26 of 33

14 591 546.08. I refer in this regard to the affidavit of Yaseera Amod attached marked annexure "N".

In respect of the conduct of Ms Van Rensburg I attach hereto a

letter dated 25 October 2018 from the Applicant to the said Ms

Van Rensburg marked annexure "O". I point out that

personally discussed this with her at the time to refrain from supplying products to the Second Respondent without receipt of

payment other than in respect of emergency medication which

could be supplied on credit. ln any event,

if the Second

Respondent chose to obtain medical supplies from third party suppliers it would in all probability have to pay for such upon

delivery. However, knowledge

now appears that she, without

the

of myself or the other director of the Applicant

continued to supply goods for millions of Rands to the Second Respondent in violation of this instruction on the pretext that such supplies were for emergency supplies.

61.

I point out that the First Respondent has now illegally occupied premises on the ground floor of the building for purposes of the

new pharmacy.

I have been informed that Louis Pasteur

Holdings Proprietary Limited, who has signed a headlease in respect of the premises, is about to take steps to enforce its

rights in this regard. However, whether or not the First Respondent wil! have premises available for the conduct of a

l\^/k

Founding Affidavit -

Pag

e 27 of 33

pharmacy in competition with the Applicant is unclear at this stage. The fact remains that the First Respondent planned this obviously in advance of the Applicant suspending the said Ms

Van Rensburg. ln fact the Applicant only suspended Ms Van Rensburg

on 07 December 2018 a day after the

First

Respondent's communication of the plans to partner with a new pharmacy on 6 December 2018.

The First Respondent also takes the attitude in his letter of 14 December 2018 that the Applicant is trading illegally because it suspended the services of the said Ms Van Rensburg and as a result of her now joining the First Respondent in setting up a new

pharmacy. This is devoid of any substance. The position is that although the said Ms Van Rensburg was the senior pharmacist she obviously could not always be available. The fact is that the

Applicant in fact has six other registered pharmacists

in its

employ. The First Respondent's allegation that the Applicant has no registered pharmacists in its employ is totally incorect.

There at all stages existed a hierarchy of pharmacists in the employ of the Applicant and as soon as the one in charge is not

available the

ne*

senior person must take charge. This

arrangement is common and established at the pharmacy. As at this stage, and as far as ! could verify the said Ms van Rensburg had not yet officially reported her departure from the applicant to

f'A-S

Founding Affidavit -

Pag

e 28 of 33

the South African Pharmacy Council, which would open the way

for the applicant to register

new permanent head of

pharmacists.

The First Respondent at this stage still continues to obtain medical supplies from the Applicant for the Second Respondent.

64.

What the First Respondent also did was to make payment during November 2018 to certain of the Applicant's staff. The Applicant also paid those employees because the Applicant was under the

impression that the First Respondent refused to do

so.

Some

employees thus received double payment under circumstances

where the Applicant's cash flow was already under serious pressure.

What the First Respondent further does is to offer employment

to some of the Applicant's employees. I suppose that is the reason why the First Respondent effected payment to certain of

the Applicant's employees and not all of them. I contend that what the First Respondent thereby attempts to do is to abuse

the situation: he causes a serious breach of contract by not

paying the Applicant's suppliers and by not funding the Applicant's cash flow and then

to offer certain employees

employment under circumstances where the Applicant finds it extremely difficult to pay them their salaries. ln this way the First U\^"4Pr

Founding Atridavit -

Pag

e 29 of 33

Respondent attempts to obtain an improper advantage, based on his own breach of contract and unethical conduct, for the new pharmacy that he is in the process of setting up. The Applicant has made payment of salaries to all its employees for the month

ending December 2018 following which its cash resources have been depleted.

A further example of the unfair trading in competition with the

Applicant

is situated in the way in which the Applicant's

relationship with

the suppliers were utilised by the

new

pharmacy to obtain its supplies.

67.

I point out that the first respondent alleges in his letter of December 2018 that

it is the applicant that repudiated the

contract when the applicant informed the first respondent on 10

November 2018 that it would temporarily withhold performance

of certain administrative functions until payment is received.

contend that this is without foundation as it ignores the fact that

such is justified on the basis of the reciprocity of performance

and where the first respondent has caused the

second

respondent to repudiate the agreement in no uncertain terms.

contend this defence is also not bona fide. ln any event it still does not justify the termination of a relationship that is required

to be continued with in the best interests of the Second Respondent.

0^/tu ..fA

Founding Affidavit - Page 30 of 33

30 6B

The Applicant has since suspension of Ms van Rensburg communicated

to its employees, through the

administration

manager, Yaseera Amod to continue supplying the Second Respondent with all medical supplies, despite its failure to make

payment,

to avoid a possible impression that it intends

repudiate its existing agreement with the Second Respondent.

URGENGY

As spelt out above the Applicant has no furtherfunds and cannot

survive unless the relief prayed for is granted as a matter of extreme urgency. I point out that the Applicant over all the years

existed and traded solely for the benefit

of the Second

Respondent and there is no question of the Applicant having benefited at the cost of the Second Respondent as the First Respondent attempts to portray. Any profits that the Applicant might have made can in fact be recovered from the Applicant by

the Second Respondent in terms of the existing arrangement in

terms whereof any such profits can be recovered from the Applicant by way of a management fee or rental payments that the Second Respondent can levy on the Applicant.

I have been informed that the First Respondent has not paid rental for the hospital building occupied by the Second Respondent since assuming duties as

a practitioner. !

Founding Affidavit - Page 31 of 33

further informed that the Second Respondent should have

surplus funds

to pay for medical

supplies

as the

First

Respondent, since the commencement of business rescue, has

not made payments in respect for the hospital premises and management fees previously paid by the Second Respondent in addition to the amounts not paid to the Applicant.

71.

I am informed that the First Respondent is involved in various disputes with the board of directors of the Second Respondent

over among others his failure to account for funds

and

transparency in his management of the affairs of the Second Respondent.

72,

point out that in the letter

of 14 December 2018 the First

Respondent takes the attitude that one of the reasons why he would refuse to pay the Applicant is because the Applicant owes money to SARS and should he make payment to the Applicant

then SARS would be in a position to obtain payment thereof.

contend that this illustrates the unethical approach of the First Respondent.

In the result the balance of convenience, insofar as that may be

of importance is that the status quo, as it existed prior to the Second Respondent repudiating the contractual relationship

NA/o,/

Fou

nding Atridavit -

Pag

e 32 of 33

between the parties should be restored as a matter of urgency and be maintained going forward.

CONGLUSION

Under the circumstances

contend that

it is clear that the

Applicant is entitled to an order that the First Respondent be removed as practitioner. Further, that the Second Respondent

should be interdicted from establishing a rival pharmacy

whatever name or form it intends to do so.

75.

ln the result I contend that the Applicant has made out a proper case for the relief prayed

for. lnsofar as the Applicant

prays for

an interdict I contend that the Applicant has a clear right, not only

in contract, but also on the basis that it is the duty of the First Respondent, as a practitioner and as an officer of Court, only to

pursue the best interests of the Second Respondent whilst he clearly is not doing

so. Furthermore, the irreparable harm

that

the Applicant is suffering and stands to suffer is beyond doubt. The Applicant clearly has no other remedy if it can no Ionger rely on the Second Respondent as its main customer to comply with

its obligations towards the Applicant, then the Applicant faces demise.

76.

In the result I pray for an order as set out in the notice of motion

y/w

Founding Affidavit - Page 33 of 33

DEPONENT

I certify that the deponent

has acknowledged that he knows and

understands the contents of this affidavit which was signed and sworn before me at

,fuMun

tn' on this the 23rd day of December

2018, and that the Regulations contained in Government Notice No. R1258 of 21 July 1972, as amended, and Government Notice No. R1648

of1

, having been complied with.

-â&#x201A;¬ COMMISSIONER OF OATHS OFFICIAL CAPACITY AREAAPPOTNTED

-f'ffft {zy'zrw(

sfrrY D Ton

FULL STREETADDRESS.C

fLoTl,u

fu^/

?-( VnrJe JPfiDfo

2018 -17' ? 3

r^{\ A

RUBICON GROUP PROPRIETARY LIMITED (Registration number: l|9f9li|OO7U5 I O7l ('Company')

Resolutions of the directors of the Company passed in accordance with Section 74 of the Companies Act 71 of 2008 ("Companies Act''l

Whereas:

The Company is involved in a dispute with Louis Pasteur Hospital Holdings Proprietary Limited

("LPHH"), which is currently in business rescue, regarding various amounts payable in respect of medical supplies provided by the Company to LPHH.

The Company wishes to take various actions to recover amounts payable by LPHH to it.

Whereas it is hereby resolved that:

The Company takes all actions and steps necessary

to recover all amounts

payable

to it by LPHH

including, but not limited to, the following:

1.1.

the Company institute legal proceedings by way of an urgent application for the removal of the current business rescue practitioner appointed to manage the affairs of LPHH;

1.2. That Tendani Muligwe, a director

of the Company, be authorised to depose to the founding

affidavit in support of the application in respect of 1.1 above;

1.3.

the Company terminate employment in respect of employees who are engaging in behaviour that

harmfulto the Company among others in respect of its endeavours to recover all amounts

owing by LPHH to it;

That any Directorof the Company, (Authorised Signatory), be and is hereby authorised and empowered

to:

2.L.

sign and/or despatch any notice and/or other documents, notices

to be signed

and/or

despatched by or on behalf of the Company under or in connection with resolution number 1; and

2.2.

generally do everything that may be necessary for the implementation of resolution number 1.

To the extent that the Authorised Signatory has already signed any documents which may be necessary

for the implementation of resolution number

their actions.in this regard be and are hereby ratified.

The Company certifies that the specimen signatures of the duly Authorised Signatories of the Company

evidenced below are the true signatures of such signatories.

t4al

Name:

,ort ffi,"o/<D

Title: Director Date:

ftr

Name,

itndafi;

Title: Director

e-ee(kl

be?

rvlu t;J')'L

nbe{ 2d F Date: ?l DeCo

(

Kr tt"

Annexure B - List of Creditors of Second Respondent - Page

LSUI$ rA$TEUR HO$prrAL HOLDING$ {pry} LTn LIST OT CREDITOR$

Air Liquid; {Pty} Ltd

Ahracht Hurcing Agency Albrccht Nursing Agency ARNABON TRADING BOU1,1,ER CARDOI\IA tt-tc

B.Bram kledlcal (Pty) Ltd. CABOIO MED Elastrlc Centrs FTA / Voltex E Mrfi Vtlhrlesalss

Enban Medical Fedics (Pty) Ltd. fishnet rnarlteting FLOYRENE TRADIhIG Formax Stgfionery & Madla {Pty} lH

Gosalr Fllter Sy*mrns (Pty) Ltd Home Hlper City Huntlelgh Africa ITHUSE MEBICAL Jab Autcdevet And Servicar CC Kerl Stoa Endoscopy SA tPty') Ltd"

K.Canim Grsup Kone Elewtors South Alrica {Pty} LH.

kovco pta Medhold

Mdical (Ptylltd

Metro Hom* Canfe M

ILLEhIIUM K*HICA

lv'll

NOLTA

Obsldian Hcalth

Pretoris Laundry & Prrmiar Linen & Gannent Rental FURFLE $URGIdAL SGUTH AFRICA {pTY} LTD Oestmed(Price filesl Respiratcry Chre Afitca

R.l.O. Consumableg

slYA LESSE TRABTH{I {FTY} LTD Srnlth Garb and *ssoclatsc CC AC TEK A mVt$tON OF EpM TECHHSLOGTES

Sfyker-O*tsonl

{pry} UTD

{Ptf} ttd

Textile World TTGHTCCINTROL

{rrY}

LTU

Valhalla General Dealers C,C. VIJMA FURHITURS PRSJECT

iFTYi LTD T/A VtJh,tA OFRCE $UPPLIE$

GB$ I SASFIH SARS STIEGELMEYER NEDBANK

CITY MED

[4g

ar{)

Annexure B - List of Creditors of Second Respondent - Page 2 of

The BRP has received 3 lurther claims. These claims forms part of the R757 287 437,60

reflected in the balance sheet and there will be no cash flow implications for the company

The creditom will not be affected by the claims should the BRP acceptthem.

The BRP has only received these claims on the 6" September 2018 and has not had the

opportunity to investigate these ctaims.

ln addition to the above claims the BRP has recsived a further two claims, onc6 again the BRP has not had the opportunity to investigate these claims.

My further report will follow in due coursc on these five clairns,

t'A tfr

4,r4

AnnexureC - Business Rescue Plan dated Lg Nov 2018 - Page 1of 87

AMENDED BUSINESS RESCUE PLAN

in respect of

LOUIS PASTEUR HOSPITAL HOLDINGS (Pn/) LTD (1997,1001696/07)

(tN BUSINESS RESCUE)

PUBLISHED ON

1.9" NOVEMBER 201.8

FINAL BUSINE$S RESCUE PLAN

n^,p-

Annexure C - Business Rescue Plan dated 19 Nov 20L8 - Page2 of 87

CONTENTS

1".

lntroduction

Definitions

r_3

1_S

'-5.

Disclaimer

r_g

$tructure of the Plan

5*1_3

rescue

21,

Events leading to financial distress of LpHH

-24

Conduct of Louis Pasteur Hospital Holdings (Pty) Ltd's business

subsequent to commencement date

Louis Pasteur Hospital Holdings (pty) Ltd's Creditors

Louis Pasteur Hospital Holdings (Pty) Ltd's MaterialAssets

r-0.

Probable liquidation dividend

L1.

Holders of LPHH issued securities

L2,

Agreement relating to BRP'S rernuneration

r.3.

Proposals rnade inforrnally hy creditors

L4.

The business rescue of Louis Pasteur Hospital Holdings (Pty) Ltd

t_5

Terrns of the business rescue plan

r_s

Moratorium on legal proceedings against Louis Pasteur Hospital 30 -

Holdings (Pty) Ltd L7

31-

Extent to which Louis Pasteur Hospital Holdings (Pty) Ltd is to be 3L *32

released from the payment of its debts

17A. The effect of the Plan on Louis Pasteur Hospital Holdings

(Pty)

Ltd's member and sureties for the debts of Louis Pasteur Hospital

Holdings (Pty) Ltd

Mfr \

Annexure C - Business Rescue Plan dated 19 Nov 20T8 - Page 3 of 87

18.

The ongoing role of Louis Pasteur Hospital Holdings (Pty) Ltd and the treatrnent of any existing ag reements

32-33

L9,

Rights Offer

33-34

20,

Sale of shares agreement

21,.

Managernent agreement between LPHH and FCPO

37-38

22,

Sub-lease agreement between FCPO and LPHH

38-42

23.

Order of distribution if plan is adopted

42-43

24.

Benefits of adopting the plan as opposed to liquidation

43-45

Effect of the ptan on the shareholder

PART

..,........,,,.

35-36

q : AqS.UMPflOUS ANp COND_|T!o_NS

26.

Conditions that must be satisfied for the Plan to be implernented

27.

Circumstances in which the business rescue proceedings will

terminate

46-47

SARS clauses

47-48

29.

Projected balance sheet and income and expenses statement

30.

Su bstanti al I mpl ernentation

PART

ADMINISTRATIVEAND GENERAL TROVISIONS

3l-.

Proof of claims

50-s2

32.

Disputed Claims

52-53

33.

Contingent Claims

34.

Failure to prove Claims and late proof of Claims

53-72

35.

Debenture Agreement

73-77

36.

General duties and powers of the BRP

37.

Domiciliurn and Notices

84-86

38.

Costs

39.

Procedure to Arnend the Plan

40.

BRP's Certificate and Declaration

-84 86

86 -87 87

ttr+

1.4

Annexure C - Business Rescue Plan dated 19 Nov 20L8 - Page 4 of 87

ANNEXURES

BRPI:

Nexia SAB &T audit rePort

BRPZ:

Audited Annual Financial Statements 2016

BRPS:

BRP

BRP4:

Memorandurn of Association

BRPS:

LPHH creditors

BRP6:

Creditors'claims repayment

BRPT:

Voting interest

BRPS:

Asset list

BRP9:

Balance sheet, Income staternent, Cash flow

BRP10:

BRP fee

BRPIL:

Deed of sale - debentures

BRP

L2:

appointrnent

agreement

Share sale agreernent

BRP13:

Share sale agreement

BRPL4:

Sub-lease agreement

BRP15:

Management agreement

BRPI.6:

ACT Solution rePort

BRP17:

$uprerne Court of Appeal Judgement

BRP18:

Nedbank post commencement finance (PCF)

Annexure C - Business Rescue PIan dated 19 Nov 20L8 - Page 5 of 87

INTRODUCTION

r..L

This is the business rescue plan prepared for Louis Pasteur Hospital Holdings

(Pty) Ltd (1992/001696/07) (in Business Rescue) by the business rescue practitioner of Louis Pasteur Hospital Holdings (Pty) Ltd in accordance with the provisions of Chapter 6 of the Companies Act No. 7L of 2008;

L.2

The business rescue plan will be presented to all affected persons by the BRP

and the affected persons will have the opportunity to consider the business rescue plan and, if deemed fit, adopt the business rescue plan with or without modification;

1".3

The business rescue proceedings commenced on 0& June 2018;

L,4

Etienne Naude was subsequently appointed as the senior business rescue practitioner (BRP) of Louis Pasteur Hospital Holdings (Pty) Ltd;

L.5

Corpnrate Governance and Social Responsibility

ln attempting to successfully rescue the business, it would be the aim and

purpose

of the appointed

practitioner

encompass the social responsibility

publish

of the

plan that would

business and which shall

capitulate to the economic, legal, ethical and discretionary expectations that

the comrnunity may have of the business.

1.6

Evidently, an adopted business rescue plan properly implemented, will therefore constitute an agreement between the business, various stakeholder

groups and the broader community it serves.

wn ,^

Annexure C - Business Rescue Plan dated Lg Nov 20L8 - Page 6 of 87

L.7

The practitioner will therefore apply the following strategies in his plan:

L.7,L

Engagement wherehy he shall identify areas for improvement in the ethical, social and environmental policy of the company;

L.7.2

Preference: work

to a list of

guidelines that the affected

persons, creditors and stakeholders prefer the business cornply

with;

7.3

Screening: decisions to trade, invest and operate be lirnited to

the econornic, legal, ethical and discretionary expectations of the cornrnunity and relevant stakeholders;

1-.8

ln recognizing thatthe business must ultimately be managed bythe directors for the benefit of the shareholders, the practitioner shall place a firm emphasis in his plan to rescue the business, taking into consideration the interests of all

stakeholders relevant to the business, Full disclosure will be made with regards to the risks affecting the business as well as an interim projection of

the performance of the business over the ensuing few months.

The overriding focus of shareholder value will therefore become less selfevident.

r..r-0

The practitioner will consequently seek to enhance the

business's

competitive advantage, create a win-win relationship with its stakeholders,

and to realize gains from cost and risk reduction and legitimacy and reputation benefits.

rtft

1t)

Annexure C - Business Rescue Plan dated 19 Nov 20L8 - PageT of 87

51 7

l_,1_l_

A successful plan will further achieve an enlightened value maximization over

the long run establishing it as the criterion for making the requisite trade-offs amongst Stakeholders, which will solve the problems that may have arisen from multiple objectives that accompanied and contributed to the business's cu rrent financial distress.

L"L2

Effective Chanfr e manaffi ement

ln compiling the business rescue plan the practitioner considered Porter's

forces

of change

management which requires consideration

the

competitiveness of the business environment relevant to the business to ensure growth and irnprovernent of the associated business Structure.

These considerations are:

1,.LZ.L

Competitive Rivalry: hlarket research has shown that a major issue to be addressed

in the business is the quality of service and treatrnent that patients recsive at the hospital. This must improve to give the busines$ a competitive advantage in the rnarket.

L,L2,2

Supplier Power:

A further obiective will be to establish the busines$ as the preferred health care facility to which patients are referred to, and to onsure that the appropriate fee structures are in place

and aligned with the prescribed rnedical aid tariffs, to ensure bills are settled on tirne. The practitioner will be required to

M --

,til

Annexure C - Business Rescue Plan dated 19 Nov 2018 - Page 8 of 87

address the following qusstions in rescuing the business: How

competitive is LPHH prices compared to its cornpetitors? What can LPHH improve on to make them the preferred supplier?

L.T2,3

Buyer Power It is anticipated that oncf; the quality of service and treatment improve$, p?tients will prefer the healthcare facility as a costeffective alternative to its competitors.

Considering the history of the business the practitioner will be required to

implement certain effective change management strategies:

These strategies are:

1.1_3.1

Cultural Values:

The ernployees' skills (doctors, nurses, etc.) and relationship

is one of the

cornerstones

patient

of this entity and

research has shown that continuous change of the cultural values of an organization has a huge positive impact, Change

in cultural values can be achieved by redefining the cultural values of all staff memhers employed by the business through

improvement of the workplace environrnent.

L.L3,2

Assess and Adapt: The successss nf the business should be properly defined and

the reason for the success should be focused and built on to ensure more $uccesses are bred in the future on the same

f,L ,/

Annexure C - Business Rescue Plan dated T9 Nov 2018 - Page 9 of 87

I principle. This could be achieved by assessing all staff rnember'$ (including doctor's) performance in accordance with

appropriate perforrnance management indicators of all staff.

1.L3.3

Act your way into new thinking

Many actions have been taken by the business rescue practitioner as $et out in section 34.3 of the plan. One of the actions still need to be taken is the upgrading of the systeffis,

which will create cost effectiveness and will be less tirne consuming, leaving staff to tend to patients and bther pressing matters.

1.13.4

Cost Management PrinciPles

Product and service cost evaluations were implernented to determine if there are any wasted costs or costs that can be reduced or elirninated. Feo structures are also being revised and neces$ary changes will be affected.

L.14

Critical factors affecting the business

The practitioner had determined that a major issue of concern to the successful rescue of the business is that there are various companies associated with it.

M,r+

Annexure C - Business Rescue Plan dated L9 Nov 20lB - Page 10 of 87

1_0

J-"1_s

The existing appointed auditor, Nexia SAB & T, of the business had in its report on the audit of the annual financial statements discovered certain issues that may constitute reportable irregularities,

a copy is annexed

annexure'BRPl".

l_.16,J_

ln this report the auditnrs express its view that LPHH has poorly

maintained accounting records and that they were unable to

obtain sufficient appropriate audit evidence to substantiate various rnatters to narne but a few.

1.L6.2

The auditors have not signed the report annexed as BRP1 due to the fact that the auditors insist that the BRP indemnifies thern

before they sign the report.

L.16.3

We also attach a copy of the audited financial statements for 2016. Annsx as annexure "BRP?".

1.L7

The practitioner shall dealwith this in his section 141 report. lt is anticipated that the corrective measures applied by the practitioner will be a catalyst to effect the necessary change in management throughout the business'

r_.ls

The effect of these possible reportable irregularities in relation to the proverbial 'famity tree of companieC may be that the financial performance as well as the associated tax compliance and obligations were incorrectly computed and recorded.

MW I

,il

Annexure C - Business Rescue Plan dated 19 Nov 20L8 - Page 11 of 87

l_1

l-.21

Ultimate obiective in the Proceedinffis

Considering the nature of the business as well as the concomitant social responsibility it has to provide accessible healthcare to the community, the practitioner must, attempt a rescue which is at its core just and equitable and Serves the aim and purposes of a business rescue as provided for under

section 7(k) read with section 8(2)(b) of the Companies Act, 2008 in that he will:

L.21,1,

Rernain

in his appointment as the practitioner

untal all the

creditors have been paid;

L.ZL.I_.1

To give job security to the 340 staff members currently ernployed.

L.7L"2

Avoid the undesirable closure

of a

business providing

affordable and accessible health care to the community; and

1,21,3

serve as a catalyst in the facilitation of the rehabilitation and revival of the business; and

T7"L.4

Retain the license of the business CIperations

to allow its continued

and trade, fi$ any adverse legal proceedings

regarding the final winding up and liquidation of the business

may result in the suspension of the license which will be detrimental to the busines$ as a whole; and

/wfi ilA

Annexure C - Business Rescue Plan dated L9 Nov 2018 - Page12 of 87

L2 1,.21.5

Ultirnately,

in avoiding the undesired final winding-up

and

liquidation of the business, to secure a better return for all affected persons and/or creditors andl or shareholders other

than what may be realised from the final liquidation of the business; and

L.2l-"6

ln keeping with the SAR$'s Charter (as published on its website)

as well as it statutory mandate irnposed upon it by

the

legislature, to promote its social responsibility to safeguard the

rights and interests of the community

to accessible and

affordable healthcare

1.2L.7

Having regard to the objectives set out above the BRP reserves

the right to approach thc affected persons with an offer to sell the businsss subject to approval by the Board of Directors and affected persons of LPHH prior to being incorporated into a new

plan for adoption as an arnended Plan as envisaged in terms of section

L,73-.8

37 .4

uf this Plan;

It is proposed that should the BRP receive an offer on the sale

of the business, a revised plan shall be published by the BRP

and shall provide projections as to the dividend which may be distributed arnongst the affected persons upon adoption of

the amended plan if the business were to be sold taking into account the following categories of creditors:

f'/'n

lrt

Annexure C - Business Rescue Plan dated 19 Nov 20LB - Page 13 of 87

r.21 8.1

Secured Creditors

L.21.8.2

Concurrent Creditors

L.Lr- 8"3

Specific creditors:

(i) Bonitas (ii) SARS

DEFINITIONS

ln this Plan, the following words shall have the meanings ascribed to them and cognate expressions shall have a similar meaning:

2,L

"Act" rneans the Companies Act No .7L of 2008 (as arnended);

2.2

"Adoption Date" means the date of the adoption of the Plan at the Meeting;

2.3

"Affected Person" or'Affected Party" means the member, any creditor of

Louis Pasteur Hospital Holdings (Pty) Ltd, any registered trade union representing employees of Louis Pasteur Hospital Holdings (Pty) Ltd and if

any employees of Louis Pasteur Hospital Holdings (Pty) Ltd are not represented by a registered trade union, each of those employees or their respective rep resentatives;

2.4

"BRP" means Ettenne Naude;

2,5

"Business Day" means any day which is not a Saturday, Sunday or public holiday in the Republic of South Africa;

w fr \

Annexure C - Business Rescue Plan dated 19 Nov 20L8 - Page14 of 87

t4 2.S

,'Business Rescue" means proceedings to facilitate the rehabilitation of Louis Pasteur Hospital Holdings (Pty) Ltd as defined in Section 128(1Xb) of the Act;

?",7

"ClPC" means the Companies and lntellectual Property Comrnission of South Africa, established by Section 185 of the Act;

2.8

"Claim" means a secured or concurrent Claim, as defined in the lnsolvency Act, against Louis Pasteur Hospital Holdings (Pty) Ltd, the cause of action in

respect of which arose prior to or on the commencement date

2.8,L

a claim arising from contract or delict, actual or contingent, pro$pective, conditional or unconditional, lncluding

liquidated or unliquidated, accepted or rejected and whether due for payment or performance, specific or otherwise; but

2.8.2

Excluding a claim of whatsoever nature and from whatsoever cau$e that can properly be regarded as costs or expenses of

the business rescue proceedings,

such claim is to be determined, calculated and admitted as secured, or concurrent by the BRP's in accordance with the ranking contemplated in the Insolvency Act, but subject to Section 135 of the Act;

2.S

"Commencement Date" means, 08 June 2018 being the date on which business rescue commenced in terms of Section 132 (l)(a)(i) of the Act;

2, J-0

"Concurrent Creditor" means

a creditor having a concurrent claim, as

contemplated in the lnsolvency Act, against Louis Pasteur Hospital Holdings (Pty) Ltd, including a claim arising from a suretyship or guarantee executed by Louis Pasteur Hospital Holdings (Pty) Ltd;

yrp

Annexure C - Business Rescue Plan dated 19 Nov 2018 - Page 15 of 87

15 ?.1-1-

"Credito/' means a natural person or a legal entity having a claim against Louis Pasteur Hospital Holdings (Pty) Ltd;

2.r2

"Disputed Claim" means a claim which is rejected either in whole or in part by the BRP'S and which claim is to be dealt with in terms of clause 28 of thls Plan;

2.J-3

"FCFO" means Firstcllnic Properties One Ltd"

2L4

"lmptementation Date" means the date on which

BRP files a notice with the

CIPC of the substantial implementation of this Plan as contemplated in Section L52 (8) of the Act;

2.15

"lnsolvency Act" means the lnsolvency Act No. 24 of 1936 (as amended);

2,!6

"LPHH" means Louis Pasteur Hospital Holdings (Pty) Ltd (1992/001696/07), a

private company duly incorporated and registered as such in accordance with the Companies Act 1972 with its registered address at374 Francis Baard Street, Pretoria, Gauteng;

2.r7

"LPH' means Louis Pasteur Holdings (Pty) Ltd, a private company duly incorporated and registered as such in accordance with the Companies Act L972 with its registered address

374 Francis Baard Street, Pretoria,

Gauteng.

2.r&

"Meeting" means a meeting convened bythe BRP'storthe consideration and possible adoption of the Plan or any amendment thereof by Creditors and other holders of a voting interest as contemplated in Section 151 of the Act;

^4p

Annexure C - Business Rescue Plan dated 19 Nov 2018 - Page16 of 87

r"6

2,J_g

"Month" means:

2.19.L

in reference to a number of months, frorn a specific date, a period commencing on that date to the immediately preceding day on the sarne date of any subsequent rnonth; and

2.L9.2

in any other context, a month of the calendar, that is, one of the 12 months of the calendar,

and "Months" and "Monthly" have a corresponding meaning;

2.20

"Moratorium" means the automatic and general moratorium on legal proceedings, including enforcement actions, against Louis Pasteur Hospital

Holdings (Pty) Ltd, and its assets which are lawfully in its possession as contemplated in Section L33 of the Act;

2.21

"pCF" means post commencement finance as contemplated in Section 135 of the Act;

2,22

"Plan" means this document together with all its annexures, prepared and published by the BRP for consideration and possible adoption by creditors in accordance with Part D of Chapter 6 of the Act;

2.23

"Pre-commencement Claim" means a claim, the cause of action which arose prior to the commencement date;

2.24

"secured Creditor" means

creditor having

secured clairn

contemplated in the lnsolvency Act against Louis Pasteur Hospital Holdings (Pty) Ltd;

Mp -/

Annexure C - Business Rescue Plan dated L9 Nov 2018 - PageIT of 87

61 L7

?.25

"Shareholder" means:-

260/o 74o/o

Bonitas Medical Fund Louis Pasteur Medical lnvestments (Pty) Ltd ("LPM|')

2,26

"signature Date" means the date of signature of this Plan by the

2.27

.vAT" means value-added tax in terms of the value-Added Tax Act;

2.28

"Paragraph" shall, subject to any contrary indication, be construed as a

BRP;

reference to a paragraph in this Plan;

2.29

"Law" shall be construed as any law (including common or customary law), or statute, constitution, degree, judgment, treaty, regulation, directive by-law,

order or any other legislative measure of any government, Supranational, local government, statutory or regulatory body or court;

230

"Person" shall be conStrued as a reference tO any person, firm, Company, corporation, government, state or agency of a state or any association or partnership (whether or not having separate legal personality, of two or more of a foregoing);

23L

lf any provision in a definition is a substantive provision conferring rights or

imposing obligations on any party, notwithstanding that

it is only in the

definition clause, effect shall be given to it as if it were a substantive provision of this Plan;

fLP

Annexure C - Business Rescue Plan dated L9 Nov 20IB - Page 18 of 87

r_8

?.32

Unless the context dictates othenruise, an expression which denotes any gender includes the other; and a reference to a natural person includes an artificial person and to the singular includes the plural, and vice versain each CASE

2.33

The annexures to this business rescue plan form an integral part hereof and words and expressions defined in this business rescue plan shall bear, unless the context otherwise requires, the Same meaning in such annexures;

2.34

When any number of days is prescribed in this business rescue plan, same shall be reckoned exclusively of the first and inclusively of the last day unless

the last day falls on a day which is not a business day, in which the last day shall be the next succeeding business day;

2.35

ln the event that the day for payment of any amount due in terms of this arrangement shall fall on a day that is not a business day, the relevant date shall be the immediately succeeding business day;

236

Where any term is defined within the context of any particular clause in this plan, the term so defined, unless it is clear from the clause in question that the term so defined has limited application to the relevant clause, shall bear

the same meaning as ascribed to it for all purposes in terms of this business

rescue plan, notwithstanding that the term has not been defined in the definitions clause;

?-.37

Any reference in this business rescue plan to an enactment is reference to that enactment as at the signature date and as amended or re-enacted from time to time:

,\/\/e6.) t

Annexure C - Business Rescue Plan dated 19 Nov 2018 - PageL9 of 87

L9 2.38

Words and expressions defined in the Act which are not defined in this business rescue plan shall have the same meanings in this business rescue plan as those ascribed to them in the Act;

2,39

Save where the contrary is indicated, any reference to this plan shall be construed as a reference to this plan as it may have been, or may from time to time be, amended, varied, novated or supplemented in terms of the Act.

DISCT-AIMER

3.l-

The information contained herein has been prepared in compliance with the Act inter alia to assist affected persons to evaluate this plan and to vote thereon;

3,2

Whilst every effort has been made to present an accurate and complete overview of the affairs of Louis Pasteur Hospital Holdings (Pty) Ltd, the BRP has not independently verified all the information contained herein. Neither

the BRP, Louis Pasteur Hospital Holdings (Pty) Ltd nor their respective affiliates, employees, officers, directors or agents make any representations or warranties (express or implied) as to the accuracy or completeness of the

information contained in this Plan or any statements, estimates or projections

contained herein. Consequently, they will not have any liability arising from

the use of the information contained herein. lnsofar as the plan includes certain statements, estimates and projections related to the anticipated future performance of Louis Pasteur Hospital Holdings (Pty) Ltd, such statements,

estimates and projections reflect various assumptions and elements of subjective judgment concerning anticipated results, which are subject to

Annexure C - Business Rescue Plan dated Lg Nov 20lB - Page20 of 87

20 business, economic and competitive uncertainties and contingencies that may or may not prove to be correct. Neither the BRP, Louis Pasteur Hospital Holdings (Pty) Ltd, northeir respective affiliates, employees, officers, directors or agents shall be liable for such statements, estimates and projections;

3.3

The content of this Plan must not be construed as legal advice and Affected

Persons are advised to seek their own professional advice on the legal, financial and tax consequences of voting for or against this Plan.

STRUCTURE OF THE PLAN

The major components of this Plan are:

4.1,

Part A:

Backg round;

4,2

Part B:

Terms of the Proposal;

4,3

Part C:

Assumptions and Conditions;

4,4

Part D:

Ad rn i nistrative

rovisions.

t\/Lp t

Annexure C - Business Rescue Plan dated 19 Nov 2018 - Page2I of 87

PART

A T BAC

ROUND

LOUIS PASTEUR HOSPITAL H,QL-DINGS (PTI-"|,TD's BUSINEI$ AND B,USINESS RESCUE

5.1_

Louis Pasteur Hospital Holdings (Pty) Ltd is a private hospital and carries on

the business of a healthcare service provider. lt was previously known as

Maraba Hospital and Medical Centre (Pty) Ltd. The establishment of the hospitalwas aimed at serving previously disadvantaged communities in Pretoria.

5.2,

Louis Pasteur Hospital Holdings (pty) Ltd has 340 employees;

5.2.1,

ln addition to these ernployees the hospital also utilises the service of an outside company. The number of employees is 80. They are all highly specialised.

s.2.2

5.3

Pursuant

This is a L00?fi BLACK enterprise.

to a resolution passed by the Directors, Louis Pasteur Hospital

Holdings (Pty) Ltd was placed in business rescue as contemplated in Section 129 of the Act on 08 June 20LB;

5.4

The nomination of the BRP's was confirmed on 15 June 2018 by CIPC. A copy of the BRP's appointment letter is attached as annexure "BRP3";

l\^-/e

1*A

Annexure C - Business Rescue Plan dated 19 Nov 2018 - Page 22 of 87

22 5.5

The first meeting of Louis Pasteur Hospital Holdings (Pty) Ltd.'s creditors were

held on 21. June

5,6

201-8.

A copy of the Louis Pasteur Hospital Holdings (Pty) Ltd Memorandum of Association is attached as annexure '*BRP4".

EVENTS LEA:D|Ng TO THE FINANCIAL DISTRESS.. OF LOUIS PASTEUR HOSPITAL HOLDTNGS (PTY) LTD

6.1

According to the affidavit deposed to by a director in support of the resolution

to place Louis Pasteur Hospital Holdings (Pty) ttd under business rescue proceedings, Louis Pasteur Hospital Holdings (Pty) Ltd was experiencing severe cash flow difficulties and was unable to meet its payment obligations

to its creditors as and when such payments fell due. Louis Pasteur Hospital Holdings (Pty) Ltd did not have funds wherewith to pay its creditors and to fund the continuance on of its business activities;

s,2

The current reasons for the financially distressed business are

s"2,1

A long standing dispute between the two rnain shareholders of

the company which has resulted in litigation which has had a harmful effect on the company.

fi.2"2

The dispute has led to lack of financial support by financial institutions who were awaiting the outcome of the litigation.

A^0

Annexure C - Business Rescue Plan dated L9 Nov 2018 - Page23 of 87

23 6.2.3

As a result of inter alia the dispute, the Bankers of the LpHH have reduced the overdraft facilities of LPHH leading to cash flow constraints,

6,2,4

The dispute in this matter concerns the terms of a funding agreement and the right to proceeds of policies ceded in terms of two sessions. The terms of the funding agreement together

with the cession$ determine the rights to the proceeds to two Sanlam investment policies, which were paid to Louis Pasteur Hospital Holdings (Pty) Ltd on maturity. ln particular, the parties

dispute whether the cession was an out-and-out cession (as contended by the Louis Pasteur Hospital Holdings (Pty) Ltd) or

a cession in securitatem debiti (as contended by Bonitas Medical Fund (Pty) Ltd), An out-and-out cession is made to affect an alienation of a right, and effects a cornplete transfer nf

the right to the cessionary. A cession in securitatem debiti resembles a pledge, and the cedent is not wholly divested of an

interest in the asset it provided as security to the cessionary, because, notwithstanding the cession, the cedent retains what has been descrihed as reversionary interest.

6,2.5

The High Court, in Pretoria, in effectively finding that the cession was a cession in securitat*m dabiti. lt resolved the dispute with

reference to both interpretation of the agreement and by inferring a tacit terrn. That taclt term contradicted the express terms of the cession.

fqp

Annexure C - Business Rescue Plan dated 19 Nov 2018 - Page24 of 87

24, 6.2 6

The result of the High Court's judgment, and the effect of the SCA upholding that judgment, is one of the reasons why the

Louis Pasteur Hospital Holdings (pry) Ltd is now financially distressed.

6.2.7

The Louis Pasreur Hospital Holdings (Pty) Ltd has now lodged

and filed a Notice of Application for Leave to Appeal to the Constitutional Csurt which appeal is pending.

6,3

Subsequently Louis Pasteur Hospital Holdings (Pty) Ltd has lost the case in

the SCA in Bloemfontein and is now indebted to Bonitas in the amount of approximately R88 000 000,00 with costs.

6.4

At the commencement date, Louis Pasteur Hospital Holdings (Pty) Ltd was

indebted to its primary creditor, namely SARS, in a sum of approximately R76 000 000,00 and Bonitas in a sum of approximately R88 000 000,00. The BRP has now received a further claim has now been lodged by SARS for the VAT of the period ending May 2018 that was not paid by LPHH. The BRP and SARS have a difference of opinion as to whether this claim is a pre-business

rescue claim or a post-business rescue claim. The BRP proposes that this

claim be treated separately from the claims of the other creditors.

6"5

Louis Pasteur Hospital Holdings (Pty) Ltd's business activities prior to the commencement date did not generate sufficient cash to settle its creditors on an ongoing basis, more specifically SARS and later on Bonitas.

r\An ,/ t

,{\

Annexure C - Business Rescue Plan dated 19 Nov 2018 - Page25 of 87

?5 7

CONDUCT

OF LOUIS

HOSPIT

INGS

LTD'S BUSINESS

SUBSEQUENT TO THE COMMENCEMENT DATE

7.1

The BRP investigated Louis Pasteur Hospital Holdings (Pty) Ltd's records and

business affairs to establish whether or not Louis Pasteur Hospital Holdings

(Pty) Ltd has a commercially viable business which is capable of being rescued by taking appropriate restructuring measures aimed at returning

Louis Pasteur Hospital Holdings (Pty) Ltd to

profitable status or which

rneasures would result in a better return for Louis Pasteur Hospital Holdings (Pty) Ltd's creditors than its immediate liquidation;

7.2

The entire cash flow situation of Louis Pasteur Hospital Holdings (Pty) Ltd is exacerbated by Bonitas and SARS claims;

7,3

Pursuant to the above investigation, the BRP concluded that for Louis Pasteur

Hospital Holdings (Pty) Ltd to be rescued as contemplated in Chapter 6 of the Act, it is necessary for SARS and Louis Pasteur Hospital Holdings (Pb7) Ltd to

settle the disputes arising from SARS claim on the terms set out in this plan'

which plan inter aliacontemplates a reduction of SARS claim.

7,4

ln addition the BRP has in terms of clause 7.1 appointed an expert

(ACT

Solutions) to advise it of the benefits to be obtalned from a restructuring of

the Business of Louis Pasteur Hospital Holdings (Pty) Ltd both from a ta,r and corporate structure and operational efficiency point of views.

{ - \

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Annexure C - Business Rescue Plan dated 19 Nov 20L8 - Page26 of 87

26 8.

LOU|S PASTEUR HOSPITA| H9I*QINGS [PwLlTp:S CREDITORg

8.L

As at commencement date the total liability of Louis Pasteur Hospital Hotdings (Pty) Ltd to its creditors was in the sum of R198 392227,59. A

schedule reflecting Louis Pasteur Hospital Holdings (Pty) Ltd creditors is annexed hereto as annexure "BRPS";

8,2

The claims reflected on annexure "BRP6" are admitted by the BRP as valid

and enforceable against Louis Pasteur Hospital Holdings (Pty)

Ltd.

Consequently, such creditors will be entitled to exercise a vote at the meeting

in respect of the Plan, which vote shall carry the voting interest reflected on annexure "BRP7";

8.3

The BRP has ruled that Bonitas is an independent creditor, for the following reasons

8.3.l-

Sec

(i)

LZB

(1Xg) defines "independent creditor"

is a

creditor

of the company, including

employee of the company who is a creditor in terrns of section LAaQ} and

(ii)

is not related to the company, a director, or the practitioner, subject to subsection (2);

It is the BRP's view that Bonitas is not a related person as defined by section 2 of

the companies act as Bonitas does not control LPHH, ittherefore qualifies

to be an independent creditor,

I.^4e \'

Annexure C - Business Rescue Plan dated L9 Nov 2018 - Page27 of 87

71 27

LOUIS PASTEUR HOSP ITAL

9.1_

LTD'S

ASSETS

Louis Pasteur Hospital Holdings (Pty) Ltd has assets and are set out in annexure 'BRP8" and the assets referred to in the balance sheet annexure "BRP9" hereto;

10.

l_0A.

PROBABLE LIQ UIDATION DIVIDEND

r"0.1

The estimated probable dividend that will accrue to creditors if Louis Pasteur Hospital Holdings (Pty) Ltd is to be liquidated forthwith is referred to in page 45.

10.2

Concurrent creditors will receive no dividend.

108,

Clause 24.4 reflects the position if the Cornpany is not liquidated and the Business Rescue Plan is adopted.

11.

HOLDERS OF LOUIS. PASTEUR HOSPIT.AI- HOLDINGS (PTY) LTD:S ISSUED SECURITIES

26o/a

Bonitas Medical Fund

7 Aa/o

Louis Pasteur Medical lnvestments (Pty) Ltd and individual doctors.

f4.w \

,/{\

Annexure C - Business Rescue Plan dated 19 Nov 2018 - Page28 of 87

L2.

AGREEMENT RELATING TO BRP'S

UNERATION

The BRP and the company have concluded a written agreement in respect of the BRP's remuneration. A copy of the agreement is annexed hereto as annexure "BRP10".

13,

PROPOSALS MADE INFORMALLY BY CREDITORS

Nedbank has commented on the previous business rescue plan and their requests to amend certain paragraphs have been incorporated in this revised business rescue plan,

ftL/ra

Annexure C - Business Rescue Plan dated 19 Nov 20L8 - Page29 of 87

PART

B T PROPOSALS 14.

THE BUSINESS RESCU,E Or_LOUIS PAS[EU]!]leSPl,laL HoLDINGS lP]Y) UE|

L4.1

The BRP is of the considered opinion that it is possible for Louis Pasteur Hospital Holdings (Pty) Ltd

to be rescued as contemplated in

Section

128(1Xb) of the Act by Louis Pasteur Hospital Holdings (Pty) Ltd continuing to

carry on business in the format and in the manner that it had done prior to the commencement date if it is able to settle the claims of Bonitas and SARS claims as proposed in this plan or in a manner to be negotiated with Bonitas

and SARS;

14.?

ln the circurnstances, there are two option$ available:

1"4,2.L

The imrnediate terrnination of the business rescue proceedings

and the liquidation of Louis Pasteur Hospital Holdings (Pty) Ltd, in which event preferred creditors will receive a small dividend

and concurrent creditors will receive no dividend;

L4.2.7

The adoption of the Plan which shall avoid the costs of a liquidation and which inter alia provides for reduction of SARS

and Bonitas clairns and the possibility of a dividend

concurrent creditors,

W 1^,/A

Annexure C - Business Rescue Plan dated 19 Nov 2018 - Page 30 of 87

30 1_5.

TERMS OF THE PLAN

The terms of the business rescue plan are:

15.1

Louis Pasteur Hospital Holdings (Pty) Ltd acknowledges its liability to SARS; BonitaS and other creditors as referred

to in annexure "BRP6" annexed

hereto.

rs.2

Upon adoption of this business rescue plan, the BRP shallon a monthly basis

pay the creditors. The profitability of the company depends on occupancy levels and the support of Bonitas and other medical funds in reaching optimal

occupancies is important to the successful rescue of the Company.

153

Clause 24.4 out the estimated dividends that should be received by the creditors. Nedbank and other PCF creditors will be repaid first and thereafter the creditors shall be paid equally.

3,6.

MORATORIUM

ON LEGAL PROCEEDINGS AGAINST LOUIS PASTEUR HOSPITAL

HOLDTNGS (PTY) LTD

16.J_

Section 133 of the Act provides that during business rescue proceedings no

legal proceeding, including enforcement action against Louis Pasteur Hospital Holdings (Pty) Ltd or in relation to any property belonging to Louis

Pasteur Hospital Holdings (Pty) Ltd or laMully in its possession may be

A{0

/.,A \'r

Annexure C - Business Rescue Plan dated L9 Nov 2018 - Page 31 of 87

commenced or proceeded with inter aliawithout the written consent of the BRP or

16.2

with the leave of the appropriate Court;

The aforementioned moratorium shall remain in place whilst Louis Pasteur Hospital Holdings (Pty) Ltd is in business rescue,

L7"

R HOSPITAL HOLDINGS

EXTENT TO WHICH LOUIS

{PTY}

LTD IS TO BE

RELEASED FROM THE PAYMENT OF ITS DEBTS

THE EFFECT OF THE HOSPITAL HOLDI

T7,L

Section L54(2)

USINESS RESCUE PLAN ON LOUIS PASTEUR rPTY} LTD

of the Act provides that if the Plan is

approved and

implemented in accordance with Chapter 6 of the Act, a creditor is not entitled to enforce any debt owed by Louis Pasteur Hospital Holdings (Pty) Ltd at the

commencement date, except to the extent provided for in the Plan;

L7.2

Save to the extent provided for in the Plan, the Plan does not contemplate the

release of Louis Pasteur Hospital Holdings (Pty) Ltd from payment of any of its debt;

173

The Plan does not circumscribe or limit the rights of any creditors arising out of suretyship agreements in respectof which Louis Pasteur Hospital Holdings

(Pty) Ltd is the principal debtor;

l./\'le

Annexure C - Business Rescue PIan dated 19 Nov 2018 - Page32 of 87

32 L7.4

The terms of the Plan and any payment received by creditors in terms of the

Plan shall have no effect on the liability of the Directors of Louis Pasteur

Hospital Holdings (Pty) Ltd and any other persons as contemplated and provided for in Sections 20, 22,66,76,77 and 218 of the Act and arising from

the conduct of the business of Louis Pasteur Hospital Holdings (Pty) Ltd prior to the adoption date;

L7.5

fhe

Plan does not exclude the possibility of a financial restructuring of the

portion of the debt of Louis Pasteur Hospital Holdings (Pty) Ltd at the option of the holder of the debt which will provide for the conversion of a portion of

the debt of Louis Pasteur Hospital Holdings (Pty) Ltd's to equity which will have the effect of improving the strength of the balance sheet of Louis Pasteur

Hospital Holdings (Pty) Ltd and allow that creditor to share in the success of

LPHH. Should such a financial restructuring of LPHH be acceptable to the creditors of LPHH who are also shareholders in LPHH it will be an imrnense vote of confidence of the shareholders of LPH H i n the future success of LPHH.

The route conversation of debt to equity is

better option than a

subordination of claims to improve the balance sheet of LPHH.

THE ONGOING ROIE OF BRP OF LQ-UIS PASrE_Ule HQEPITA!= HO,LpI\LGâ&#x201A;Ź (PrY) LTD AND THE TREATMINT,9F ANY EXISIING- ASBEEMENTS

After the Plan has been implemented the BRP shall continue to manage the business of Louis Pasteur Hospital Holdings (Pty) Ltd untilthe plan has been substantially implemented.

yfr I

Annexure C - Business Rescue Plan dated 19 Nov 2018 - Page 33 of 87

The following agreements have been annexed

18.L

Deed of Sale of Debentures, a copy is annexed as annexure "BRPll"

18"2

Share Sale Agreernent, a copy is annexed as annexure "BRPLL

18.3

Share Sale Agreemenl a copy is annexed as annexure "BRPJ.3"

TB.4

Sub-lease agreement between LPHH and FCPO,

a copy is annexed

annexure "BRP14"

LB.5

Management Agreement between LPHH and FCPO, a copy is annexed as annexure "BRP15"

RIGHTS OFFER

t_s.r_

Bonitas Medical Fund is a registered shareholder of 26Va of the issued share

capital of Louis Pasteur Hospital Holdings (Pty) Ltd, and is also a creditor of Louis Pasteur Hospital Holdings (Pty) Ltd.

19,2

The other shareholders in Louis Pasteur Hospital Holdings (Pty) Ltd are Louis Pasteur Medical lnvestments Ltd and other parties.

19,3

Bonitas owns 260 of the issued shares in Louis Pasteur Hospital Holdings (Pty) Ltd and Louis Pasteur Medical lnvestments Ltd the rest, which totals L 000 issues

ordinary shares.

f4 \p vA

Annexure C - Business Rescue Plan dated 19 Nov 2018 - Page34 of 87

34 1_S"4

The authorized share capital of the company is

10 000

ordinary par-value

shares of L0 scent each as appears from the memorandum of association. lt

furthermore, appears that table B was chosen as the applicable articles of association of Louis Pasteur Hospital Holdings (Pty) Ltd.

J_9.5

A shareholde/s agreement was also entered into between the shareholders

on l-1 October 1994.

L9.6

Louis Pasteur Hospital Holdings (Pty) Ltd did not file or register with CIPC, a

new memorandum of incorporation, and therefore the

shareholders

agreement and old articles of association apply insofar as the provisions thereof may not be contradictory to the current Companies Act, Nr 71 of 2008 (hereinafter referred to as ("the Companies Acf').

19,7

On 6 May 2016 a decision was taken by the board of directors of Louis Pasteur

Hospital Holdings (Pty) Ltd to offer to existing shareholders of the company pro rate to their existing shareholding, 298 new shares by way of a rights offer'

19.B

This transaction has subsequently been reversed by the Exco of the Board of

Directors based on the instruction of the BRP after he obtained legal advice

that proper notice was not given to all the shareholders-

19.9

The shareholding of LPMI and other persons thus remains at 740 and Bonitas

at 2S0 shares.

\|^ */ t

,,4

Annexure C - Business Rescue Plan dated 19 Nov 20L8 - Page 35 of 87

20.

$ALE OF S

20,1_

AGREEMENTS

On the 8" of May 2013 Louis Pasteur Hospital Holdings (Pty) Ltd and Louis Pasteur Holdings (Pty) Ltd concluded an agreement.

20,2

ln terms of the agreement LPHH sold 300 000 fihree Hundred Thousand) ordinary shares with

a par value of R0.01 (one cent) each in Medical

Empowerment Consortium lnvestments Ltd. A copy of this agreement is annexed as "BRP12".

20.3.

Payment referred to in paragraph 4 of the agreement and reads as follows:

PAYMENT

The purchase considerations shall be paid by the Purchaser as follows:

20"3.1

The purchase price shall be settled by way of the issue of unsecured, transferable, cumulative, fixed rate debentures in the purchaser.

2A,3 2

The debentures shall be in denominations of

000 (One

Thousand Rand) per debenture and debenture certificates shall be issued in such amounts as requested by the seller

rwtc

Annexure C - Business Rescue PIan dated 19 Nov 2018 - Page 36 of 87

20.3.3

The debentures shall have the following terms and conditions:

20.3.3.1-

The debenture shall be unsecured,

20.3.3.2

The debentures shall earn a return of B% (eight percent)

{TWo

incorne and

60/o

capital growth) per

annum issued by Louis Pasteur Holdings (pty) Ltd"

24,4

20.3.3"3

The debentures shall be transferable.

20.3,3.4

The debentures shall be curnulative.

LPHH has not received any interest in cash as it was credited to the loan

account by way of journal entries.

20.5

A similar agreement was concluded between the parties without any date, a

copy of the agreement is allocated as annexure "8RP13".

20.s

Louis Pasteur Holdings (Pty) Ltd now owes LPHH an amount of R38 016 250,00

in cash, I am in the process of recovering the outstanding

amount.

v rA \

Annexure C - Business Rescue Plan dated 19 Nov 2018 - Page37 of 87

81 37

2L.

MANAGEMENTAGREEMENT BETWEEN LPHH AND FCPO

The BRP is in the possession of a Management Agreement between LPH and LPHH which was signed on the 30" August 201L.

2L.L

I have been informed by Adam that this agreement has been cancelled but

was not handed a cancellation agreement.

2L,1.1

Therefore a new Management Agreernent was entered into

between FCPO and LPHH on 3'MaY 2016.

2L.2

It is not clear from the hospital license that LPHH has any clear right what so

ever in terms on which it is entitled to appoint FCPO to manage the hospital. It is not clear on what basis LPHH has the right to enter into an agreement

with FCPO for purposes of management of the hospital, especially as the sub-

lease agreement was only entered into after the new management agreement,

2l- 3

At my appointrnent date FCPO had no staff and never tendered to assist me as they have no staff.

2L.4

It also appears from the

document setting out the resolutions entered into the

agreement that the resolution of LPHH was only taken by the Exco of the Board of LPHH. The agreement was therefore not authorized by the Board of Directors,

r^ t.

Annexure C - Business Rescue Plan dated 19 Nov 20L8 - Page 38 of 87

agreement is void from lack of authority.

21.5

I am therefore of the view that the

2r_.6

An agreement such as this managernent agreement, for the reasons Set out above, that lead to an illegality, and that has illegality as its purpose, will be

found by a court to be void and valid.

?,2.

SUB.LEASE AGREEMENT BETWEEN FCPO AND LPHH

22.1

An agreement of sub-lease between LPH and LPHH was signed on 28' March 2O12at Pretoria. This agreement has lapsed and I can only assume that as a

result of this a new sub-lease agreement Was concluded between LPHH and FCPO on

22.2

2b September

2OL7.

The new sub-lease agreement should now be considered in the light of the above mentioned.

22.3

The same principle pertaining to the authority of LPHH to enter into the agreement of sub-lease as referred to above applies in respect of this sublease agreement. lf the board of directors did not take a proper decision to enter into the agreement, the lack of authority will cause the agreement to be

void, on the basis of my interpretation of section 20(1Xb) of the Companies Act above.

2?.,4

The provisions of this sub-lease agreement indicate that the main intention of this agreement as well as the management agreement is to transfer funds

from LPHH to

FCPO.

^/\fr \

Annexure C - Business Rescue Plan dated L9 Nov 2018 - Page 39 of 87

39 22,4.1

ACT Solutions prepared a report for the BRP in respect of a

claim whereby FCPO claimed an amount of R99 084 L26 owed to them by LPHH. I shall elaborate on this claim further in this

report. I annex a copy of the report as annexure "8RP16".

their report they state that no resolutions where handed to them.

2?.5

lf regard is had to the very high amounts payable in respect of rentals in

terms

of this agreement, it appears to me that the intention of the agreement was

not really a rental agreement, but simply an agreement to constitute a basis for expenses in LPHH, which could be deducted from income from LPHH.

22.6

The management agreement also has that effect if one has regard to the

remuneration referred to in that agreement. The remuneration in that agreement appears

to be exorbitant as it is based on 7,5o/o of the gross

turnover of the hospital including the pharmacy turnover plus VAT, and a fee

equal to

l-,50lo

of the gross turnover of the hospital including the pharmacy

turnover for its services to market the hospital plus VAT.

?2.7

Such percentages on gross turnover do not appear to me to be reasonable and justifiable, and I have been informed that it is not market related at all.

22.8

It therefore appears also that the management agreement

was intended to

create high expenses for LPHH, to offset such expenses against the income of LPHH.

fArft t

{

Annexure C - Business Rescue Plan dated 19 Nov 2018 -

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e 40 of 87

40 ?2"9

ln any event, the lease agreement also intends to create a situation whereby LPHH rents the hospital premises from FCPO, and whereby it is intended that LPHH should conduct the hospital business. This again will be contrary to

the regulations referred to above as LPHH would not be a party who would be entitled to the rights in the hospital license.

22.10

For the same reasons therefore as raised above

respect

of the

management agreement, this agreement also has an illegal purpose.

22.r1.

I am furtherrnore of the view that both agreements read together with reference to the abovementioned issues are vague.

22.12

A court would not apply a benevolent interpretation to such an extent that it

would be making a contract for the parties and finding consensus ad idem by mere conjecture.

7,2.r3

lf the contracts were also entered into with a view to create an incorrect impression in respect of the financial statements, and to create expenses to

deduct from incorne in the books of account of LPHH, the agreements will also suffer the same fate as it will mean that the agreements are then not what they are supposed to be.

22_14

Parties may arrange their affairs to avoid statutory provisions, provided their

arrangement does not result in a simulated transaction, which is in fraudem legis.

l\A fr \

,fl

Annexure C - Business Rescue PIan dated 19 Nov 20L8 - Page 4T of 87

4L 22.L5

ln my view, these contracts were never really intended to provide FCPO with the right to conduct the business of the hospital, as the facts show that LPHH at all relevant times conducted the business of the hospital. There was also

not a real intention of LPHH to hire the hospital from FCPO for purposes of conducting the hospital business. I am of the view that both agreements are therefore simulated transactions with a view to create higher expenses than market related expenses for LPHH, to be able to offset same against incorne for tax purposes.

22.1,6

The main principle to be applied is whether a transaction serves a legitimate

commercial purpose, and a court must examine the transaction as a whole,

including surrounding circumstances, unusual features of the transaction

and the manner in which the parties intend to implernent it, before determining whether a transaction is simulated or not.

22.L7

ln my view, the commercial purpose of any of the two agreements is not clear

at all, both transactions have extremely unusual

features, and the

transactions aS a whole are vague to such an extent that it cannot be determined on the basis of interpretation thereot what the parties really wanted to achieve.

22.1_B

The only possible end result that can be deduced from the agreements is the extremely high expenses created for LPHH, with reference to the rental in the sub-lease agreement being huge and much higherthat market related rental, and the payment of the management service fee in terms of the management

agreement also being much higher than market related or reasonable prices.

B-fr i

Annexure C - Business Rescue Plan dated 19 Nov 2018 -

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e 42 of 87

*2 22.r9

An important further fact that contributes to the abovementioned conclusions is the fact that FCPO and LPHH are interrelated companies, with the Same

directors and boards of directors, and they are controlled by the same parties. These transactions are therefore not really arms-length transactions'

22.?0

It makes no sense that FCPO lets the property to LPHH, who then contract FCPO again to manage the hospital. There is no clear sense of purpose in that.

22.2r

The BRP is in the process of negotiating with FCPO to reduce the rental amount. The BRP shall report further on this aspect at the creditors rneeting.

23.

ORDER OF DISTRIBUTION IF PLAN IS ADOPTED

23,1

lf the Plan is adopted, the available funds will be distributed in satisfaction of

the costs and claims mentioned hereunder in the order

mentioned

hereunder:

23.1.1

The unpaid remuneration and expenses of the BRP, including legal costs, the costs of professional advisors and other costs reasonably associated with the facilitation

of the

business

rescue proceedings, the preparation and irnplementation of the Plan;

23.t.2

The claims of the creditors aS set forth in annexure "BRP6";

|.^? ///" \,tl

Annexure C - Business Rescue Plan dated L9 Nov 2018 - Page 43 of 87

No assets of the LPHH will be sold to pay the creditors as LPHH require their

23.2

assets to generate income.

24.

BENEF

O F AD,OPT.!

I{Q IHE TLA]N AS-QP-EASE

-IA-

UTPAIIPN

The benefits of adopting the Plan as opposed to the liquidation of Louis Pasteur Hospital Holdings (Pty) Ltd are as follows:

24.L

The additional costs of the administration of liquidation proceedings will not be incurred;

24.2

The date of publication of this business rescue plan all the creditors referred to in the business rescue plan are concurrent

24,3

No workers will be retrenched should the creditors adopt the plan,

24.4

Creditors may receive a divldend much sooner than would be the case if Louis Pasteur Hospital Holdings (Pty) Ltd is liquidated.

Liquidation

Business Rescue Plan l-.1 The Practitioner has the authority to sell the

assets immediately, with n0 time constraints. L.2 The a$$ets are preserved, therefore the Assets will retain their value

l-"L The Provisianal Liquidator has no authority to $ell assets, while the company is under provisional

li q u

idation.

1.2 The a$sets cannot be rnaintai ned, as there are no funds available and no staff to maintain them. lf the liquidator wants to maintain the assets, the expenditure will have to be funded by contributions from the creditors, L,2.L:

As soon as the cornpany has been finally liquidated, the Provisional Liquidator

ftL'P 1

{

Annexure C - Business Rescue Plan dated 19 Nov 2018 - Page 44 of 87

44 must obtain either the consent Master of the Hig h Cou rt o r the High Court to sel the assets, The atter is very exercise.

l-.3 The assets are maintained properly

l-.3 The assets depreciate on a daily basis, due to a lack of continued maintenance,

Shareholders may be willing to contribute financially to the busines$.

Preserves the value of the assets

The Practitioner is basis.

to contribute There is a perception that the assets will be sold at values far less than Market value. are as follows:

assets: Lja/o of the value of the assets:

No time constraints to pay out dividends, at the discretion of the practitioner,

There is an incentive for Shareholders to co-operate to save the cornpany, therefare they rnay be incentivized to: 6,1" Subordinate their Loan Accounts 6.2 To inject cash or othsr assets. fi.3 To participate in the Business Rescue

Plan.

6.4

intellectual property of Management and staff is retained.

All the historical company inforrnation is readily accessible, due to the loyalty of management and staff to the company.

3o/o

of the value of the

of assets. The liquidator rnay only pay out dividends to Creditors once the Master of the High Court has approved the Liquidation of Distribution Account. 5.1 The above process rnay take up to 24 rnonths. 5.2 The entire process before any creditor will receive a dividend may take up to 22 * 36 months. No Incentive for Shareholders to participate. *.3, No obligation to subordinate their Loan Accounts, 6.2 No Further contributions from Shareholders. S.3 No participation by $hareholders and rnanagernent. S.4 lntellectual property of Management and staff is [ost. No loyalty from staff and management on the accessibility of the historical company information.

t\/\W -/ I ,d

Annexure C - Business Rescue Plan dated 19 Nov 20LB - Page 45 of 87

SI{I-E-MENT

lN rERMS -qF-sEcrlslU l5!.-t4G)fu!)

pR0BABLE DlVlDEllQ TQ

CREDITORS IN THEIR SPECIFIC CLASSES

Class of Creditor

Proposed Dividend

tVoS

Proposed Dividend

{Yo)

under Busine$t$ Rescue

under Liquidatipn

100 %

100 q6

Secu red Creditors (Nedbank)

Preferent Creditors (SARS) L00 %

Concu rrent Creditors

25.

EFFECT OF THE PLAN ON THE SHAREHOLDER

ln terms of the business rescue plan, the Shareholders will retain their shares.

o/o

Annexure C - Business Rescue Plan dated 19 Nov 2018 - Page 46 of 87

4,6

PART C

I ASSUMPTI ONS AND CONDITIONS 20.

c o N,plr o NS r

rHAT M U ST B E: SAT! $ F]EOFQR

TH E PIAN,

rO B EIMP

L-E_]\[ENTE D

For the Plan to be implemented it must be adopted by the holders of more than 7570 of the

creditors' voting interests that are voted, and the vote must include at least

500/o

of the

independent creditors'voting interests, if any, that are voted at the meeting.

CIRCUMSTANCES

WHICH THE BUSINESS RESCUE PROCEEDINGS WILL

TERMINATE

The Business Rescue proceedings will terminate: t

27.L

lf the Plan is rejected

atthe meeting and affected persons do not actto extend

the Plan in any manner contemplated in the Act and the BRP files a notice of

termination

of the Business Rescue

proceedings with

the CIPC

contemplated in Section 153(5) of the Act;

7.7,2

the Plan is not adopted and implemented and the BRP has to file a notice

of substantial implementation of the Plan with the CIPC as contemplated in Section 132(2)(c)(ii) of the Act;

$,'ft ,/

\ _/^

Annexure C - Business Rescue Plan dated L9 Nov 20LB - Page 47 of 87

91 47

27.3

lf the Business Rescue proceedings in respect of Louis Pasteur Hospital Holdings (Pty) Ltd is terminated by an order of Court and Louis Pasteur Hospital Holdings (Pty) Ltd is placed in liquidation.

27.4

Failure to adopt business rescue plan

lf a business rescue plan has been rejected as contemplated in section 152(3)(a) or (c)(ii)(bb) the practitioner may

27.4.L

Seek a vote of approval from the holders of voting interests to prepare and publish a revised plan; or

27 4.2

advise the meeting that the company will apply to a court to set aside the result of the vote by the holders of voting interests or shareholders, as the case rray be, on the grounds that it was inappropriate,

28.

SARS CL,AUSES

28"1

DEFAULT CLAUSE

Any compromise contemplated in this business rescue plan is conditional upon the company fully meeting its obligations to creditors as set out in this business rescue plan. ln the event of any breach by the company of its obligations to creditors in terms of the business rescue plan, or in the event the company is placed in liquidation, the full balance due to creditors in terms of their original claims against the company shall immediately become due,

f*b

Annexure C - Business Rescue Plan dated 19 Nov 2018 - Page 48 of 87

owing and payable by the company to the creditors. Business rescue proceedings will, in such instance be deemed to have terminated.

28,2

coNTl NuI NG TAX OBLI GATIONS

The business rescue practitioner undertakes that the company shall ensure that all future tax obligations (including the filing of returns and payment of outstandlng ta<es) will be met until proceedings have been terminated on any ground listed in terms of section t32 of the Companies Act of 2008. Any

deviation from this undertaking shall constitute a material breach of the provisions of this business rescue plan and proceedings will in such instance be deemed to have terminated. The full original claim outstanding to creditors

or remainder of such claim shall be payable.

28.3

VAT CLAW BACK CI3USE

VAT liability arising as a result of a compromise of debts in terms of this plan is not subject to compromise. The practitioner warrants that provision for any

future VAT llability triggered in terms of section 22 of the VAT Act 89 of 1991 has been made in the Plan.

28,4

ASSESSED LOSS FORFEITURE

Any assessed loss will be subject to and dealt with in accordance with the provisions of the tax laws of South Africa and will be forfeited in proportion to

the debt compromise effected by the business rescue plan. Such reduction shall be without prejudice to any rights that the ta(payer may have in terms of in terms of the Tax Administration Act.

Annexure C - Business Rescue Plan dated L9 Nov 2018 - Page 49 of 87

4,9

29.

SHEET AND

PROJECTED

ANP EXPENSES STATEMENT

A projected balance sheet and an income and expenses

Statement are annexed as

annexure "BRPS",

30.

30.1

BSTANTIAL I M P LEMENTATIO N

Substantial implementation of the Plan will be deemed to have occurred

upon the BRP having made payment and settled the creditors in full as provided for in this Plan. Nevertheless, the BRP has prepared a projected

balance sheet, income and expenses statements and is annexed as annexure "BRP9". The benefit for SARS to adopt the business rescue plan

is clearly illustrated in the future income that SARS will receive should the company be allowed to continue trading,

30.2

SARS FUTURE EARNINGS

5ABS- Future Hsfn! nf,t frqm !,auiS*[Hsteyr, Hpsqital."H oldines 2.,O2O R 2,019 R

2,42L

Total

VAT

19,200,000.00

2L,L2O,000.00

23,232,000.00

PAYE

13,944,000.00

15,338,4m.00

L6,872,240.00

OTHER

L,872,828,00

2,060,1,10.00

22,66L,218.00

R 53,552,000.00 R 46,r54,640.00 R 25,594,156.00 36 660 105.26

CIT

164 533.45

L2 565 573.89

12 929 997.92

46 181 361.45

51 084 083.89

75 695

11"

455.92

L72 960 901.2

A^- lft

Annexure C - Business Rescue Plan dated 19 Nov 2018 - Page 50 of 87

PART D -AD MINISTRATIVEAND GENERAL PR

SIONS

33-.

PROOF OF CLAIMS

31.1

The creditors listed in annexure "BRPS" hereto are regarded by the BRP as creditors in the amounts listed in the annexure and having the voting interests listed in the annexure;

3L.2

The claims of creditors that are not reflected on annexure "BRPS" are deemed

to have been rejected by the BRP, in which event such creditors are required

to lodge their claims for proof with the BRP at 739 Blesbok Street, Rietfontein A/H, Mooikloof, Pretoria EaSt, or via e-mail to: sarie(@enprok.co.za within a period of ten (10) business days after the publication date;

31-.3

.BRPS", all creditors are required Save for those creditors listed on annexure

to prove their claims to the satisfaction of the BRP as if the BRP was an officer presiding at a meeting of creditors as provided for in the lnsolvency Act and

all claims are to be supported by affidavits which are to contain such information and are to be accompanied by such supporting documents as are required for proving claims in accordance with the lnsolvency Act;

3L4

The BRP decision in respect of a claim shall be subiect to review by a Court

upon application by any parly affected person thereby, provided that any such review proceedings shall be brought within fourteen (14) business days

of receipt of written advice of such decision from the BRP. Should the affected person failto make such an application, he shall be deemed to have

r* fr ./

Annexure C - Business Rescue Plan dated 19 Nov 2018 - Page 51 of 87

waived his right to dispute such decision and shall thereafter be debarred from bringing any such review proceedings and shallto the extent to which his claim or security or preference is so rejected or reduced, be deemed to have abandoned his right to any dividend under this Plan or any amendment

thereto.

31.5

Notwithstanding the provisions

of clause 29.4 above, the

BRP and the

creditor/claimant may agree that the dispute relating to the claim may be resolved by arbitration, in which event the following shall apply:

31.5.1

The arbitration shall take place at a venue determined in the sole discretion of the BRP;

31.5.2

The arbitration shall be presided over by a senior counsel of at least ten years standing practicing at the Pretoria Bar;

31 5.3

The arbitrator shall be appointed by agreernent between the BRP and the

creditorlclaimant. ln the event nf the parties failing

to reach agreement, the arbitrator shall be appCIinted by the Chairman of the Pretoria Bar of Advocates;

3r_.5 4

The arbitration lnlill be conducted in terms of the Commercial Rules of the Arbitration Foundation of South Africo, alternatively

in terrns of such Rules as the BRP and the creditor/clairnant may agree on;

vp /

Annexure C - Business Rescue Plan dated 19 Nov 2018 - Page52 of 87

52 31-,5,5

The BRp and the creditorlclairnant may take the creditors award on review within 20 days after the arbitrator has delivered his award.

32. DISP

32.L

CI.,AIMS

The BRP reserves the right to dispute any claim up until the implementation date;

32.2

The BRP may at any stage during the business rescue proceedings accept any disputed claim, which claim shallthen be dealt with in accordance with the terms of this Plan or any amendment thereto;

32.3

Should a Creditor dispute the claim of any other creditor, the BRP shall call

for wriften representations in respect of such dispute from the creditor disputing the claim and the creditor whose claim is disputed;

32.4

Within 5 (five) business days of receipt of the written representations, the BRP shall provide a written decision in respect of the dispute;

32"5

The BRP decision in respect of the dispute shall be subject to review by a Court upon application by any party affected thereby, provided that any such

review proceedings shall be brought within 14 (fourteen) business days of receipt of the BRP's written decision;

14 n /

nA \

Annexure C - Business Rescue Plan dated 19 Nov 20L8 - Page 53 of 87

s3 32.6

Notwithstanding the provisions

of clause 29.4 above, the

BRP and the

creditors in question may agree that the dispute relating to the claim may be resolved by arbitration, in which event the provisions of clause 27.5 above shall apply.

33.

CONTINGENT CTAIMS

Upon the adoption of this Plan, any contingent claims shall be deemed to be a disputed claim and the rights of Louis Pasteur Hospital Holdings (Pty) Ltd to dispute such contingent

claims remain unaffected by the adoption of this Plan or any amendment thereto, except

to the extent that such disputed contingent claim either becomes settled between the creditor concerned and the BRP or determined or liquidated in any legal forum in which event such creditor will be entitled to payment in terms of this Plan or any amendment thereto.

34,

FAILURE TO PROVE CI-AIMS AND LATE PROOF OF CI-AIMS

34.r

Creditors whose claims are not recorded on annexure "BRPS" and creditors

who are othenarise obliged to prove their claims as provided for in this Plan and who have received proper notice of:

34.1.1

The subrnission of this Plan; and

rq ,4

Annexure C - Business Rescue Plan dated 19 Nov 2018 -

Pag

e 54 of 87

54 34.1..2

Meetings as required in terms of Section 151 of the Act, and

who fail to subrnit their claims within the period stipulated

this Plan shall be deemed to have abandoned their right to participate in any distribution Under this Plan or any arnendrnent thereto;

34,2

Creditors alleging not to have been given proper notice of:

34.2.1

The submission of this Plan; and

34.2.2

Meetings as required in terms of Section 15L of the Act;

at the outset shall be entitled to prove their claims in the manner stipulated in

clause 29.2 above within 30 (thirty) calendar days after receiving proper notice of this Plan and any meeting referred to in Section 151 of the Act, failing

which they shall be deemed to have abandoned their right to participate in any distribution under this Plan or any amendment thereto;

34.3

lf a claim is proved after the payment of distributions by the BRP's in terms of

this Plan or any amendment thereof or if the monies which the BRP's have on hand for distribution are not sufficient to pay a dividend in respect of a claim

that has been proved late as contemplated herein, such creditor shall lose the right to share in dividends paid out in accounts predating the proof of his claim;

34.4

Louis Pasteur Hospital Holdings (Pty) Ltd shall have the right to recover from any creditor who has received payment under this Plan or any amendment thereto priorto the proof of a late claim, the amount by which the dividend to

{yo^A

Annexure C - Business Rescue Plan dated 19 Nov 20L8 - Page 55 of 87

55 such creditor exceeds the amount which should have been paid to him had

the late claim been proved timeously;

34.5

A certificate under the hand of the BRP as to the amount so refundable by the

creditor referred to in clause 2!.L above shall be prima facie prool of the refundable amount in any proceedings instituted against such creditor for recovery thereof.

34.6

SARS's CLAIM

34.6.1

At the commencernent date, Louis Pasteur Hospital Holdings

(Pty) Ltd was indebted to SARS in the sum of approximately R76 000 000,00 which arnount continues to increase as a result

of the interest accruing thereon at the prirne lending

rate

charged by SARS, calculated daily and compounded monthly;

34,6.2

As at 13 June 2018, Louis Pasteur Hospital Holdings (Pty) Ltd

was indebted to SARS in the sum of approximately R76 000 000.00;

34.6.3

SARS holds no security for its clairn;

34.6.4

At the commencernent date, Louis Pasteur Hospital Holdings (pty) Ltd was indebted to its primary creditor, narnely SARS, in a sum of approxirnately R76 000 000,00 and Bonitas in a sum of

approximatety

RBB 000

000,00. The BRP has now received a

further claim in the arnount of R1 8L6 422,67 by SARS for the VAT for the period ending May 2018 that was not paid by LPHH

A -s

4,4

100

Annexure C - Business Rescue Plan dated 19 Nov 20LB - Page56 of 87

The BRP and SARS have a difference of opinion as to whether

this claim is a pre-business rescue claim or a post-business rescue clairn. The BRP proposes that this claim be treated separatoly from the claims of the other creditors.

34.7

BONITAS CLAIM

34.7.L

The Louis Pasteur Hospital Holdings (Pty) Ltd lost both cases in

the High Court in Pretoria and the Supreme Court of Appeal in Bloemfontein,

34.7.2

The effect rhereof is that Louis Pasteur Hospital Holdings (Pty) t

Ltd owes Bonitas an amount of RBB 000 000 being capital and

interest. Bonitas hold no security for its claim.

34.7.3

Louis pasreur Hospital Holdings (Pty) Ltd has filed

application for Leave to Appeal to the Constitutional Court.

947.4

The application for Leave to Appeal is still pending

34,7.5

Until the Constitutional Court has rnade its ruling Bonitas remains a creditor that has to be paid.

34.7.6

Cornpanies frequently enter

into complicated financial

arrangements in order to raise funds, either by borrowing (deb$ or through issuing shares (equity). Debt can be either secured

or unsecured. Where significant

arnounts

of money are

borrowed from third party financiers, those financiers will

p A,A /\

Annexure C - Business Rescue Plan dated 19 Nov 20L8 - Page57 of 87

101 57

typically require security for the funds. The type of security provided affects the financiers' risk, and consequently the size of funds advanced aS well as the payment terrns'

34.7 7

As I will explain in more detail, below the debt in this mafier was

secured by rneans of a cession-

34.7.8

ln this matter, the dispute between Bonitas and LPHH concerns

the terms of the cession. The terms of the cession determine

the rights of the proceeds of the two Sanlarn investments policies, which were paid to IPHH on rnaturity. ln particular, the

party's disputes whether the cession was an out-and-out cession (as contended by LPHH) or a cession in securitatem

debiti, An out-and-out cession is rnade to affect an alienation

of a right, and effects a complete transfer of the right to the cessionary. A cessio n in securitatem debitiresembles a pledge, and the cedent is not wholly divested of an interest in the asset he provided a$ security to the cessionary, because,

notwithstanding the cessiotl, the cedent retains what has been described as a reversionary interest.

34 7.9

Debt financing arrangements are almost invariably reduced to

writing, as it is necessary for the terms of the often-complex arrangements to be clear and unequivocal. Third parties may rely on the express written terms of the agreernent, in order to determine the strength of the security, their risk and so forth.

1.4 1+

102

Annexure C - Business Rescue Plan dated 19 Nov 2018 - Page 58 of 87

34.7.L0

The High Court, in effectively foud that the cession wa$ a cession in securitatem debiti.

34.7.\1

The SCA has upheld the decision of the High Court. The High Court Judgment is attached marked as "BRPL7".

34.8

RUBTCON'S CLAIM AND LQU1S PASTEUR EMPOWERMENT CONSORTIUM

34.8.1

LPH sold of its loan units in LPHH

to Rubicon Group for

arnount of R233 280 000,00.

34.8.2

LPHH sold

of its loan units in

LPHH

Louis Pasteur

Empowerrnent Consortium for a substantial amount,

34.8.3

THE DEED OF SALE OF DEBENTURES

34.8.2.L

Section 43 of the Companies Act provides for "debt instruments", which in terms of the old L973 Act were inter alia referred to as debentures.

34.82.2

A debt instrument is defined in section 43(1)(a) as

to include any securities other than the shares of a company irrespective of whether or not issued in terms of a security document such as a trust deed, but does not include prornissory notes and loans.

34.8.2.3

Because the word "debenture" is not defined in the Cornpanies Act, a debenture as defined in the

cornmon law may be issued by the company in addition to a debt instrument and the provisions

A4 -fu

103

Annexure C - Business Rescue Plan dated L9 Nov 20L8 - Page59 of 87

of section 43 should then apply to such a debentu re.

34.8.2.4

The meaning of a debenture is imprecise, but it

has been interpreted to mean any document however it may be described, ?ffd whatever form

it may take, which creates or acknowledges in the company to another for monies advanced or to be advanced to the

indebtedness company.

34.8.2,5

A debenture has some aspect and type of loan as

element or as causa for the debt, and it may be argued that it is not a debt instrurnent as rneant in section 43. lt is, however, argued by acadernic

writers that it does constitute a debt instrument. 34.8.2.6

It is also irnportant to note that a debentu re can

also be

a credit

agreement

in terms of

the

National credit Act, Nr 34 of 2005. ln this regard,

the company should be considered as

the

consumer (borrower). lf the consumer is a juristic person, the National Credit Act does not apply if the asset value or turnover of the juristic person is in excess of RL million. Although I have not been

provided with information in this regard, there should be no doubt that LPH has an asset value

of rnore than RL million and also a turnover of more than R1 million. 34.8,2.7

Furthermore, the National Credit Act will also not apply to credit agreernents where parties are not deali ng at arrns-length,

f\/L re :,

-'A

104

Annexure C - Business Rescue Plan dated 19 Nov 2018 - Page 60 of 87

60 34.8.2.8

A shareholder's loan for instance is a transaction

that is not a deal at arms-length and that

excluded from the National Credit Act. ln rny view

the debenture transaction under discussion

also not an arrns-length deal, because of inter alia the similarity of directors.

34.8.2.9

Section 43(2) of the Companies Act provides that

the board of a company rnay authortse the company to issue a secured or unsecured debt

instrument at any tirne except to the extent provided otherwise by the mernorandum of incorporation and must determine whether each such debt instrument is secured or unsecured.

34.8,2.1_0

Section 43(3) provides that a debt instrument issued by a company may for instance grant special privileges.

34.8.2.1L

It is therefore clear that the board of directors of a

cornpany may authorise the issue

of a

debt

instrurnent such as a debenture. 34.8.2.12

The following is to be noted in respect of the structure in terms of the agreement:

34.8.2,L2.1,

L.So/o

interest on the value of the 600

debentures must be paid out in cash every year;

34.8.2.L2.2 the net effect therefore over a long period of time is a transfer of value per annurn from LPH to LPHH;

f/vP -/

)

105

Annexure C - Business Rescue Plan dated 19 Nov 2018 - Page 6I of 87

6l34.8,2.L2.3

LPH on the other hand in respect of

the loan account may subordinate the claim against LPHH to improve its balance sheet;

34,8.2.L2.4

therefore, LPH obtains capital growth on the loan account and because the loan can be

subordinated in LPHH, it would not

lead

to any insolvency

issues or

other issues in respect of LPHH: 34,8.2.L2.5

the intention is to create a

net

rnovement of wealth apparently from LPH to LPHH without it being done in terrns of a straight fonruard loan;

34.8.2.12.6

the interest rate on the

loan

account in respect of the amount owed by LPHH to LPH is 8%o;

34.8.2.L2.7 on the other hand the interest rate on the debentu res is 970;

34.8.2.L2.8

there is therefore a transfer of wealth from LPH to LPHH in this regard.

34.8.2.r.2.9

the loan account shall be convertible at the end of 15 years to

in LPHH, which will require a special convertible debentures

resolution and the approval of the board of directors;

./ )

$ ('^40

106

Annexure C - Business Rescue Plan dated 19 Nov 2018 - Page 62 of 87

62 34.8.2.r2.L0

if the approvals are not obtained, the loan account shall be redeernable at the deerned value on the conversion date or such later

date agreed to in writing between LPHH and LPH:

34 8.2.r2.1L

the LPH

debentu

re shall

convertible to LPH preferent shares at the option of LPHH or any holder

thereof at any time after the

15"

anniversary of the effective, date by

giving written notice to LPH such shares shall be unsecured and earn

a return equal to 9o/o per annum, and shall be transferable and assignable; 34.8.2.L2.L2

h it may be converted it is not perernptory and it is at the option of the holder of the LPH althoug

debentures namely LPHH or any other holder at the time.

34.8.2.J-3

The whole transaction must therefore analysed, and

appears that the following

disconcerting aspects must be considered: 34.8,2.13.1

there is no legal causafor either the

issue of the debentures or the creation of the loan account; 34.8.2.L3.2

the 3..5o/o income interest that

payable on the debentures per year

is paid in cash by LPH to

LPHH

every year;

f-,\-fr \

{

107

Annexure C - Business Rescue Plan dated 19 N ov 2018 - Page 63 of 87

63 34.8,2.J-3.3

the wealth transfer therefor lies in the amounts in cash Paid every year by LPH to LPHH in resPect of the debentures;

34.8.2,13.4

a causa is therefore artificiallY rposes of transfer of

created for

the

on the value of

L.SYo

the

debentures every year, which did not exist before;

34.8.2 13.5

this creates a transfer of wealth from LPH to LPHH on the basis of the afiificially created legal causa narnely the issue of the debentures;

34.8"2.13.6

a conversion of the debentures to preference shares after 15 Years would have the effect that LPHH obtains preference shares in LPH in return forthe transfer of wealth frorn LPH

34.8.?.r4

to LPHH every month.

There is therefore an enrichrnent of at least l-% of

the value of the debentures between LPH and LPHH, which may lead to LPHH owning shares in

LPH after 15 years.

34.8.2.L5

LpH therefore contributes financially to LpH H obtaining shares in LPH, should the debentures be converted.

/Vfr \

108

Annexure C - Business Rescue Plan dated 19 Nov 2018 - Page 64 of 87

54 34,8.2.16

Such financial assistance for purposes of the subscription of an option (to convert the debentures into shares), may not be done save in

the event of a special resolution of shareholders as referred to in sections 44(2) and (3) of the Act. 34,8,?,T7

It appears that the ultimate goal of the transaction

is to transfer wealth from LPH to LPHH without

any causa having existed for it, before

the

debentures were issued and the transaction was entered into, which may eventually result in LPHH

owning preferent shares in LPH. 34.8.21-8

This aspect rnay be arguable in the sense that the

main object may not be the acquisition of shares

by LPHH, but rather the transfer of wealth for no causa or reason. ln that regard the transaction

will not fall foul of section 44 of the Companies

Act, regarding the provision of assistance

financial

in the acquisition of shares by a

company. 34.8.2.19

It rnust be determined what the direct object of the transaction was and whether it is equivalent

or sufficiently similar to the prohibited purpose. The fact that the giving of financial assistance was incidental to the purchase or obtaining of shares, would not justify a conclusion that the prohibition has been contravened.

ruo {A

109

Annexure C - Business Rescue Plan dated 19 Nov 20L8 - Page 65 of 87

65 34.8.2.20

Although I do not have any documentation indicating the purpose of the issue of the debentures and of the transaction, it appears to me that the main purpose of the transaction is to

transfer wealth, from one company to another, through creating an apparently legal causa that did not exist before. 34.8.2.2L

lf that is so, it will be arguable whether the transaction is void in terms of section 44 of Cornpanies Act.

34.8.2.22

It is important to note that 7.5a/o of the interest on

the debentures would be regarded as capital, which would mean that it is not incurred in the production of income and for purposes of trade. Such interest of a capital nature would therefore not be regarded as incorne by LPHH, but cannot be deducted as an expense by LPH. No income tax will be payable on the

7.5o/0,

but possibly only

on the L.5% paid in cash every year by LPH to LPHH.

34.82.23

The

L.So/o

interest payable per year in cash by LPH

to LPHH rnay be taxable as income by LPHH and

may be deducted by LPH as an

expense

depending on whether, and for what purposâ&#x201A;Ź, the debentu res were issued.

34.8.2.24

lnterest may

in certain circumstances

regarded as capital and not income,

110

Annexure C - Business Rescue Plan dated L9 Nov 20T8 - Page 66 of 87

66 34.8.2.25

Especially if the debentures are to be converted in shares, it would rnean that the interest paid was

for purposes of obtaining shares and not to bring in any income and therefore the interest would be

of a capital nature. ln that event it would not be taxable as incorne by LPHH.

34.8.2,26

lf the purpose of the transaction is simply to transfer wealth between LPH and LPHH, at least

the

1.5Y0

interest component that is regarded as

income and not as capital, would constitute a transfer of wealth without any causa whatsoever, and may be taxable as incorne. 34.8.2.27

Such transfer of wealth with no real cause in turn

would incur donations tax in terms of section 54 of the lncome Tax Act, Nr 58 of L962. Section 54(1) defines a donation to mean any gratuitous

disposal

of property including any gratu itous

waiver or renunciation of a right. 34.8.2.28

The payment of donations tax on the calculated

transfer

of wealth, at the very least the

difference between the

9o/o

LVo

interest payable on

the debentures and the 8% interest payable on the loan account, would constitute a donation. 34.8.2.29

However, if the whole nature of the transaction

and the changes to be made after 1-5 years is taken into account, the transfer of wealth really constltutes the 7 .\Vo capital interest as well as the 1.5V0

incorne interest on the debentures from LPH

to LPHH, which would contribute to the value of the shares to be created as a result of the conversion of the debentures into shares after

rA d

Annexure C - Business Rescue Plan dated 19 Nov 2018 - Page 67 of 87

111 67

IlVo. Value and wealth will therefore be transferred over a lS-year period resulting into preference shares in LPH.

34.8.2.30

Presumably LPHH will pay income tax on the 1,,5Vo income interest, but no tax will be payable

in respect of the transfer of wealth of the 9o/o interest on the debentures, which are to be converted to shares eventually, especially in the

light of the fact that

7.5o/o

of that interest is to be

regarded as capital and not incorne. 34.8.2 31

Apart from the transfer of wealth referred to above, the transaction also has a tax benefit in the

sense of avoiding paying donations tax on the value of the transfer of wealth in respect of the debentures, in the form of 9% on the value of the

debentures per year, after

7.So/a

interest is also

capitalised every year. 34.8.2.32

Section 54 of the lncome Tax Act provides that, subject to the provisions of section 56, it shall be

paid on the value of any property disposed, whether directly or indirectly, under any donation by any resident.

34.8.2.33

A donation is made indirectly where the cost of donation is born by the ultimate donor and the ultimate donor must suffer a dirninution in his/her estate to the extent of the donation. That exactly the case in this matter.

34.8.2.34

ln terrns of section 64 of the lncome Tax Act the rate of donations tzu< chargeable under section 54

in respect of the value of any property disposed of under a donation, shall be

20o/o

of such value.

f\'l)

112

Annexure C - Business Rescue Plan dated L9 Nov 20L8 - Page 68 of 87

34 8.2.3s

ln rny view therefore, the transaction has been structured to give effect to a donation, because there was no legal causa in existence for the transfer of the interest on the debentures before the creation of the agreement, and the total of the transfer eventually in the form of interest paid as well as the value added to the shares, into which

the debentures could be converted eventually, constitutes a gratuitous disposal of property by LPH to LPHH.

34,8.2.36

As I have indicated above, only L.So/o of the 90/o interest could possibly attract income tax to be payable by LPHH. That will be much less than the 20o/o

payable on the total amount transferred by

way of interest from LPH to LPHH every year and after 15 years, with

7.5o/o

being capitalised every

year.

34 8.2.37

Therefore, the transaction is a simple donation, if

it is stripped from all its difficult provisions and conditions by LPH to LPHH, spread over 15 years. 34.8.2.38

It is a well-known principle of our law that courts

of law will not be deceived by the form of

transaction. They will rend aside the veil in which the transaction is wrapped and examine its true nature and substance.

$p 1\

Annexure C - Business Rescue Plan dated 19 Nov 2018 - Page 69 of 87

113 69

34.8.2.39

The cornmercial sense of a transaction must be deterrnined narnely its real substance and purpo$e, lf the purpose of a transaction is only to achieve an object that allows for the evasion of tax or of a peremptory law, then it will be regarded as simulated. The mere fact that the parties

perform in terms of the contract does not show that it is not simulated,

34.8.2.40

$uch a simulated transaction will be invalid if it is determined to be in fraudem legis and designed

to avoid certain consequences of the true transaction. lt will be unenforceable, however only if the true nature of the relationship is one that the law forbids.

34.8.2.4L

Whether a particular transaction is simulated, is in each case a question of fact and involves an

examination of the transaction as a whole, including it contexts and any features unusual in relation to the form given to it, and the manner in which the parties intend to perform it. 34,8.2.42

It it is determined that one of the purposes of the

transaction is to avoid paying donations tax in respect of the wealth transfer to occur over a period of 15 years, it will be a transaction that is

intended

to avold tax and a court will in all

probability declare it as void and invalid.

34"8.2.43

A further aspect of concern is the conversion of LPH debentures to LPH preferent shares at the option of LPHH or the holder of the LPH debentures at any tirne after the 15* anniversary of the effective date,

r\\0

Annexure C - Business Rescue Plan dated 19 Nov 20L8 - Page70 of 87

11 70

34.8.2.44

Such LPH preferent shares will have to be issued in terms of section 38 at that ttrne and it will have

to cornply with section 39(2) of the Companies Act with reference to the right of first refusal of each shareholder. The shareholding in LPH may

be completely different at that time than it

today. 34.8.2,45

It will also be subject to a special

resolution

required in terms of section 41 when it is issued. 34.8.2.46

At this point in time, there has been no special resolution authorising such conversion by LPH and there has been no decision of the board of directors of LPH to issue such shares at that time, if LPHH or the holder would decide to convert the

debentures into shares.

34.8.2.47

FURTHER GROUNDS FOR INVALIDITY:

Any conversion of the debentures to preference shares after 15 years would have the effect that LPHH would obtain preference shares in LPH, against return for the transfer of wealth from LPH to LPHH every month, 34.8.2.48

There is therefore an enrichment of at least l-70 of

the value of the debentures which may lead to LPHH owning shares in LPH after 15 years. LPH therefore contributes financially to LPHH

obtaining shares in LPH should the debentures be converted eventually,

Annexure C - Business Rescue Plan dated 19 Nov 2018 - PageTI of 87

115 JL

34.S"2 49

That would constitute financial assistance fnr purpsses of the subscription of an option to

c*nvert the debentures into shares, and will ther*fnre in my view fall under the provisions of $*f,tion 44 of the Companies Act No .71of 2008, 34.8.?.5fi

Section 44t2) provides that, except to the extent

that the

mernor&.ndu

rn of incorporation of

s*rnpany provides otherwise, the board rnay authoriss a corrtpany to provide financial assistance by way of a loan, guarantee, the provisimn of security, or otherwise, to any person for ths purpo$e nf or in connection with the subscriptian of any option or any securities issued, sr to be issued by the company, whether

related sr interrelated company, or for the purchase of eny sscurities of the cornpany or a

related or interrelated company, subject to the provisions of sections 44(3) and 44(4). 34.8.2.51"

A haard mey nnt authorise such financial assistancs unless certain requirements as laid dnwn in section aa(3) are cornplied with. Section 44(3){bxl} provides that the board nrusr be satisfied that imrnediately after providing rhe financial assistance the cornpany wsuld satisfy

the smlvency and liquidity tes!, and the terms under which the financial assistance i$ proposed

to be given are fair and rs&sonahl* to the cornpany,

r*^/

Annexure C - Business Rescue Plan dated L9 Nov 20L8 - Page72 of 87

116 72

34.8.2.32

The provision of the financial assistance in this case will be the creation of the loan account in respect of the debentures and the yearly income

interest payable on the debentures per year in cash by LPH to LPHH. LPH therefore contributes

financially

LPHH eventually becorning the

shareholder in LPH.

34.8.2.53 34.8.3

The BRP has rejected these claims.

Rubicon's claim R9 080 000 000. This is a new clairn that Rubicon (pharmacy) has lodged for

medicine that was purchased form LPHH which has never

been paid and forrns part of pre-business corn mencernent

34,8.4

c red

rescue

itor.

FCPO Limited clairn R9g 084 L26,00.

The business rescue practitioner has rejected your clients clairn for the reasons set out in the report of ACT Solutions, a copy of ACT Solutions report is attached as annexure "BRPL6"

34.9

LOUIS PASTEUR HOSPTTAL HOLDTNGS (PTr) LTD MATERIAL ASSETS

34.S.J_

Louis Pasteur Hospital Holdings (Pty) Ltd has assets and are set

out in annexure "BRP8" here to;

fu'ft A

Annexure C - Business Rescue Plan dated Lg Nov 20L8 - Page73 of 87

117 73

35.

DEBENTURE AGREEMENT

35.1

On27 May 20L6 a deed of sale of debentures was entered into between Louis Pasteur Holdings (Pty) Ltd (LPH) and LPHH.

35.2

ln terms of that agreement LPHH subscribed for and agreed to purchase 6 000 (six thousand) debentures

of R100 000.00 each at par value thereof in

LPH.

3s3

The LPH debenture shall be unsecured, transferable, cumulative, convertible LPH debentures having a total return of 9Vo, divided into 1.5% income and 7,5o/o

capital growth per annum. The LPH debenture shall be convertible to

LPH preference shares at the option of the holder of the LPH debentures at any time after 15' anniversary of the effective date and shall be unsecured but be transferable and assignable.

35.4

The subscription price is the sum of R600 million for the payment of 6000 debentures of R100 000.00 each and the effective date of the agreement was agreed to be 30 June 2016.

35.5

The purchase consideration would be paid by LPHH by way of crediting the loan account of LPH in LPHH by the amount of the purchase price, which value of the loan account shall increase by

8o/o

capital growth per annum.

The loan account shall be convertible to LPHH debentures in LPHH at the end of L5 years from the effective date. fhe loan accounts are to be secured by way of a cession in securitate debitiover all existing assets of LPHH and

/or its subsidiaries.

tM^P

Annexure C - Business Rescue Plan dated L9 Nov 2018 - Page74 of 87

118 74

35.6

Section 43 of the Companies Act provides for "debt instruments", which in terms of the old 1973 Act were inter aliareferred to as debentures.

35.7

A debt instrument is defined in section a3(1Xa) as to include any securities other than the shares of a company irrespective of whether or not issued in

terms of a security document such as a trust deed but does not include promissory notes and loans.

35.8

Because the word "debenture" is not defined in the Companies Act, a debenture as defined in the common law may be issued by the company in

addition to a debt instrument and the provisions of section 43 should then apply to such debenture.

359

The meaning of a debenture is imprecise, but it has been interpreted to mean any document however it may be described, and whatever frorn it may take,

which creates or acknowledges indebtedness in the company to another for monies advanced or to be advanced to the company.

35.1"0

A debenture has some aspect and type of loan as elernent or as causator

the debt, and it may be argued that it is not a debt instrument as meant in section 43. lt is, however, argued by academic writers that it does constitute a debt instrument.

35.11

It is also important to note that a debenture can also be a credit agreement in terms of the National Credit Act, Nr 34 of 2005. ln this regard, the company

should be considered as the consumer (borrower). lf the consumer is a juristic person, the National Credit Act does not apply if the asset value or

rftR \'i:

Annexure C - Business Rescue Plan dated L9 Nov 2018 - Page75 of 87

119 75

turnover of the juristic person is in excess of RL million. Although I have not been provided with information in this regard, there should be no doubt that LPH has an asset value of more than R1 million and also a turnover of more

than Rl million.

35.12

Furthermore the National Credit Act will also not apply to credit agreements

where parties are not dealing at arms-length.

3s.13

A shareholder's loan for instance is a transaction that is not a deal at arms-

length and that is excluded frorn the National Credit

Act. ln my view the

debenture transaction under discussion is also not an arms-length deal, because of inter aliathe similarity of the directors.

35.14

Section 43(2) of the Companies Act provides that the board of a company rnay authorise the companyto issue a secured or unsecured debt instrument

at any time except to the extent provided otherurise by the memorandurn of

incorporation and must determine whether each such debt instrument is secured or unsecured.

35.r"5

Section 43(3) provides that a debt instrument issued by a company may for instance grant special privileges.

35.16

It is therefore clear that the board of directors of a company may authorise

the issue of a debt instrument.

35.17

The following is to be noted in respect of the structure in terrns of the agreement:

120

Annexure C - Business Rescue Plan dated 19 Nov 2018 - Page76 of 87

76 35.1-8

1.5%o

interest on the value of the 600 debentures must be paid out in cash

every year;

35.19

the net effect therefore over a long period of time is a transfer of value per annum from LPH to LPHH:

35 20

LPH on the other hand in respect of the loan account may subordinate the

claim against LPHH to improve the balance sheet of LPHH;

35.21

therefore LPH obtains capital groMh on the loan account and because the loan can be subordinated in LPHH, it would not lead to any insolvency issues or other issues in respect of LPHH;

35.22

the intention is to create a net movement of wealth apparently from LPH to LPHH without it being done in terms of a straight fonruard loan;

35 23

the interest rate on the loan account in respect of the amount owed by LPHH

to LPH is 8olo;

35.24

on the other hand the interest rate on the debentures is

35.25

there is therefore a transfer of wealth from LPH to LPHH in this regard;

35.26

the loan account shall be convertible at the end o{ 15 years to convertible

9026;

debentures in LPHH;

35.27

The whole transaction must therefore be analyzed

[I'{

ft .A

121

Annexure C - Business Rescue Plan dated 19 Nov 2018 - Page77 of 87

35.27.0I

the

1.59/o

income interest that is payable on the debentures per

year is paid in cash by LPH to LPHH per year;

35.27.02

the wealth transfer therefore lies in the arnounts in cash paid every year by LPH to LPHH in respect of the debentures;

35 27 03

The BRP is of the view that the agreement is of benefit to LPHH provided that the interest is payable in cash by LPH which will have a po$itive impact on the cashflow of LPHH.

36.

GENERAL DUTIES AND POWERS OF THE BRP'S

36.1

The BRP shall have all those powers as conternplxed in law;

36.2

The BRP shall be entitled to deal with all and any claims not specifically provided for in this Plan in accordance with common law and all applicable statutory provisions.

363

ACTIONS TAKEN BYTHE BU$INEsS RESCUE PRACTITIONER

36.3. L

When the BRP took control of the Business, the rental with City

Property was

in arrears in the amount of approxirnately

R2 800 000.00, This

has been rectified and the rental has now

been paid up to date.

fl."/

4,,$

122

Annexure C - Business Rescue Plan dated 19 Nov 2018 - Page78 of 87

?B 36.3.2

Various agreernents with the Unions have not previously been finalised and have now been finalised and signed.

36.3.3

At night time the hospital may rnake use of a company called

Allnred to supply the hospital with specialized nursing staff during the night. Their account was in arrears in a $ubstantial

arnount. An urgent arrangement has been concluded with them and they are satisfied with the solution. The nurnber of temporary staff have been reduced substantially from the

previous year (expense approximately R22 000 000) to approxirnately R1B 000 000 for the current year.

36.3.4

The LPHH has for some years not paid VAT and PAYE to SARS

36.3.4.1

ln terms of section

LAL

of the cornpany I have

to file a repoft to deal with this aspect and other matters and

I shall deal with the SARS

non-payment in that report.

36.3.5

By L0 November 2018 I would have paid an amount of approxirnately Rg 338 078,09 to SARS in VAT and LBS and will continue to do so.

36.3.6

A moratoriurn was placed on the appointment of staff by previous management. The effect of this was that the account

of Allmed who provides us with nurses, was way out

proportion.

rl'fr

123

Annexure C - Business Rescue Plan dated Lg Nov 2018 - Page79 of 87

79 36.3.7

I have lifted the moratorium and there has been a huge saving

on the arnount that we had.

36.3.8

have had meetings with all the staff and their unions to explain

to thern the irnplications of Business Rescue. They are all very pleased.

36.3.9

The acting hospital manager's previous position was financial accou ntant

36.3.9,L

It becarne clear to me that he was not qualified for the position and after negotiations with him he

was re-deployed to another company in the group. The acting hospital manager did not prepare adequate budgets be

incorne and

expenses or capital budgets.

36.3,9.2

have appointed a chartered accountant as

finance manager with 10 years' experience

financial and systems.

36.3.9.3

He as$umed his duties on 20 August 2018.

3fi.3.9.4

A chartered accountant has been recruited and employed as Finance Manager on the

20^

August

20r.8.

l^fr

124

Annexure C - Business Rescue Plan dated 19 Nov 20lB - Page 80 of 87

80 36.3.1,0

The intention is to in the future appoint a full-time hospital manager.

36.3.11_

The BRP has arranged finance as post commencernent finance for the following equipment:

36.3.1L,J. 2xAnesthetic Machines;

36.3.11.2

Arthroscopic equipment:

36.3"L1.3

Other smaller necessities for use in theatres;

36,3.1!.4

Pediatric equipment

36 3.1-l-.5

e.g . 4 x

electric warmers;

Psychiatric beds have been purchased

and are already in use in the ward;

36.3.11.6

A technical audit has been cornpleted on all theatre and ward equiprnent

ascertain

their life expectancy and usefulness, which

a detailed capital expenditure will be

compiled for

36,3.12

from

L year, 3 years

and 5 years.

The BRP has compiled a list of doctors that do not use the hospital facilities and has approached thern via the marketing manager to persuade them to use our facilities.

36.3.13

The BRP has since his appointment appointed approved the admittance of further 20 specialists to the Hospital.

F'p

125

Annexure C - Business Rescue Plan dated 19 Nov 2018 - Page 81 of 87

B1-

36.3.3,4

The BRP has rnet all the doctors and explained the Business Rescue proce$s to them"

36.3.15

The BRp has filed all the returns with SARS and all the outstanding returns due are now up to date.

SARS:lgtlrr$_ HarniJrgs from Louis Pasteur HospitFl Holdin#s R 2,020 2,Or9 R

2,O2r

Total

23,232,000.00

VAT

L9,200,000.00

2L,L2O,000.00

PAYE

L3,944,000.00

1,5,338,400,00

r5,872,240.00

L,972,828.00

2,060,110,00

22,661,218.00

R 63,552,000.00 R 46,154,640.00 R 26,594,156.00

L2929 997.92

35 560 105.26

75 695 455.92

r72 960 901.2

OTHER

crr

LL L64 533.45

12 565 573.89

46 181 361.45

51.

36.3.1_6

084 083.89

A copy of the 2016 Annual Financial Statements is attached as

annexure'.BRPL.

36.3 L7

All hospital vehicles are currently in working order (2 were broken on our arrival) and patients are being transported from

surrounding town$hip clinics to the hospital for treatment.

36.3 1B

We are currently

investigating

the

establishment

Oncology Departrnent.

36.3.1-9

Several upgrades have taken place in the wards and theatres.

3S.3.20

An intense rnarketing campaign has been initiated with the doctors utilizing the hospital facilities.

-fr "tA

Annexure C - Business Rescue Plan dated

126

Nov 2018 - Page82 of 87

82 36.3"20.1"

New specialists (20) have been canvassed and appointed to join the hospital;

3S 3.20.2

A concerted effofi has been embarked on

existing doctors on the premises to support the

hospital by rneans

of referring patients and

providing incorne by means of procedures and occupancy.

36.3"20.3

Performance clauses have been included in the

agreernents with the new doctors which if not rnet after three months will result in the doctor vacating his consulting roorns to rnake way for someone who can meet the targets agreed upon.

36.3,20.4

Existing doctors not meeting the turnover target

agreed upon are given three months to cornply, where after if not met will vacate the premises.

36 3.2L

The BRP has requested Nedbank to postpone the repayment of the overdraft facility until the end of February 20L9. I attach a

copy of the letter of Nedbank consenting to the BRP's request subject to the ratification of this post commencement finance agreement,

a copy is attached as annexure "8RP18".

The

creditors are hereby requested to ratify this agreement and should the business rescue plan be adopted the consequence

will be that the PCF agreernent has been ratified by the creditors.

w'9

<.4

127

Annexure C - Business Rescue Plan dated 19 Nov 2018 - Page 83 of 87

36.3.22

Annual financial staternents since 2013 financial year have been restated to bring them in line with agreements not valid and other agreements cancelled.

36.3.23

As soon as the partner of the auditing firm returns from leave

the 2AI7 annual financial statements will be finalised with them.

36 3.24

The following issues will be addressed by the BRp during the ensuing months

36,3.24.r-

Accounting software

is outdated and will

upgraded;

36.3.24"2

Computing systems are very old and will be upgraded on a piece meal basis over the next two years;

36.3.25

Hospital occupancy

is irnproving at a steady rate and is

estimated to grow due to the marketing effort by approximately L0-Ilo/s for the next 3 years.

36.3.26

Cancellation of rights issues of shares that was void and invalid

36 3.27

The BRP has concluded an agreement with a marketing company, The BRP is very excited about this agreement due to the fact that the Road Accident Fund patients will be referred to

the Hospital. The income will very soon be

increased

substantially.

t\^ fi /

128

Annexure C - Business Rescue Plan dated 19 Nov 20L8 - Page 84 of 87

B4 36.4

ISSUES STILL TO BE ANDRESSED FY THE BRP

36.4.1-

The systems are very old and needs to be upgraded

36.4,2

There are

a lot of redundant equiprnent'that needs to be

replaced,

36.4.3

For the time being the BRp

is not paying the absorbent

managernent- and rental fee"

36 4.4

A process of mediation has been initiated between the parties to try and resolve these disputes as soon as possible.

DOMICILIUM AND NOTICES

37.1

The BRP and Louis Pasteur Hospital Holdings (Pty) Ltd choose as their domicilia citandi et executandi their respective addresses set out in this paragraph for all purposes arising out of or in connection with this Plan at

which address all processes and notices arising out of or in connection with this Plan, its breach ortermination may validly be served upon or delivered to

the parties;

f-{ fr (

-/ \,

129

Annexure C - Business Rescue Plan dated 19 Nov 2018 - Page 85 of 87

8s 372

For the purposes of this Plan the parties respective addresses shall be:-

37.2.r

BRP's

739 Blesbok Street Rietfontein A/H

Mooikloof Pretoria East

e-mail: sarieffinprok6*,# for the attention of: Etienne Naude

37.2.2

Louis Pasteur Hospital Holdings (Pty) Ltd 739 Blesbok Street Rietfontein A/H

Mooikloof Pretoria East

e-mail: sarie#*np rfrk.cc.za for the attention of: Etienne Naude

or at such other addresses in the Republic of South Africa of which the Party concerned may notify the others in writing;

37.3

Each Creditor is hereby deemed to have chosen asits domicilium citandi et

executandiand as its address for the delivery of all notices hereunder for all purposes arising out of or in connection with this Plan at the address stated

by that creditor in his proof of claim form or as reflected in the books of account and records of Louis Pasteur Hospital Holdings (Pty) Ltd;

130

Annexure C - Business Rescue Plan dated 19 Nov 2018 - Page 86 of 87

374

Any notice given by email in terms of this Plan shall be in writing and shall be

deemed to have been duly received by the addressee on the date the email is sent by the addressor, unless the contrary is proved.

38.

COSTS

Louis Pasteur Hospital Holdings (Pty) Ltd shall pay all costs, expenses, fees and charges incurred in the negotiation, drafting and execution of the Plan and the final implernentation of all aspects arising from or relating to this Plan.

39.

PROCEDURE TO AMEND THE PLAN

39.1

Should the Plan be adopted and if, in the opinion of the BRP, the Plan can no longer be implemented, then the BRP's will notify allAffected Persons of this fact;

39,2

lf the BRP at the abovementioned stage continues to believe that business

rescue will yield a better return for creditors than liquidation, the business rescue proceedings shall not end and the BRP's will have L0 (ten) days, or such longer time as the creditors may agree to, after publication of the notice to publish a revised Plan;

*fr fl \

Annexure C - Business Rescue Plan dated 19 Nov 20L8 - Page87 of 87

131 87

The provisions of Section 151 to 153 of the Act, and other applicable sections,

39,3

will apply mutatis mutandis to the revised Plan and the process of the possible adoption thereof;

The BRP shall be entitled to convene further meetings in the event that

39.4

circumstances arise which warrant an amendment to the Plan or for any other reasons which in the opinion of the BRP's warrant such meeting'

40.

THE BRP CERTIFICATE AND DECLARATION

t, Etienne

Naud6 the BRP of Louis Pasteur Hospital Holdings (Pty) Ltd (in business rescue)

confirm that the Plan was prepared to the best of my ability and that I relied on actual information provided by the management of Louis Pasteur Hospital Holdings (Pty) Ltd and Creditors of Louis Pasteur Hospital Holdings (Pty) Ltd. Projections contained in and referred

to in this Plan are estimates made in good faith on the basis of factual information and assurnptions as set forth in the Plan.

The BRP is of the considered view that this Business can be rescued and profitably taken foruvard.

SIGNED

(in h

PRETORIA

tq this U4" day

NOVEMBER 2018.

&s, Senior Business Rescue

Practitione|

I\/t-o ,/

132

Annexure D - Letter by the Chair of the Board of Directors of the Second Respondent - Page 1 of 10

Lous PesreuR HosptrAL Hot orrtas (Prv) Lro Louis Pasteur Medicat Centre, 3T4Francis Baard Street, Pretoria, South Africa, 0002 PO Box 11876, The

Tramshed, Pretoria, South Africa, 0126

Tel,:27 12 336 6331 or 336

6000 Fax:27

12 336 6047

CommltGd to Sowtcc Etccltence thtottgh Kalzen (ongolng qnttty lmpmYencot)

HOSPITAI

Dear All Creditors and Affected Persons of LPHH,

ln the matter of the Flnal Business Bescue Pl,an for Louls Pasteur

Hospltal Holdings (Pqr) Ltd ( "LPHH" ) dated thel9s Nouember2ol8.

We refer to the proposed FinalBusiness Rescue Plan for LPHH published by the Business Rescue Practitioner ("BRP" ) of LPHH ( the "BRP's Plan" ) submitted by

the BRP for approval by creditorc and affected parties of LPHH on the 12th December 2018.

We object to its approva! in its present form for the following reasons:

Paragraph 1 .18 needs serious detail and clarification

At paragraph 8.3.1 of page 26, the BRP concludes his reasons for the fact that Bonitas is not a related party. This is contradicted by the fact that:

In the Bonitas Medical Fund ("Bonitas" ) audited and approved annual

financial statements for the period ending 31 December 2018 at 95 and 96 of its Report (Note 25 to the financialstatements.), the Board of Trustees and Auditors of Bonitas conclude that LPHH is a related party.

Louis Pasteur Hospitat Hotdings (Pty) Ltd Reglstratlon Number: 1992/001696/07 374 Francis Baard Street, Ground Floor, Louis Pasteur Medicat Centre, Pretoria, 0001 feh (012) 336 6000 Fax (012) 336 6047 E-maik leulilaste!ffIrqE4g,za website: gwr4lgg!E!3$ElLs9.33 Directors: Dr. A. S. Nkomo ( Chairman ) Adv A J N Mahomed 5C ( Vice Chair ), Mr. G.J. van Emmenis, Dr. M.A. Ramasia, Mr A E Prakke, Dr. M. Adam, Mr. D. Daka, Mr. A.S Akoob, Mr Y Sutiman, Mr I J Jansen ( Att Director )

rwfr ,;r/

\ /^

Annexure D - Letter by the Chair ofthe Board of Directors ofthe Second Respondent - Page 2 of 10

133

Further in paragraph 30 of the Financial Statements of LPHH signed by the BRP on the 12th November 2018 on page 126 of the BRP Plan of 19 November 2018 the BRP himself confirms that Bonitas is a related Party. (See Annexure A )

The BRP Plan is not correct as it makes no reference of a counter disclosure of the Related Par$ transaction.

In Paragraph 15.1 , at page 30 reference is made to annexure 6 for the liability

to SARS. This is confusing as in annexure 5 and annexure 7 the liability is substantially different. There is no breakdown of how this sum is computed, i.e Income Tax, PAYE, VAT, UIF and other levies managed by SARS.

This issue is further complicated by the fact that no indication is provided regarding the situation of tax liability upon which the BRP's opinion is based, namely that the Sub-lease and ManagementAgreements are invalid. There are

various implications to this. lf correct there will be substantial claw back of income etc. applicable. No mention of such Contingent Claims is found should

the plan be adopted as set out in paragraph 33 and 34.6 on page 53 and page 55.

ln Paragraphs 34.8.2.37 and 34.2.8.38, the BRP determines thatthe debenture

is a simple donation but does not state what the financial effect of this will be and how such should be disclosed in the financial records. This opinion has the further effect that donations tax is payable at a rate of 2tr/o which is not

referred to or nor provided in the BRP's Plan if adopted and the extremely negative effect this will have on the SARS liability. The BRP also does not state

what his intentions are to enforce his opinion as the transactions have been concluded and can only be set aside by a Court.

Objection to the Business Rescue Plan for

LPHH Page 2 oi 10

ll^t

Annexure D - Letter by the Chair ofthe Board of Directors ofthe Second Respondent - Page 3 of 10

ln paragraph 35 and the final assessment of the BRP in paragraph 35.27.03 relating to the Debentures transaction, the BRP finds it beneficial to LPHH. He admits that can bring cash as wellas long term benefits for LPHH, but he regards it as a donation and fails to make any provision

forthe debenture transaction and

the donations tax related to it in the signed financial statements of LPHH. 8

ln Paragraph 36.3.9.1, despite the alleged shortcomings of the previous Hospital Manager, there are yet

no budgets presented, nor reports circulated as

determined and prescribed by Section 132(3) of the Gompanies Act. 9

!n Paragraph 36.3.9.2, the CV of the accountant has not been submitted. The Board has no knowledge of the latte/s skills, qualifications and experience.

Paragraph 36.3.11.6 is not reflected in the Annexure 9 (page 148) concerning the cash flow and who will be authorized to acquire such equipment. Further there is

no indication how the capita! expenditure wish list was established and who signed it off. This is relevant as the Clinical Engineer in corroboration with the Specialist medical practitioners is required with the directors'approval.

Paragraph 22.4.1 (page 39) refers to the ACT report. lt alleges that there are no

resolutions to the effect of the lease. This is not correct. The resolutions of the Exco of the Board are annexed to the agreement of sub-lease as confirmed in

the BRPs own plan. Further the Board of Director of LPHH had on the 6th May 2016 met and approved the decisions of the Exco of the Board. The Board of Directors also met on the 12th October 2017 to take decisions relating inter alia

to the Agreement of Sub-Lease and Management Agreements. The directors were never asked by ACT Solutions for their input in this regard. The ACT Report was by admission of the author done in haste to meet a deadline set by the BRP.

Objection to the Business Rescue Plan for

LPHH

Page 3 of 10

,ffi

134

135

Annexure D - Letter by the Chair of the Board of Directors of the Second Respondent - Page 4 of L0

The ACT report contains a material non-disclosure on the fact that LPHH did occupy the premises since 1996 and continued with its operational activities as a

Hospital ostensibly evidencing that al! parties had ratified and agreed to the

continuation of the lease. See Annexure B for further detailed Background information on the origin of the Agreement of Sub-Lease as the basis of an agreed Business Model agreed to by the shareholders of LPHH when they signed the shareholders agreement. 12.1 The argument regarding the sub-lease is questionable. ln paragraph 22.5,

no actual industry standard is advanced for the determination of rental. The only basis is the BRP's opinion which is unsupported.

Annexure 1 of the BRP Plan, page 88:

13.1

The report is a draft, undated, incomplete and unsigned.

13.2 Paragraph 3 of the report which is unnumbered states that the directors have not provided a cash flow forecast. The directors were never requested

to provide a cashflow forecast and were unaware of any such action to be completed. Had the request been received it would have been complied with.

13.3

lt is not possible for the directors to compile a cash flow forecast as the Business Rescue Practitioner has not provided the directors with any

management accounts for such an exercise.

13.4

The financial statements have been prepared on a going concern basis and

no director is aware of any such action taking place. The preparation was

done by the BRP without reference to the directors.

1,4 Objection to the Business Rescue Plan for

LPHH

Page 4 of 10

Annexure D - Letter by the Chair of the Board of Directors of the Second Respondent - Page 5 of 10

13.5

136

lt is also not clear who is responsible for the preparation of the financial statements. The disclosure of such a person is obligatory, Section 29 (1) (e) (ii) of the Companies Act 71 of 2008.

13.6

Paragraph

states that no representations were received from the

directors.

None of the directors was asked or aware that representations were required. The BRP undertook this action solely

at his own behest

without involving the directors.

On page 96, annexure 2, the BRP who signed the Directors Responsibili$ report

states that:

14.1 the financial statements have been compiled in terms of IFRS, 14.2 the directors approved the financial statements; and 14.3 the BRP signed on their behalf

All of the three statements in point 14 above are factually incorrect and deliberately misleading. Neither the directors met on the

12th November 2018

as a Board, nor were the auditors informed of such a meeting, nor was such a meeting ever held and neither were any representations made by directors per the report in 15.6 above.

15.1

The directors were, in any event, not aware of the fact that financial

statements were presented representations were req

to the auditors and what

red.

Objection to the Business Rescue Plan for

LPHH Page 5 of 10

Nla

137

Annexure D - Letter by the Chair of the Board of Directors of the Second Respondent - Page 6 of 10

15.2

The directors only became aware of the financial statements when

the BRP published his plan.

15.3

The directors report includes the Bonitas directors represented in LPHH, although they did not aftend any such meeting as well. The so-called

signed Directors Responsibility Report is thus not only misleading to the directors of Bonitas and its memberc but also a fiction.

15.4

Paragraph 5 states that the directors have reviewed the cash flow. This

statement is false. The BRP has to date, notwithstanding repeated requests, refused to disclose any information regarding income and expenditure to the

directors.

5.5

The BRP has, without the director's knowledge and approval, opened

a bank account in the name of his own legal practice where he has sole

discretion

dispense the funds. To date, despite repeated

requests, he has refused to disclose any such bank statements and bank reconciliation.

15.6

ln the 6th paragraph of the said report, the BRP states that he was not in control of the companyand cannottake any responsibility fortransactions

passed

in the financial

records. He has passed substantial

transactions which have a substantial and material effect on the interpretation of the financial statements, without any referral to the

directors or notification. lt calls into question his knowledge and objection to the Business Rescue Plan for

LPHH

Page 6 of

10 4*

his NA/+

Annexure D - Letter by the Chair ofthe Board of Directors ofthe Second Respondent - Page 7 of 10

and experience of corporate governanoe and understanding of the appropriate accounting standards and conventions.

15.7

He further states that he will sign off the financial statements should the

Creditors approve the BRP plan on the 29th November 2018 but in truth

and in fact signs off the financia! statements of LPHH on the 1lh November 2018. This is misleading.

15.8

The statement thatthe directors approved the financial statements on the 12s November is false. As stated above, the directors did not

meet and were not requested to meet. lt was signed by the BRP

without any

of their

knowledge

or consent. lt is not without

significance that the BRP deposed to a founding affidavit seeking the

removal of some of the directors on the very same day (the 12th November) that he alleges the directors approved the financials, which founding affidavit he signed off on the 13th November.

His nondisclosure of such action and misleading statements in a statutory document warrants investigation and censure.

15.9

The BRP has not informed any director of the claim for medical negligence nor the status of such claim, as per paragraph 4 of the Directors report.

Objection to the Business Rescue Plan for

LPHH

Page 7 of 10

138

139

Annexure D - Letter by the Chair ofthe Board of Directors ofthe Second Respondent - Page 8 of 10

15.10. The entire paragraph regarding going conoern is confusing and cannot be interpreted in a commercially intelligent manner. On the one hand there is doubt as to the continuation of the business as a going concern

yet on the other hand there is a statement that adequate financial resources exist

continue without providing details.

This is also

contradicted by the financial statements.

15.11 The cash flow drafted and aftached by the BRP on page 148 is not indicative of this opinion.

15.12

The cash flow on that page does not indicate any provision for the BRP's fees. Neither does it include any interest cost for SARS should no settlement be reached. !n any event, any seftlement wil! include a reduction of the claim, which will include interest to date of settlement and

which will attract interest on the amount settled during payment of the settlement. The cost of such settlement will be substantial and is not included in the Profit and Loss.

15.13 The profit and loss statement on page 149 states it is a comprehensive statement whereas it is only a summary and cannot be interpreted.

15.14. Referring to total revenue, this does not compare with the figures submitted in a letter to the attorneys and is substantially lower for the months of July, August and September 2018. No further information is available, and no assumption is provided as

to how the increased

revenue will be achieved.

Objection to the Business Rescue Plan for

LPHH

Page 8 of

*ft 1

140

Annexure D - Letter by the Chair of the Board of Directors of the Second Respondent - Page 9 of 10

15.15 On 31 December 2016, the Accumulated loss was R115 393 720. On 31 December 2018 the assumed starting date

of the BRP plan, the

Accumulated loss is R89 061 256. The implication is that

a profit of

some R35 million was achieved in the 2017 and 2018 financial years with no explanation and for 2019 a profit of R37 million will be made. This is not supported by any facts or assumptions.

15. 16

The BRP promised in his previous meeting with creditors that he would set out all the assumptions etc. of the plan on the budget to put the viability in context. None has been forthcoming to date.

15.17 lt appears

that the "comprehensive" profit and loss and the cash flow

is based on the presumption that the sub{ease is invalid including the management agreement. No impact assessment is done. The plan makes it clear that the opinion of the BRP is that it is invalid although it is

silent on the figures relied upon.

Objection to the Business Rescue Plan for

LPHH

Page 9 of 10

r.1o

Annexure D - Letter by the Chair ofthe Board of Directors ofthe Second Respondent - Page 10 of 10

141

The reasons are not exhaustive. We reserve the right to expand upon

these at the appropriate time. All our rights in this regard are strictly reserved. We have set out the more important and salient number of them

to indicate the seriousness of our objections to the adoption of the BRP's Plan.

We trust that the Business Rescue Practitioner will consider his statutory

du$ and address the concerns stated above by the following steps:

16.1

Adjourn the meeting set for the approval to a date in the last week of January 2019 or the first week of February 2019;

16.2

Convene a meeting of the directors of LPHH in the second week of

January 2019 to interact and discuss with the BRP the various conoerns raised above.

Yours sincerely

Dr.

S. Nkomo

ffiLouis

Pasteur Hospital Holdings (Pty) Ltd

(Former Ambassador for the Republic of South Africa)

I}^ Objection to the Business Rescue Plan for

LPHH Page 10 of 10

Annexure

E-

142

The Applicants Financial Statements - Page L of 27

GUDRAN EMMA ERASMUS (P'TN LTD (Registration number 1 995/0 A7 17 5107) Trading as Louis Pasteur Hospital Pharmacy Financial statements for the year ended 31 December 2014

These financialstatements were prepared by: L Chetty (FinancialManager).

These annual financial statements have been audited in compliance with the applicable requirements of the Companies

Act71 of2008. Published 12 November 2015

$ft &T

Annexure E - The Applicants Financial Statements - Page 2 of 27

143

GUNRAN EMMA ERASMUS (PTY} LTD (Registration number 1 995/007 17 5107) Trading as Louis Pasteur Hospital Pharmacy Financial $tatements for the year ended 31 December 2A14

General Information Country of incorporation and domicile

$outh Africa

Nature of business and principal activities

Pharmacy

Director

Mrs MB Adarrr

Registered office

374 Francis Baard Street Louis Pasteur Medical Centre

4th Floor Pretoria 0001

Business address

374 Francis Baard Street Louis Pasteur Medical Centre 4th Floor Pretoria 0001

Postal address

PO Box 1 1876 The Tramshed Pretoria 01 2S

Bankers

Nedbank Limited First National Bank

Auditor

Nexia SAB&T Registered Auditor

Secretary

FH Lloyd

Company registration number

1gg5/047175rA7

f.A 1

144

Annexure E - The Applicants Financial Statements - Page3 of 27

GUDRAN EMMA ERASMUS (PTY} LTD (Registration number 1 995/0071 7 5lA7) Trading as Louis Pasteur Hospital Pharmacy Financial Statements for the year ended 31 December 2014

lndex The reports and statements sel oul below comprise the financial slatemenls presented to the shareholder:

lndex

page

Report Director's Responsibilities and Approval Director's Report Statement of Financial Position Statement of Comprehensive lncome Statement of Changes in Equity Statement of Cash Flows Accounting Policies Notes to the Financial Statements lndependent Audito/s

4 s 6

l 8

g 10 - 15

j6 - 26

,tr\ 2

145

re E - The Applicants Financial Statements - Page 4 of 27

&LT lndependent Aud itor's Report To the Shareholders of Gudran Emma Erasmus (Pty) Ltd audited the financial statements of Gudran Emma Erasmus (Pty) Ltd, as set out on pages 6 to 26 which comprise the of financial position as at 31 December 2014, and the statement of comprehensive income, statement of changes in cash flows for the year then ended, and the notes, comprising a summary of significant accounting information.

for the Financial Statements is responsible for the preparation and fair presentation of these financial statements in accordance with Reporting Standards, and requirements of the Companies Act 71 of 2008, and for such internal control determines is necessary to enable the preparation of financial statements that are ftee from material whether due to fraud or error

Responsibility is to express an opinion on these financial staternents based on my audit. We conducted our audit in with lntemational Standards on Auditing. Those standards require that I comply with ethical requirements and plan the audit to obtain reasonable assurance whether the financial statements are free from material misstatement.

involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial The procedures selected depend on the auditods judgement, including the assessment of the risks of material of the financial statements, whether due to fraud or error. ln making those risk assessments, the auditor internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the of the entity's intemal control. An audit also indudes evaluating the appropriateness of accounting policies used and the reasonableness of acctunting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for my audit opinion.

Oplnion ln our opinion, the financial statements present fairly, in all material respects, the financial position of Gudran Emma Erasmus (Pty) Ltd as at 31 December 2O14, and its financial performance and its cash flows for the year then ended in accordance with lntemational Financial Reporting Standards, and the requirements of the CompaniEs Act 71 of 2008. Other reporG required by the Gompanies Act As part of our audit of the financial statements for the year ended 31 December 2014, we have read the Director's Report, for the purpose of identiffing whether there are material inconsistencies between this reporl and the audited financial statements This report is the reponsibility of the respective preparers. Based on reading this report we have not identified material inconsistencies between this report and the audited financial statements. However, we have not audited this report and accordingly do not express an opinion thereon.

[U*" tA*lfr

Darmalingam SAB&T

2415

Directors: B Adom (CEOI. A Abooboker, Z Abroms, A Dormolingom, T de Kock, S Gombu', Y Hossen, N Hossim. S lsmofl, B Jhelom, H Kojie, 5 Kleovoulou. H Mokqmure S Mokomure,I Moyel, K Rorno, M Sindone, Y Somo, Z Sonpro, N Soopol, M F Sulomon. lTheron, H von der Menre. lvt Wessels 'Non Execuilve I l, Wltch'Hotrl AYcnuG. Hlghvcld Tcchnopork, Crnludon . P.O. hh (012) 682 tE(l0 . fox (012) 6E2 S!0I . wwye.nexls-robt cs.ro

Box 10512, Confurton, 0&{6

. Docrx

15, Con}udon

Other Oftlces: Etoemlonlein. Cope lown, Durbon. Kimberley, Nelsprull. Poloh,none. Porl Elizobeth, Ruslenburg

SAilf Chorhnd

Accounlonh lncorporotcd Co. Reg No: l997rtl8â&#x201A;Ź,69l2l IRBA Reg No:721D7

on indeperrdenl rnember firm ol

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Annexure

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146

The Applicants Financial Statements - Page 5 of 27

GUDRAN EMMA ERASMUS (PTY} LTD

(Reglstration nurnber 1 9951007 17 1nn Trading as Louis Pasteur Hospital Pharmacy Finandal Statements for the year ended 31 December 2014

Director's Responsibilities and Approval The.dkector is reqyired in.term-s of-the Companlee Act 71 of 2008 to maintain adequate aocounting.records and Is responsible ior the conlent and inlegdty oJ th_e financlal statements and related financial informition induded ifr'this report. lt is his responsibility to ensure that the financial statements fairly present the state of affairs of the company as ai lhe end of lhe financialyear th9 rEsulls-of its operations and cash flows for the perlod then ended, in confd,rmiiy with lnternational "!9 Standards. The external auditor ls engaged lo express an independent opinion 6n the {inancial Finandal Reporting statements. The linanclal statements are prepared in accordsnce witr lntemational Financial Reporting Standards and are based upon appropriate accounting policies consistently applied and supported by reasonable and prudent ludgmenls and estimates. The direclor acknowledges that he js ultimately responsible for the systam of lntemal financial control established by the company and places considerable importance on maintaining a strong control envlronment. To enable the director to rneet these responsibilities, the direc{or sets standards for lnternal control aimed at reducing the risk of enor or loss ln a cost effective manner. The standards indude the proper delegation of responsibitities within a clearly defined framework, effective accounting procedures and adequale segregation of duties to ensure an acceptable level of risir. These controls are monltored $roughout the company and all employees ?re required to maintaln the highest ethlcal standards in ensurlng lhe companfs business is conducted in a manner that in all reaeonable elrcumstances is ibove reproadr. The focus of rislimanagerirenf in the c,ompany is on identfflng, assessing, managlng and monitoring all knorrn forms of risk across the company. vfrrile operating risk cannot be fully eliminated, lhe company endeavours to minimise it by ensuring that appropriite ihfrastructure, controls, systems and ethical behaviour are applied and managed within predeteriineO procedurei ind'constraints. The direslor is of the opinion, based on the informallon and explanations given by management, that tha Bystem of intemal control provides reasonable assuranoe that the ffnancial records may be relied oir fortha preparation of th6 tinancial statements. However, any systern of internal ffnancial control can provide only reasonable, and not absolute, assurance against malerial misstatament or loss. The director has revlewed the companf s cash flor forecast and, in the light of this reviertr and the cunent financial position, she is satisfled thal the company has or has access to adequale resources lo continue in operational existence for ihe foreseeable future. The external auditor is responsible for independently revlewing and reporting on the company's financial slatements. The financial statemenls have been examined by lhe company's external auditoiand thelr reiortis presentEd on page 3. The fnancial statements set oul qn pages 5 to 26, whlch hgve !9en prepared on the going concern basis, were approved by the director on 12 November 2015 and were signed on its behalf by:

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Annexure E - The Applicants Financial Statements - Page 6 of 27

147

GUDRAN EMMA ERASMUS (PTY} LTD (Registration number 1 995/007 17 5n7) Trading as Louis Pasteur Hospital Pharmacy Financial Statements for the year ended 31 December 2A14

Director's Report The director submits her report for the year ended 31 December 2014.

Review of activities

Main business and operations Net loss of the company was R 382,273 (2013: R 36,382 profit), after taxation of R 130,395 (2013: R (14,149)).

Going concern

The financial statements have been prepared on the basis of accounting policies applicable to a going concern. This basis presumes that funds will be available to finance future operations and that the realisation of assets and settlement of liabilities, contingent obligations and commitments will occur in the ordinary course of business.

Events after the reporting period

The director is not aware of any matter or circumstance arising since the end of the financial year.

Authorised and issued share capital

There were no changes in lhe authorised or issued share capital of the company during the year under review.

Non-currentassets

There were no major changes in the nature of the non-current assets of the company during the year.

Director

The director of the company during the year and to the date of this report is as follows:

Name Adam 7. Secretary Mrs MB

Nationality African

South

Changes

Appointed - 01 May 2010

The secretary of the company is FH Lloyd of; Business address

4th Floor Louis Pasteur Medical Centre 374 Francis Baard Street Pretoria 0001

Postal address P.O. Box 55835 Arcadia 0007

Auditor

Nexia SAB&T will continue in office in accordance with section 90 of the Companies Act 71 of 2008.

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The Applicants Financial Statements - Page 7 of 27

GUDRAN EMMA ERASMUS (PTY} LTD (Registration number 1 995/00717 5lA7) Trading as Louis Pasteur Hospital Pharmacy Financial Statements for the year ended 31 December 2A14

Statement of Financial Position Figures in Rand

Note(s)

?414

201 3

Assets Non-Current Assets Loans to group companies

Deferred tax

275,302 959,010

g,169,336 828,615

1,234,312

9,996,951

5,754,312

4,532,835 28,000

269,963 12,130,569

Current Assets lnventories Current tax receivable Trade and other receivables Cash and cash equivalents

53,844 19,398,156 18,1

Total Assets

366,176 2,1 86,801 7

,113,912

,110,763

Equity and Liabilities Equity o

Share capital

Accumulated loss

100

(2,471,294) 12,471

,194)

100 (2,099, a21)

(2,099,921)

Liabilities Current Liabilities Trade and other payables

Total Equity and Liabilities

,859,350 19,389,156

19,199,694 17

,110,763

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The Applicants Financial Statements - Page 8 of 27

GUDRAN EMMA ERASMUS (PTY} LTD (Registration number 1 995/0071 7 5107) Trading as Louis Pasteur Hospital Pharmacy Financial Statements for the year ended 31 December ZAM

$tatement of Comprehensive lncome Figures in Rand

Note(s)

Revenue Cost of sales

Gross profit

2014 79,157,453 (69,354,984) 9,802,469

Operating expenses

(9,737,1 81 )

Operating profit

lnvestment revenue Fair value adjustments Finance costs

(Loss) profit for the year

7AJ2g,3g4 (58,992,748) 11,135,646 (8,986,062)

2,149,594

1,701 753,843 (1 ,333,500)

(512,668) 130,395

50,531 (14,149)

(382,273)

36,382

1382,2731

36,392

(Loss) profit before taxation Taxation

65,289

201 3

4,61 1 (467 ,1 75) (1

,636,489)

Other comprehensive income

Total comprehensive (loss) income

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150

Applicants Financial Statements - Page 9 of 27

GUDRAN EMMA ERASMUS (PTY} LTD (Registration number 1 995/007 17 5107) Trading as Louis Pasteur Hospital Pharmacy Financial $tatements for the year ended 31 December 2014

Statement of Change$ in Hquity Share

capital Accurnulated Total equity

Figures in Rand

loss

Balance at 01 January 2013

12,125,403)

(2,125,303}

Total comprehensive income for the year

36,382

Total changes

36,392

36,382

100

Changes in equity

Balance at 01 January 2014 Changes in equity Total comprehensive loss for the year

100

Total changes

100

Balance at 31 December 2914

t2,099,021)

(2,088,9211

(382 ,273)

(382,273,

(382,273)

(382

d2,471,294)

,273)

12,471,194)

Note(s)

flrr B

Annexure E - The Applicants Financial Statements - Page I0 of 27

151

GUDRAN EMMA ERASMUS (PTY} LTD (Registration number 1 995/007 17 5107) Trading as Louis Pasteur Hospital Pharmacy Financial Staternents for the year ended 31 December 2A14

Staternent of Cash Flows Figures in Rand

Note(s)

2414

201 3

Cash flows from operating activities Cash receipts from customers Cash paid to suppliers and employees 16

Cash generated from operations lnterest income Finance costs Tax received

79,254,666

74,157,574

(77 ,649,037)

(63,497,940)

1,603 ,164

6,659,634 4,611

1,741 (1

Net cash from operating activities

,333,500) 25,535 296,900

,636,489)

5,027,756

Cash flows from investing activities (5,963,355)

Loans to group companies repaid Loans advanced to group cornpanies

9,646,868

Net cash (in) / from investing activities

9,646,868

Total cash movement for the year

9,943,768

(935,599)

Cash at the beginning of the year

2,1 86,801

3,122,400

12,130,569

2,186,801

Total cash at end of the year

(5,963,355)

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The Applicants Financial Statements - Page

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152

GUDRAN EMMA ERASMUS (PTY} LTD (Registration number 1 9951007 17 5fi7) Trading as Louis Pasteur Hospital Pharmacy Financial Statements for the year ended 31 December 2014

Accounting Policies 1.

Presentation of Financial Statements

The linancial statements have been prepared in accordance with lnternational Financial Reporting Standards, and the Companies Act of South Africa. The financial statements have been prepared on the historical cost basis, except for the Statement of Cash Flows which is prepared on a cash basis and incorporate the principal accounting policies set out below They are presented in South African Rands.

These accounting policies are consistent with the previous period.

1.1 Significant

judgements and sources of estimation unceftainty

ln preparing the financial statements, management is required to make estimales and assumptions that affect the amounts represented in the linancial statements and related disclosures. Use of available information and the application of judgement is inherent in the formation of estimates. Actual results in the future could differ from these estimates which may be material to the financial stalements. Significant judgements include: Loans and receivables The company assesses its loans and receivables for impairment at the end of each reporting period. ln determining whether an impairment loss should be recorded in profit or loss, the company makes judgements as to whether there is observable data indicating a measurable decrease in the estimated future cash flows from a financial asset.

Allowance for slow moving, damaged and obsolete stock An allowance for stock to write stock down to the lower of cost or nel realisable value. Management have made estimates of the selling price and direct cost to sell on certain inventory items. Fair value estimation The carrying value less impairment provision of trade receivables and payables are assumed to approximate their fair values. The fair value of financial liabilities for disclosure purposes is estimaled by discounting the future contractual cash flows at the current market interest rate that is available to the company for similar financial instruments.

lmpairment testing The recoverable amounts of cash-generating units and individual assets have been determined based on the higher of valuein-use calculations and fair values less costs to sell. These calculations require the use of estimates and assumptions. lt is reasonably possible that the assumption may change which may then impact our estimations and may then require a material adjustment to the carrying value of tangible assets. The company reviews and tests the carrying value of assets when events or changes in circumstances suggest that the carrying amount may not be recoverable. Assets are grouped at the lowesl level for which identifiable cash flows are largely independent of cash flows of other assets and liabilities. lf there are indications that impairment may have occuned, estimates are prepared of expected future cash flows for each group of assets. Expected future cash flows used to determine the value in use of tangible assets are inherently uncertain and could materially change over time. They are significantly affected by a number of factors.

Taxation Judgement is required in determining the provision for income laxes due to the complexity of legislation. There are many transactions and calculalions for which the ultimate tax determination is uncertain during the ordinary course of business. The company recognises liabilities for anticipated tax audit issues based on estimates of whether additional taxes will be due. Where the final tax outcome of these matters is different from the amounts that were initially recorded, such differences will impact the income tax and deferred tax provisions in the period in which such determination is made. The company recognises the net future tax benefit related to deferred income tax assets to the extent that it is probable that the deductible temporary differences will reverse in the foreseeable future. Assessing the recoverability of deferred income tax assets requires the company to make significant estimates related lo expectations of future taxable income. Estimates of future taxable income are based on forecast cash flows from operations and the application of existing tax laws in each jurisdiction. To the extent that future cash flows and taxable income differ significantly from estimates, the ability of the company to realise the net deferred tax assets recorded at the end of the reporting period could be impacted. 10

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The Applicants Financial Statements - Page 12 of 27

153

GUDRAN EMMA ERASMUS (PTY} LTD (Registration number 1 995/0071 7 SIAT) Trading as Louis Pasteur Hospital Pharmacy Financial Statements for the year ended 31 December 2014

Accounting Pollcies 1.2

Financial instruments

Classification The company classifies financial assets and financial liabilities into the following categories: Loans and receivables Financial liabilities measured at amortised cost

. r

Classification depends on the purpose for which the financial instruments were obtained / incurred and takes place at initial recognition. Classification is re-assessed on an annual basis.

lnitial recognition and measurement Financial instruments are recognised initially when the company becomes a party to the contractual provisions of the instruments. The company classifies financial instruments, or their component parts, on initial recognition as a linancial asset, a financial liability or an equity instrument in accordance with the substance of the contraclual arrangement. Financial instruments are measured initially at fair value. For financial inslruments which are not at fair value through profit or loss, transaction costs are included in the initial measurement of the instrument. S

ubsequent meas urement

Loans and receivables are subsequently measured at amorlised cost, using the effective interest method, less accumulated impairment losses. Financial liabilities are subsequently measured at amortised cost, using the effective interest method.

Loans to {from} group companies These include loans to and from holding companies, fellow subsidiaries, subsidiaries,.ioint ventures and associates and are recognised initially at fair value plus direct transaction costs. Loans to group companies are classified as loans and receivables and measured initially at fair value and subsequently at amortised cost. Loans from group companies are classified as financial liabilities and measured initially at fair value and subsequently at amortised cost.

Trade and other receivables Trade receivables are measured at initial recognition at fair value, and are subsequently measured at amorlised cost using the effective interest rate method. Appropriate allowances for estimated irrecoverable amounls are recognised in profit or loss when there is objective evidence that the asset is impaired. Significant financial difficulties of the debtor, probability that the debtor will enter bankruptcy or financial reorganisation, and default or delinquency in payments are considered indicators that the trade receivable is impaired. The allowance recognised is measured as the difference between the asset's carrying amount and the present value of estimated future cash flows discounted at the effective interest rate computed at initial recognition. Trade and other receivables are classified as loans and receivables. Trade and other payables Trade payables are initially measured at fair value, and are subsequently measured at amortised cost, using the effective interesl rate method.

154

Annexure E - The Applicants Financial Statements - Page L3 of 27

GUDRAN EMMA ERASMUS (PTY} LTD (Registration number 1 995/007 17 5n7) Trading as Louis Pasteur Hospital Pharmacy Financial Statements for the year ended 31 December 2A14

Accounting Policies 1.2

Financial instruments (continued)

Cash and cash equivalents Cash and cash equivalents comprise cash on hand and demand deposits, and other short-term highly liquid investments that are readily convertible to a known amount of cash and are subject to an insignificant risk of changes in value. These are initially measured at lair value and subsequently recorded at amortised cost.

Bank overdraft and borrowings Bank overdraffs and borrowings are initially measured al fair value, and are subsequently measured al amortised cost, using the effective interest rate method. Any difference between the proceeds (net o{ transaction costs) and the settlement or redemption of borrowings is recognised over the term of the bonowings in accordance with the company's accounting policy for borrowing costs.

1.3

Tax

Current tax assets and liabilities Current tax for current and prior periods is, to the extent unpaid, recognised as a liability. lf the amount already paid in respect of current and prior periods exceeds the amount due for those periods, the excess is recognised as an asset. Current tax liabilities (assets) for the current and prior periods are measured at the amoun! expected to be paid to (recovered from) the tax authorities, using the tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period.

Deferred tax assets and liabilities A deferred lax asset is recognised for the carry forward of unused lax losses to ihe extent that it is probable that future taxable profit will be available against which the unused tax losses can be utilised. Defened tax assets and liabilities are measured at the tax rales that are expected to apply to the period when the assel is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacled by the end of the reporting period.

Tax expenses Current and deferred taxes are recognised as income or an expense and included in profit or loss for the period, except to the extent that the tax arises from: a transaction or event which is recognised, in the same or a different period, to other comprehensive income, or a transaction or event which is recognised, in the same or a different period, directly in equity.

r r

Current tax and deferred laxes are charged or credited to other comprehensive income if the tax relates to items that are credited or charged, in the same or a differenl period, to olher comprehensive Income. Current tax and deferred taxes are charged or credited directly to equity if the tax relates to items that are credited or charged, in the same or a different period, directly in equity.

1.4

Leases

A lease is classified as a finance lease if it transfers subslantially all the risks and rewards incidental to ownership. A lease is classified as an operating lease if it does not transfer substantially all the risks and rewards incidental to ownership.

Operating leasea

lessee

Operating lease payments are recognised as an expense on a straight-line basis over the lease term. The difference between the amounts recognised as an expense and the contractual payments are recognised as an operating lease asset. This liability is not discounted.

Any contingent rents are expensed in the period they are incurred.

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155

The Applicants Financial Statements - Page 14 of 27

GUDRAN EMMA HRASMUS (PTY} LTD (Registration number 1 995/00717 5107) Trading as Louis Pasteur Hospital Pharmacy Financial Statements for the year ended 31 December 2014

Accounting Policies 1.5

lnventories

lnventories are measured at the lower of average cost and net realisable value. Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale. The cost of inventories comprises of all costs of purchase, costs of conversion and other costs incurred in bringing the inventories to their present location and condition.

When inventories are sold, the carrying amount of those inventories are recognised as an expense in the period in which the related revenue is recognised. The amount of any write-down of inventories to nel realisable value and all losses of inventories are recognised as an expense in the period the write-down or loss occurs. The amount of any reversal of any write-down of inventories, arising from an increase in net realisable value, are recognised as a reduction in the amount of inventories recognised as an expense in the period in which the reversal occurs.

1.6 lmpairment

of assets

The company assesses at each end of the reporting period whether lhere is any indication that an asset may be impaired. lf any such indication exists, the company estimates the recoverable amount of the asset. lf there is any indication that an asset may be impaired, the recoverable amounl is estimated for the individual asset. lf it is not possible to estimate the recoverable amount of the individual asset, the recoverable amount of the cash-generating unit to which the asset belongs is determined.

The recoverable amount of an asset or a cash-generating unit is lhe higher of its fair value less costs to sell and its value in use. lf the recoverable amount of an asset is less than its carrying amount, the carrying amount of the asset is reduced to its recoverable amount. That reduction is an impairment loss.

An impairment loss of assets carried at cost less any accumulaled depreciation or amortisation is recognised immediately in profit or loss. An impairment loss is recognised for cash-generating units if the recoverable amount of the unit is less lhan the carrying amount of the units. The impairment loss is allocated to reduce the carrying amount of the assets of the unit. An entity assesses al each reporting dale whether there is any indication that an impairment loss recognised in prior periods for assets that may no longer exist or may have decreased. lf any such indication exists, the recoverable amounts of those assets are estimated.

The increased carrying amount of an asset attributable to a reversal of an impairment loss does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset in prior periods. A reversal of an impairment loss of assets carried at cost less accumulated depreciation or amortisalion is recognised immediately in profit or loss,

1.7 Share capital

and eguity

An equity Instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities.

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156

The Applicants Financial Statements - Page L5 of 27

GUDRAN EMMA ERASMUS (PTY} LTD (Registration number 1 995/0AT 17 5107) Trading as Louis Pasteur Hospital Pharmacy Financial Statements for the year ended 31 December 2014

Accounting Policles 1.8

Employee benefits

$hort-term em ployee benefits The cosl of short-term employee benefits, (those payable within 12 months after the service is rendered, such as paid vacation leave and sick leave, bonuses, and non-monetary benefits such as medical care), are recognised in the period in which the service is rendered and are not discounted. The expected cost of compensated absences is recognised as an expense as the employees render services lhat increase their entitlemenl or, in the case of non-accumulating absences, when the absence occurs. The expected cost of profit sharing and bonus payments is recognised as an expense when there is a legal or constructive obligation to make such payments as a result of past performance.

Defined contribution plans Payments to defined contribution retirement benefit plans are charged as an expense as they fall due.

1.9

Provisions and contingencies

Provisions are recognised when: the company has a present obligation as a result of a past event; it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation; and a reliable estimate can be made of the obligation.

r . .

The amount of a provision is the present value of the expenditure expected to be required lo settle the obligation.

Where some or all of the expenditure required to settle a provision is expected to be reimbursed by another party, the reimbursement shall be recognised when, and only when, it is virtually certain that reimbursement will be received if the entity settles the obligation. The reimbursement shall be treated as a separate asset. The amount recognised for the reimbursement shall not exceed the amounl of the provision. Provisions are not recognised for future operating losses. lf an entity has a contract that is onerous, the present obligation under the contract shall be recognised and measured as a provisioa. Contingent assets and contingent liabilities are not recognised.

1.10 Revenue Revenue from the sale of goods is recognised when all the following conditions have been satisfied: the company has transferred to the buyer the significant rlsks and rewards of ownership of the goods; the company retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over lhe goods sold; the amount of revenue can be measured reliably; it is probable that the economic benefits associated with the lransaction will flow to the company; and the costs incurred or to be incurred in respect of the transaction can be measured reliably.

. . . . .

Revenue is measured at the fair value of the consideration received or receivable and represents the amounts receivable for goods and services provided in the normal course of business, net of trade discounts and volume rebates, and value added tax.

lnterest is recognised, in profit or loss, using the effective interest rate method.

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157

The Applicants Financial Statements - Page 16 of 27

GUDRAN EMMA ERASMUS (PTY} LTD (Registration nurnber

995/007 17 5107)

Trading as Louis Pasteur Hospital Pharmacy Financial Statements for the year ended 31 December 2014

Accounti ng Policles 1.11 Cost of sales When inventories are sold, the carrying amount of those inventories is recognised as an expense in the period in which the related revenue is recognised. The amount of any write-down of inventories to net realisable value and all losses of inventories are recognised as an expense in lhe period the write-down or loss occurs. The amount of any reversal of any write-down of inventories, arising from an increase in nel realisable value, is recognised as a reduction in the amount of inventories recognised as an expense in the period in which the reversal occurs. The related cost of providing services recognised as revenue in the curent period is included in cost of sales.

1.12 Borrowing costs The capitalisation of borrowing costs commences when: expenditures for the asset have occurred; borrowing costs have been incurred, and activities that are necessary to prepare the asset for its intended use or sale are in progress.

. . .

Capitalisation is suspended during extended periods in which active development is interrupted. Capitalisation ceases when substantially all the activities neoessary lo prepare the qualiffing asset for its intended use or sale are complete.

All other borrowing costs are recognised as an expense in the period in which they are incurred. 1.13 Statement of Cash Flows The Statement of Cash Flows is prepared according to the direct method.

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158

The Applicants Financial Statements - Page L7 of 27

GUDRAN EMMA ERASMUS (PTY} LTD (Registration number 1 995/007 17 5lA7) Trading as Louis Pasteur Hospital Pharmacy Financial Statements for the year ended 31 December 2014

Notes to the Financial Statements Figures in Rand

2A14

New Standards and lnterpretations

2,1

Standards and interpretations effective and adopted in the current year

201 3

The company has adopted the following standards and interpretations, which have been published and are mandatory for the company's accounting periods beginning on or after 1 January 2014 or later periods:

IFRS 10 Consolidated Financial Statements IFRS 10 exception to the principal that all subsidiaries must be consolidated. Entities meeting the definition of 'lnvestment Entities' must account for investments in subsidiaries at fair value under IFRS 9, Financial lnstruments, or IAS 39, Financial Instrumenls: Recognition and Measurement. The effective dale of the standard is for years begining on or after 01 January 2014. The standard did not have a material impact on the company's financial statements. IFRS 12 Disclosure of lnterests in Other Entities New disclosures requires for lnvestment Entities (as defined in IFRS 10).

The effective date of the standard is for years beginning on or after 01 January 2014. The standard did nol have a material impact on the company's annual financial statements. IAS 27 Consolidated and Separate FinancialStatements Requirement to account for interests in 'lnvestment Entities at fair value under IFRS 9, Financial lnstruments, or IAS 39, Financial lnstruments: Recognition and Measurement, in the separate {inancial statements of a parent.

The effective date of the standard is for years beginning on or after 01 January 2014. The standard did not have a material impact on the company's annual flnancial statements. IAS 36 lmpairment of Assets Amendments to address the disclosure of information about the recoverable amount of impaired assets if that amount is based on fair value less costs of disposal. The effective date of the standard is for years begining on or after 01 January 2014.

The standard did not have a material impacl on the company's financial statements. . Require the presentation of non-owner changes in equity either in a single statement of comprehensive income or in an income statement and statemenl of comprehensive income. . Require the presentation of a statement of financial position at the beginning of the earliest comparalive period whenever a retrospective adjustmenl is made. This requirement includes related notes. . Require the disclosure of income tax and reclassiflcation adjustments relating to each component of other comprehensive income. The disclosures may be presented on the face of the statement of comprehensive income or in lhe notes. . Allow dividend presentations lo be made either in the statement of changes in equity or in the notes only. . Have changed the titles to some of lhe financial statement components, where the 'balance sheet' becomes the 'statement of financial position' and the 'cash flow statement' becomes the 'statement of cash flows.' These new titles will be used in lntemational Financial Reporting Standards, but are not mandatory for use in financial statements.

Annexure E - The Applicants Financial Statements - Page 18 of 27

159

GUDRAN EMMA ERASMUS (PTY} LTD (Registration number 1 995/00717 5107') Trading as Louis Pasteur Hospital Pharmacy Financial Statements for the year ended 31 December 2014

Notes to the Financial Statements 2.

New Standards and lnterpretations (continued)

2.2

Standards and interpretations not yet effective

The company has chosen not to early adopt the following standards and interpretations, which have been published and are mandatory for the company's accounting periods beginning on or afler 1 January 2015 or later periods: IFRS 7 Financial lnstruments: Disclosures

Annual lmprovements 2O12-2014 Cycle: Amendment clariling under what circumstances an entity will have continuing involvement in a transferred financial asset as a result of servicing contracts. Annual lmprovements 2012-2014 Cycle: Amendment clariffing the applicability of previous amendments to IFRS 7 issued in December 2011 with regard to offsetting financial assets and financial liabilities in relation to interim financial statements prepared under IAS 34.

The effective date of the standard is for years begining on or affer 01 January 2016. It is unlikely that the standard will have a material impacl on the company's financial statements. IFRS 9 Financial lnstruments A finalised version of IFRS t has been issued which replaces IAS 39 Financial lnstruments: Recognition and Measurement. The completed standard comprises guidance on Classification and Measurement, lmpairment Hedge Accounting and Derecognition:

IFRS 9 introduces a new approach to the classification of linancialassets, which is driven by the business modelin which the asset is held and their cash flow characteristics. A new business model was introduced which does allow certain financial assets to be categorised as "fair value through olher comprehensive income" in certain circumstances. The requirements for financial liabilities are mostly carried forward unchanged from IAS 39. However, some changes were made to the fair value option for financial liabilities to address the issue of own credit risk.

The new model inlroduces a single impairment model being applied to all financial instruments, as well as an "expected credit loss" model for the measurement of financial assets.

IFRS 9 contains a new model for hedge accounting that aligns the accounting treatment with the risk management activities of an entity, in addition enhanced disclosures will provide better lnformation about risk management and the effect of hedge accounting on the financial statements.

IFRS 9 carriers forward the derecognition requirements of financial assets and liabilities from IAS 39.

The effective date of the standard is for years begining on or afier 01 January 2018 It is unlikely that the standard will have a material impact on the company's financial statements.

IFRS 10 Consolidated Financial $taternents llnvestment Entities: Applying the Consolidation Exception: Narrow-scope amendments to IFRS 10, IFRS 12 and IAS 28 introduce clarifications to the requirements when accounting for investmenl entities. The amendments also provide relief in particular circumstances, which will reduce the costs of applying the Standards. The effective date of the standard is for years begining on or after 01 January 2016. It is unlikely that the standard will have a material impact on the company's financial slatements.

IFRS 12 Disclosure of lnterests in Other Entities lnvestment Entities: Applying the Consolidation Exception: Narrow-scope amendments to IFRS 10, IFRS 12 and IAS 28 introduce clarifications to the requirements when accounting for investment entities. The amendments also provide relief in particular circumstances, which will reduce the costs of applying the Standards. 17

Annexure

E-

160

The Applicants Financial Statements - Page L9 of 27

GUDRAN EMMA ERASMUS (PTY) LTD (Registration number 1 995/007 17 5107') Trading as Louis Pasteur Hospital Pharmacy Financial Staternents for the year ended 31 December 2A14

Notes to the Financial Statements

New Standards and lnterpretations (continued)

The effective date of the standard is for years begining on or ater 01 January 2016. It is unlikely that the standard will have a material impact on the company's financial statemenls.

IFRS 13 Fair Value Measurement Annual lmrovements 2011-2013 Cycle: Amendments to clari! that the portfolio exception applies to all contracts within the scope of, and accounted for in accordance with, IAS 39 or IFRS 9. The effective daie of the standard is for years begining on or after 01 July 2014. It is unlikely that the standard will have a material impact on the company's financial stalements.

IFRS 15 Revenue from Contracts from Customers

' New standard that requires entities to recognise revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which lhe entity expects to be entitled in exchange for those goods or services. This core principle is achieved through a five step methodology that is required to ber applied to all contracts with customers.

The new standard will also resull in enhanced disclosures about revenu, provide guidance for transactions that were not previously addressed comprehensively and improve guidance for mulliple-element arrangements.

The new standard supersedes:

(a) IAS 11 Contruction Contracts; (b) IAS 18 Revenue; (c) IFRIC 13 Customer Loyalty Programmes;

(d) IFRIC 15 Agreements for the Construction of Real Estate; (e) IFRIC 18 Tranfers of Assets from Cuslomers; and (0 SIC-31 Revenue-Barter Transactions lnvolving Advertising Services.

IFRS

I carriers

forward the derecognition requirements of financial assets and liabilities from IAS 39.

The effective date of the standard is for years begining on or after 01 January 2017. It is unlikely that the slandard will have a material impact on the company's financial statements.

IAS 1 Presentation of Financial Statements Disclosure lnitiative: Amendments designed to encourage entities to apply professional judgement in determining what information to disclose in their financial statemenls. For example, the amendments make clear that materiallty applies to the whole of flnancial statements and that the inclusion of immaterial information can inhibit the usefulness of linancial disclosures. Furthermore, the amendments clarify that entities should use professional judgement in determining where and in what order information is presented in the financial disclosures. The effective date of the standard is for years begining on or after 01 January 2016. It is unlikely lhat the standard will have a material impact on the company's financial statements.

IAS 16 Property, Plant and Equipment Ammendments to IAS 't6 and IAS 38 to clarify the basis for the calculation of depreciation and amortisation, as being the expected pattern of consumption of the future benefits of an asset. 1B

rtr o

Annexure E - The Applicants Financial Statements - Page 20 of 27

161

GUDRAN EMMA ERASMUS (PTY} LTD (Registration number 1 995/007 17 5rc71 Trading as Louis Pasteur Hospital Pharm acy Financial Statements for the year ended 31 December 2A14

Notes to the Financial Statements

New Standards and lnterpretations (continued)

Amendment to both IAS 16 and IAS 38 establishing the principle for lhe basis of depreciation and amortisation as being the expected paltern of consumption of the future economic benefils of an asset. Clarifying that revenue is generally presumed to be an inappropriate basis for measuring the consumption of economic benefits in such assets. Amendments to lAS 16 and IAS 41 which defines bearer plants and bearer plants in the scope of IAS 16 Property, plant and Equipment rather than IAS 41 allowing such assets to be accounted for after initial recognition in accordance with IAS 16.

The effective date of the standard is for years begining on or after 01 January 2016. It is unlikely that the standard will have a material impacl on the company's financial statemenls.

IAS 19 Employee Benefits Amendments to Defined Benefits Plans: Employee Contributions whereby the requiremnets in IAS 19 for contributions from employees or third parties that are linked to service have been amended.

The effective date of the standard is for years begining on or after 01 July 2014. It is unlikely that the standard will have a material impact on the company's financial statements.

IAS 24 Related Party Disclosures Annual lmprovements 2O10-2012 cycle: Amendments to the definitions and disclosure requirements for the key management personnel.

The effec{ive date of the standard is for years begining on or after 01 July 2014. It is unlikely that the standard will have a material impact on the company's financial statements.

IAS 38 lntangible Assets Amendments to both IAS 16 and IAS 38 establishing the principle for the basis of depreciation and amortisalion as being the expected pattern of consumption of the future economic benelits of an asset. Clarifying that revenue is generally presumed to be an inappropriate basis for measuring the consumption of economic benefits in such assets. The effective date of the standard is for years begining on or after 01 January 2016. It is unlikely that the standard will have a material impact on the company's financial statements.

o {

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Annexure

E-

162

The Applicants Financial Statements - Page 2L of 27

GUDRAN EMMA ERASMUS (PTY} LTD (Registration number 1 9951007 17 5107) Trading as Louis Pasteur Hospital Pharm acy Financial Statements for the year ended 31 December 2014

Notes to the Financial Statements Figures in Rand

2014

201 3

Loans to (from) group cornpanies

Fellow associate Louis Pasteur Hospital Holdings (Pty) Ltd The loan is unsecured, interest free and has no fixed terms of repayment.

275,302

9,168,336

Credit quality of loans to group companies The credit quality of loans to group companies that are neither past due nor impaired can be assessed by reference to historical information aboul counterparly default rates, therefore a credit rating of high has been ascribed to these loans"

Fair value of loans to and from group companies The carrying values of loans to companies approximates their fair values. Loans to group companies past due but not impaired The loans to group companies is considered to be neither past due nor impaired and subsequently no provision was created for the irrecoverability of any portion (or the whole) of the loans. The terms of the loans that were fully performing during the year, have not been re-negotiated during the year. The companies maximum exposure to credit risk with regards to the loans is limited to the carrying value of the loans.

Financial assets by category

The accounting policies for financial instruments have been applied to the line items below:

2014

Loans and receivables Loans to group companies Trade and other receivables Cash and cash equivalents

Total

275,302

269,963 12,130,569

12,674,834

12,674,934

2013

Loans and receivables Loans to group companies Trade and other receivables

9,169,336

Cash and cash equivalents

2,196,901

366,176

11,721,313

Total 9,168,336 366

,176

2,186,801 11,721,313

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163

Annexure E - The Applicants Financial Statements - Page 22 of 27

GUDRAN EMMA ERASMUS (PTY} LTD (Registration number 1 995/007 17 5107) Trading as Louis Pasteur Hospital Pharrnacy Financial Statements for the year ended 31 December 2014

Notes to the Financial Statements Figures in Rand

2414

2413

Deferred tax

Beferred tax asset Loan discounting Calculated tax loss Discounting trade receivables Discounting trade payables Provision for leave pay

218,206 589,421

7,1 30 911 ,232

122

299

(43,984) 84,510

(37,357) 58,046

959,010

828,615

Reconciliation of deferred tax asset (llability) At beginning of the year Calculated tax loss Discounting trade receivables Discounting trade payables Provision for leave pay

828,615

26,464

lnventories

Merchandise

959,010

,812

(178) (6,627)

Loan discounting

(211,076)

343,340 38,419) (480) (8,768) 2,7A9 130,809

321

5,7

54,312

4,532,835

Trade and other receivables

Trade receivables

269,963

366

,176

Credit quality of trade and other receivables The credit quality of trade and other receivables that are neither past nor due nor impaired can be assessed by reference to historical repayment trends of the individual debtors, therefore a credil rating of high has been ascribed to these debtors. Trade receivables

Credit rating of trade receivables Rating Current - 30 days 30 - 60 days over 90 days

2414 248,216

High Medium Medium

17,669 3,078 268,963

Credit rating of trade receivables Rating Current - 30 days 30 - 60 days over 90 days

2013

High Medium Medium

214,346 104,481

47,349 366,176

Fair value of trade and other receivables The carry value of trade and other receivables approximates its fair values due to the short term nature thereof.

,/ "\

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Annexure

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164

The Applicants Financial Statements - Page 23 of 27

GUDRAN EMMA ERASMUS (PTY} LTD (Registration number 1 995/007 17 5fi7) Trading as Louis Pasteur Hospital Pharmacy Financial Statements for the year ended 31 December 2014

Notes to the Financial Statements Figures in Rand

2014

201 3

Trade and other receivables (continued)

Trade and other receivables past due but not impaired Trade and other receivables which are less than 3 months past due are not considered to be impaired. The ageing of amounts past due but not impaired is as follows: 1 month past due

2 months past due 3 months past due

17 ,669 2 ,085

15,567

996

26,657

2,900

12,127,669

2,900 2,183,901

12,130,569

2,1

5,125

Cash and cash equivalents

Cash and cash equivalents consist of. Cash on hand Bank balances

96,801

Credit quality of cash at bank excluding cash on hand The credit quality of cash and bank excluding cash on hand that are neither past due nor impaired can be assessed by reference to historical information about counterpart default rates. None of the financial institutions with which bank balances are held defaulted in prior periods and as a result a credit rating of high are ascribed to the financial institutions. The company's maximum exposure to credit risk as a resaull of the bank balances held is limited to the carrying value of these balances as detailed above. All bank balances are held with two banking institution increasing the related concentration risk. However, to mitigate the risk of loss, lhe company only transacts with highty reputable financial institutions. Fair value of cash and cash equivalents The carrying value of cash and cash equivalents approximates its fair value.

Share capital

Authorised 1000 Ordinary shares of R1 each

1,000

,000

900 unissued ordinary shares are under the control of the director in terms of a resolution of members passed at the last annual general meeting. This authority remains in force until the next annual general meeling.

lssued Ordinary shares of R1 each

100

20,535,297 1,A22,234 301 ,923

18,992 ,372

21,859,354

19,199,681

10. Trade and other payables Trade payables Sundry creditors Accrued leave pay

2A7,309

Fair value of trade and other payables The fair value of trade and other payables approximates its carrying value due to the shorl term nature thereof

[^/ O

Annexure

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165

The Applicants Financial Statements - Page 24 of 27

GUDRAN EMMA ERASMUS (PTY} LTD (Registration number 1 995/007 17 5107) Trading as Louis Pasteur Hospital Pharmacy Financial Statements for the year ended 31 December 2A14

Notes to the Financial Statements Figures in Rand

2414

2413

11. Financial liabilities by category The accounting policies for financial instruments have been applied to the line items below:

2014

Financial

Total

liabilities at amortised cost Trade and other payables

,120,148

21 J2AJ4g

201 3

Financial

Total

liabilities at amortised

cost

Trade and other payables

g,1gg,6g4

gg,684

9,1

0,129,394

12. Revenue

79,157,453

Sale of goods 1

Operating profit

Operating profit for the year is stated after accounting for the following

Operating lease charges Premises

Contraclual amounts

Employee costs

171,499

285,173

6,268,364

6,612,92A

1,916,432

746,965

,230

1,636,489

Amount expensed in respect of retirement benefit plans: Defi ned contribution funds

14. Finance

costs

Trade and other payables

Late payment of tax

,317

16,270 1,333,500

1,636,489

lrw^&

166

Annexure E - The Applicants Financial Statements - Page 25 of 27

GUDRAN EMMA ERASMUS (PTY} LTD (Registration number 1 995/00717 5107) Trading as Louis Pasteur Hospital Pharmacy Financial Staternents for the year ended 31 December 2A14

Notes to the Financial Statements Figures in Rand

2414

201 3

15. Taxation Major components of the tax income Deferred Originating and reversing temporary differences

(130,395)

14,149

Accounting loss

(512,669)

50,531

Tax at the applicable tax rate al 28% (2A13:28a/o)

(143,547)

14,149

Reconciliation of the tax expense Reconciliation between accounting profit and tax expense.

lnterest & penalties

{

13,152 (130,395)

14,149

(512,669)

50,531

(1 ,701) ,333,500 (753,843)

1,636,489

,477) 97,213

328,546 29,190

Cash generated from operations

Loss before taxation

Adjustments for: lnterest received Finance costs Discounting of loans

(4,61 1)

467,175

Changes in working capital lnventories

(1 ,221

Trade and other receivables Trade and other payables

2,659,675

4,152,324

1,600,699

5,659,634

17. Related parties Relationships Associates

Louis Pasteur Hospital Holdings (Pty) Ltd, JA Badenhorst (Pty) Ltd Mrs MB Adam, Dr M Adam, Mr MFA Habib

Members of key management

Related party balances

Amounts included in Trade receivable (Trade Payable) regarding related parties Louis Pasteur Hospital Holdings (Pty) Ltd JA Badenhorst (Pty) Ltd

275,302

9, 1 68

,336

(283,030)

Related party transactions Rent paid to related parties Louis Pasteur Hospital Holdings (Pty) Ltd

Purchases frorn (sales) to related parties Louis Pasteur Hospital Holdings (Pty) Ltd

18.

285,173

171,499

(69,262,1

83)

(61 ,241 ,637)

Director's eruoluments

No emoluments were paid to the director or any individuats holding a prescribed office during the year. 24

,/ \

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Annexure

E-

167

The Applicants Financial Statements - Page 26 of 27

GUDRAN EMMA ER.ASMUS (PTY} LTD (Registration number 1 995/0A7 17 5107) Trading as Louis Pasteur Hospital Pharmacy Financial Statements for the year ended 31 Decernber 2014

Notes to the Financial Statements Figures in Rand

19.

2014

201 3

Risk management

Capital risk management The company's objectives when managing capital are to safeguard the company's ability to continue as a going concern in order to provide returns for shareholder and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital.

Financial risk management The company's activities expose it to a variety of financial risks: market risk (including currency risk, fair value interest rate risk, cash flow interest rate risk and price risk), credit risk and liquidity risk. The company's overall risk management program focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the company's financial performance. Risk management is carried out under policies approved by the board of directors. The director provides principles for overall risk managemenl, as well as policies covering specific areas, such as interest rate risk, credit risk and investment of excess liguidity.

Liquidity risk Prudent liquidity risk management implies maintaining sufficient cash and marketable securities, the availability of funding through an adequate amount of committed credit facilities and the ability to close out market positions. Due to the dynamic nature of the underlying businesses, company treasury maintains flexibility in funding by maintaining availability under committed credit lines. The company's risk to liquidity is a result of the funds available to cover future commitments. The company manages liquidity risk through an ongoing review of future commitments and credit facilities. Cash flow forecasls are prepared and adequate utilised borrowing facilities are monitored. The table below analyses the company's financial liabilities inlo relevant maturity groupings based on the remaining period at the slatemenl of financial position to the contractual maturity date. The amounts disclosed in the table are the contractual cash flows.

At 31 December 2014 Trade and other payables

At 31 December 2013 Trade and other payables

Less than year

Between 1 and 2 years

Between 2

Over

years

and 5 years

(21 ,12A,148)

Less than year (1 9,1

Between

and 2 years

Between 2

Over 5 years

and 5 years

99,684)

lnterest rate risk The company's interest rate risk arises from loans to group companies, cash and cash equivalents and borrowings. Loans issued at variable rates expose the group to cash flow interest rate risk. Loans issued at fixed rates expose the company to fair value interest rate risk.

At 31 December 2014, if interest rates on Rand-denominated borrowings had been 1% higher/lower with all other variables held constant, post-tax profit for the year would have been R 87,319 (2013: R15,724) lower/higher, mainly as a result of higher/lower interest expense on floating rate borrowings. Deposits and cash balances attract interest at a rate that varies with prime. The company policy is to manage interest rate risk so the fluctuations in variable rates do not have material impacl on profit and loss.

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Annexure

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168

The Applicants Financial Statements - Page 27 of 27

GUDRAN EMMA ERASMUS (PTY} LTD (Registration number 1 995/007 17 5lA7) Trading as Louis Pasteur Hospital Pharmacy Financial Staternents for the year ended 31 December 2014

Notes to the Financial Statements Figures in Rand

19.

2A14

201 3

Risk management (continued)

Cash flow interest rate risk

Financial instrument

Current Due in less rate than a year 9.25 % 12,127,669

Due in one

interest Bank balances

hlo

years

Due in two to Due in three Due after five years three years to four years

Credit risk Credit risk is managed on a company basis. Credit risk consists mainly of cash deposits, cash equivalents, and loans and trade debtors. The company only deposits cash with major banks with high quality credit standing and limits exposure to any one counter-party.

Trade receivables comprise a widespread customer base. Management evaluated credit risk relating to customers on an ongoing basis. lf customers are independently rated, these ratings are used, Otherwise, if there is no independent rating, risk control assesses the credit quality of the customer, taking into account its financial position, past experience and other factors. lndividual risk limits are set based on internal or external ratings in accordance with limits set by the board. The utilisation of credit limits is regularly monitored. Financial assets exposed to credit risk at year end were as follows:

Financial instrument

2014

Trade and other receivables Cash and cash equivalents Loans to group companies

268,963

2013 366,176

12,127,669

2,1 83,901

5,302

9,168,336

,A n/-"'s

IN THE HIGH COURT OF SOUTH AFRICA

GAUTENG DIVISION, PRETORIA Case No:

ln the matter between

Applicant

RUBTCON GROUP (PTY) LTD

and

First Respondent

ETIENNE JACQUES NAUDE (Business Rescue Practitioner of Second Respondent)

LOUIS PASTEUR HOSPITAL HOLDINGS (PTY) LTD

Second Respondent Third Respondent

BONITAS MEDICAL FUND SOUTH AFRICAN REVENUE SERVICES

Fourth Respondent

DENOSA

Fifth Respondent

MASTER OF THE HIGH COURT

Sixth Respondent

THE GOMPANIES AND INTELLECTUAL PROPERTY COMMISSION

Seventh Respondent

THE CREDITORS OF THE SECOND RESPONDENT

Eighth Respondent Ninth Respondent

HOSPERSA

CON FI RMATORY AFFIDAVIT

l, the undersigned,

(wc

FREDERICK HERSELMAN LLOYD:

./ \

..n

do hereby make oath and state as follows:

DEPONENT AND AUTHORITY

I am a major male former employee of the applicant that has its

principal place of employment at Louis Pasteur Building, 374

Francis Baard Street, Pretoria.

was employed with the

applicant as a company secretary from 2004 and also served for a period as a director of the applicant until my retirement in 2010

during which period lwas actively involved in the management

of the applicant. I have also been a director of the second respondent from 1996 until my retirement in 2010.

The facts herein contained are within my own

personal

knowledge and belief, save where stated otherwise or appears

different from the context hereof, and are to the best of my knowledge, both true and correct.

I have read and confirm as correct the contents of the affidavit of Tendani Muligwe in as far as they relate to me and to issues

within my knowledge.

tA ff

DEPONENT

I certify that the deponent

has acknowledged that he knows and

understands the contents of this affidavit which was signed and sworn

before me

on this the ozt+ day of at 8- B f 8 2018, and that the Regulations contained in

Government Notice No. R1258 of 21 July 1972, as amended, and Government Notice No. R1648 of 19 August 1977, as amended, having been complied with.

\u COMMISSIONER OF OATHS OFFICIAL CAPACITY

REG No: 9l1l8t4 (AD)

BOX

AREA APPOINTED FULL STREET ADDRESS:

4119

ROOYWAL

MOKOPANE STERKRIVIER

0600

0630

TEL:0154530611 CELL: 083 400 8364

frl ffi !.$$A RIS VAF,I EDE :#fu{FXI$$ICNER OF OATH$

i'tq-"1

VfrNTER i,(0u#N*EI-JC0L#!{ffiL rT"-,-

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Annexure C - Letters of Demand - Page t of 8

172

:l*

phnrmed th€ ind *p*ndent choIrs DATE z l5ll0/2018

FAX NO: 0123366047 ACCOUNT NO: 601355 ACCOUNT NAME: RUBICON GROUP PTY LTD

LE,TTE,R OF DE,MANI) Sre advise that, hsving

issndyorwithprcviors rcmindcrs, yrnrheve frilodto sctrlo tb oustaoding mom (Eytnr

withh a pcriod of 2 days trom the date of this lofrer, we shall bc ohligpd to rcpct your defrultto CREDIT GilIARANIEE intorms ofourcreditinsurmco policywhere afterlegnl actimwill be instfuted ogairot yor withortr firfhcr notice.

Unloss prynena is rcc€iv,ed

It will

geatty aperesiot€d if a diroct depooit is dme to orr booking accont

irediarcly

as stated bclow:

FIRST NATIONAL BANK

ACCOLINTNO:

62329317251

BRAI{CH CODE: 22L926

BRAI{CH:

$DtG]rourPhstmodaccCIdntr myondepocitrvten-rti"gpoymedcowe poynm and altocatc thc amount cmtAly. Please

Ifindly frx

ns a copy of

are able to

idsilifytho

tte d€posit slip as proof ofpoyment to either frr rumber (Olll ?$ nSiI o email tte

corfirmationto@ Your urg€,nt atteirtion would be greafly approciatod Yours Faithfully For and on behalf

PharmedM(Pty)Ltd

8ffi@ DUft8AF.I

JOHAH?*E5BUfi6

31 Imwbu Psrh Close, ft iverhorse Vo Ltry, 4S51 031 571 2800 F:031 571 2950 info@Fhormed.co-zo

138 lndustriat ftosd, Amo[gom. ?025 T.: 011 309 27m

rrr*vw. p

a rm e d.

co.zo

Co- Reg. No-; 1985

F: 011 S30

003I

info@Fhsrrned.f,o-ro www.phffrmed"co.zfl

eArE ss\fiJf{ 4-S Tehstisl ftood. Psrcw lndustrio, 7493 T: S86

0rS LTS2

F;031 571 I95O lnfo@Fhsrmed"co-Zfl www-phormed.ctl.zo

/ 005694 / 07 Directors; Dr lR Borton, NT Vqn der Wott Dr

WE ARE

Seedot YM Vohed, CG Moody. R Oone

r ,

I}.{PERIAIT

TVLA

Annexure C - Letters of Demand - Page 2 of 8

The Sisonke Partnership Ua DSV Healthcare 1 Meadowview Lane Meadowview Business Estate, Linbropark Johannesburg South Africa , 2065

Final Demand

Louis Pasteur Private Hospital Louis Pasteur Private Hospital Postnet Suite 1045 Private Bag X 153 Bryanston 2021

Date:

person: Telephone: Contact

30.10.2018 Susan Knight 0102480885

Telefax: susan.knight@za.dsv.com E-mail: Customer account: W517257 30 Days from Statement Payment term: Postings are considered up to and including 30.10.2018

Dear customer,

We refer to our recent correspondence. Our record still shows invoices on your account which are overdue and not under query. Payment of the aforementioned amount must be made within one (1) day of the date of this letter, failing which legal action will be instituted for the recovery of the full outstanding debt, the costs of which will be for your account. Payment must be deposited into our bank account and the confirmation of the deposit e-mailed to your credit controller. Our banking details are reflected in the footer of this letter

Total of due

ZAR

items

423,312.97

ln the meantime, we have suspended trade on your account. All future purchases are to be settled in cash prior to delivery. Should you not be able to make the above payment, please contact your credit controller to conclude a mutually acceptable repayment arrangement. The details of your credit controller are reflected above.

Alternatively, in terms of Section 129(1) of the National Credit Act 34 of 2005, you may be entitled to refer the matter to a debt counsellor, alternative dispute resolution agent, consumer court or or ombud with jurisdiction with the intention that any dispute in relation to this matter may be resolved or agree on a plan to bring your outstanding indebtedness up to date. Please also be advised that, in addition to proceeding with the necessary legal action, you may be adversely listed with the credit bureau.

We look forward to hear from you. Yours faithfully Kind regards

Bank details: Nedbank ZAR: Acc No 1908599863 Branch Code: 130126

Swift Code: NEDSZAJJ

USD: Acc No 7859010461 Branch Code: 130126

Swift Code: NEDSZAJJ

USD: Acc No 7579369826 Branch Code: 130126

Swift Code: NEDSZAJJ

rA \'

f\ruP

or alternatively Please select DSV Healthcare as a predefined beneficiary when making payment and use your 7 digit account number (beginning with \^r) as your reference.

Annexure C - Letters of Demand - Page 3 of 8

DSV Healthcare

.ul'\ n{{i Page 2 out of 2

Annexure C - Letters of Demand - Page 4 of 8

TRAH$

175

PHARIIII TRANSPHARM (PTY) LTD REG N0 : 1994100658407

BUSINESS ADDRESS:387 TALJAARD STREET HERMANSTAD, HERCULES, PRETORIA, OO82 P O BOX 23297, GEZINA , 0331 TEL : +27 (0) 12377-9000

FAX:+27 (0) 12377-0929

Dear valued client Per email

RE: ACCOUNTS PAYABLE ON OR BEFORE 24th

As a valued stakeholder in our company we would like to bring the following under your attention The Transpharm month closes on the 24th ol every month. Amounts due should be paid on or before the 24th of the month. Accounts that are not settled within the agreed terms has a major effect on the company's cash flow.

We hereby would like to request that all amounts due are settled on or before the

24th

of every month.

Accounts that are not paid within the agreed terms may cause the account to be placed on hold and may have a negative impact on the credit limit. We trust you will find the above mentioned in order Kind regards

Transpharm management

REGISTERED OFFICE : CNR WLLIAM DABS & OLD PAARL ROADS, PO BOX 215, BRACKENFELL, 7561 , SOUTH

AFRICA

TEL : +27 (0)219835224 7A74'. +27 (0)219804673 www.transoharm.co.za

DIRECTORS : M BOSMAN, J V R BRONN, A J VAN ASWEGEN

yw/a

176

Annexure C - Letters of Demand - Page 5 of 8

FH*nilt

T;*&r*s

REc HO : tSS{ttrrubr,0? BU$IHE$S ADDRE$S:88T TAIJAARF $THEET HERMAITI$TAS, HERCULE$, PRETORIA, SSffa p o Box 23297, GEZIHA, S3S1 TEL : +37 {0} 12 Sr7-S000

F$( ; *27 t0) 12 37r,SS[$

TH E

HOSPITAL PHAR]I{ACY

p s Bsx 11876 THE TRAT4SHED PRETORIA

0126

[Fer:

EmailJ AccsuNT ilu]rtBER r *rzfitT

RE: Paymcnt arrangement wtth ragarde to outstanding balance If Owner/ Director / ltlember , herehy acknowledge that I/$/e are indehted tu Tianspharrn to the amount of R220,r597.3?,,

sfr*..*

I hereby request Transpharm to consider the following payment arrangement, The balance to be paid within 6 mont* ls follows: {Please lndlcate the amounto that will be paid and thc date payment can be expected) Date:

Amount:

Date:

Arnount:

Date:

Arnount:

Date:

Amount:

Date:

Arnount:

Datel

Amountl

I understand that the outstanding per month

ffi

!a*--Erf!l*la+

REGISTERED

7561, SOUTtl

balance will be charged interest at

Zo7o

oFFlcE : cNR wllrtAM D/qB8 & oLD PAARL RoADs, Fo Box 2to, BRAcKEHFELL,

AFRIGA

TEL I *27

(0)2198952"t F$(;

DTRECTORS : *rI

***i,IAH,

+27

(0p134H873 lnrv.tranrnherm.ao.m

J V R HNOilH, A J UAH A8WEfiEI{

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Annexure C - Letters of Demand - Page 6 of 8

Conditions for arrcngements

177

1) If this anrngement Is not rcturned withrn 3 working days from date of this letter the account wlll be crosed and steps will be taken to recover the outstanding balance. 2) Transpharm has the right erther accept or decline this payment arrangement.

3) Transpharm wlll notify me/us of their decision wlthln 3 working days after the return of the payment arrangement.

4) lf at any stage the payments are not made, as agrreed upon, it will constitute a brcach of the arrangement and the account will be handed over To Transpharm collecHon agency.

we attached a summary of all outstandlng invoices for your attention. Signed at

Name

on this da

of this

Designation

Slgnature

For offlce uae only Approved Declined

PR Paterson

Date

f^-'\

Annexure G - Letters of Demand - Page 7 of

178

PROPOSED FORM OF NOTICE lN TERMS OF SECTION 129(1)(a) OF THE NATIONAL CREDIT ACT, NO. 34 OF 2OO5

05 Dec 2018

RUBTCON GROUP (PTY) LTD

374 FRANCIS BAARD STREET PRETORIA

Attention: LAWRENCE

Dear Si/Madarn

NOTIGE lN TERMS OF SECTION 129 (1) (a) OF THE NATIONAL CREDIT ACT, NO. 34 OF 2005 (the'Act') AGCOUNT NUMBER: 601355 (the'Account Number')

1. ln this notice 'you' means RUBICON GROUP (PTY) LTD ; and 'we'means PHARMED PHARMACEUTICALS (PTY) LTD. 2. You entered into a credit agreement with us on 06 May 2002 (the'Credit Agreement'), pursuant to which we allocated the Account Number to our transaction. 3. ln terms of section 129(1Xa) of the Act, you are hereby advised that you are in default under the Credit Agreement as follows:

1.1 1.2

Month of

delivery/shipment Original

due

I 25 Oct 201 I

Aug 2018 Sep 2018

24 Sep 201

Oct 2018 Nov ZAfi

23 Nov 2018 20 Dec 2A18

Total amount owing Total amount overdue

date

lnvoice

type

Amount owing (VAT lncl,) 30,096.97

Biil

Bilt

222,790.54

BiII

144,719.22

BiII

2A9,238.10 705,844.83 497606.73

4. The Overdue Amount have been so in default since 26 Jul 2018 (the'Default Date').

n'rE

Annexure G - Letters of Demand - Page B of

179

5. We propose that you consider referring the Credit Agreement to a debt counsellor, alternative dispute resolution agent, consumer court or Ombud with jurisdiction, with the intent that we try and resolve any dispute under the Credit Agreement or develop and agree a plan to bring the Overdue Amount(s) up to date. 6. Should you either fail to respond to this notice at all, within 10 (ten) business days from delivery hereof or respond by rejecting the aforesaid proposals and should you remain in default with your obligations under the Credit Agreement for a period of 20 (twenty) business days since the Default Date, we may 5.1 cancel or enforce the Credit Agreement and proceed with relevant legal steps against you as a result of your breach, the costs for which you will be held liable; and/or 5.2 report your default to Credit Guarantee under our Trade Credit lnsurance policy.

7. Please note that, to the extent that the Credit Agreement is not, or is not deemed to be, a credit agreement under and/or for purposes of the Act, this demand remains extant in accordance with its terms. 8. We urge you to act responsibly and look forward to hearing from you.

Yours faithfully

PHARMED PHARMACEUTICALS (PTY) LTD

Per:

Position:

JALIL JHETAM FINANCIAL MANAGER

/ \

Annexure H - Communication to the Staffand Doctors of LPHH dated 6 Dec 2018 - Page L of

Louis Pasteur Hospital Hotdings (PtV) Ltd r'ouisPasteurMedf

iiffi ti;iii,mH,?xxll,ifii;r,ii'#l;so,rhAf

Tel: 77 72 3366331 or 3365000 Fax; /7

Committed to Servr'ce Excellence

336

180

rica.0002

&47

Kaizen

MEDICAL EXPERTS

FROM

PUBLIC RELATIONS AND MARKETING DEPARTMENT

NATE

06 DECEMBER 2018

SUBJECT

FESTIVE SEASON MESSAGE BY HOSPITAL MANANGEMENT AND BUSINESS RESCUE PRACTITIONERS

The festive season is almost upon us again, and it is time to be Merry in the company of loved ones and friend. An entire year has come and gone, and it seems as if it was oniy a short while ago that the festive season of 2017 had been with us. As we prepare to unwind, relax and celebrate, it is important to pause for a moment and reflect on the year that has passed. This moment of reflection will help us gauge how far we have come and what still needs to be done in order to accomplish the objectives we had set for 2019. To face the future with confidence, we need to draw from lessons of the past. For Louis Pasteur private Hospital, 2018 has been an eventfulyear, and also one that produced some daunting moments-from which we have learnt, acted and had been praised for our quick response. I refer in particular to the theatre equipment and many other challenges that needed our attention, our relationship with the customer lurched from excellent to challenging, but we have happily overcome this and have various projects that will remove supply bottlenecks.

ln recent weeks we also experienced interference in the hospital operations by hospital directors, which created uncertainty in staff members and clients, however on the 4h of December the Business Rescue Practitioners managed to secure a court order that prevent directors from interfering with hospital management and business operations.

Stratesic Support The hospital has partnered with a new Pharmacy that will be situated on the ground floor opposite Badehnhorst , which will be responsible for supplying medication to the hospital. this will ensure that the curent disruption of medical supply is completely eradicated.

We also partnered with various departments as part of our organizational growth, which includes; Road Accident Fund, CPIS, National Defense Force, Botswana government, Angola Government, Mamelodi Sundowns football team and All medical aids to mention the few.

Louis Pasteur Hospital Holdings (Pty) Ltd Ua Louis Pasteur Private Hospital. Registmtion Number: 1992/001696/07 374 Francis Baard Street, Ground Floor, Louis Pasteur Medical Cenlre, Pretoria, 0001 Tel: (012) 336 6000 Fax: (012) 336 6047 E-mait: lOuispasteu{@icorl,-c..q.zq Website: www. lou ispasteu Directors: Dr. M. Adam, Dr. F.S, Mufarnadi, Mr. D. Daka, Dr. A.S. Nkomo, Mr. A.S Akoob, Dr. M.A. Ramasia, Mr. G.J. varr Emmenis, Mr. M.Y. Adam

.co,za

,AA f\A

Annexure H - Communication to the Staff and Doctors of LPHH dated 6 Dec 2018 - Page 2 of 2

181

Louis Pasteur flospital Holdings (pty) Ltd LouisPasteurM;::iiHTliiimH,H#,ilH;irff i:;,?,1?ar'i.adoo-z Tel:27 723366331 or 3366000 Fax;2Z 12336

Committed

Seruice Exce llence

Kaizen

It wa1 through your talents, hard work and dedication that we have been able to provide this strategic support to our customers. Whatever we may say will never be enough, but accept our grateful thanks and appreciation for your-effois. We satute and thank you for.your.unwavering support. We would also lifte to reassure you that the hospital is stable, therefore you should not be troubled by anything pertiining to hospital operations ln the New Year there will be further strengthening our partnerships with customers and potential customers, as we prepare to launch our business growth plan that is intended to expand our existing business and attract new ones.

We have to continuously remain vigilant about the risks pertaining to our environment and functions-both existing and emerging-and ensure that wJ have both sufficient and practical mitigation measures in ptace to cushion the effect of these risks. At the same time, it is realistic to begin preparing for further input into deliberations that are taking place to realign or develop our business modei, as colleagues, you have a crucial role to play in ensuring that we attain our objectives.

Conclusion We want to wish you and everybody close to you a joyous festive season and prosperous new Year, we also like to efiend our wishes to at all experts who will be working over the festive period and cannot be with their loved one. Our thoughts wilt be with you. For some people, the coming holiday season will not be a joyous occasion because of personal circumstances or loss. Our thoughts, hearts and prayers are with you as well' As some of you make the long journey home and various destinations, [tease drive safely.

Kind

Michael Sadiki PRO/Marketing Manager Email : marketinq@louispasteur.co.za Tel: 012 336 6307 Mobile: A72389 4186 Louis Pasteur Hospital Holdings (Pty) Ltd Ua Louis Pasleur Privale Hospital. Regiskation Number: 1ggzooj696/07 374 Francis Baard Sheel, Ground Floor, Louis Pasteur Medical Cintre, Pretoria, 0001 Tel: (0'12)336 6000 Fax

(012)Pqq04i e-maii loulspasteur@jcon.co.za website:www.louispasteur,co.za

Direclors: Dr. M. Adam, Dr. F,S. Mufamadi, Mr. D. Daka, Dr. A.S. Nkomo, Mr. A"S AkooU Dr. M.A. Ramasia, Mr. G.J. van Emmenis, Mr. M.y. Adain

PA-A

Annexure

Letterof Suspension in respectof MrsVan Rensburg dated 7 Dec2018

-Pagelof

182

IVIANoNG PTLANE lv{ oKoTEDt lt-r(l-

By Email

The Rubicon Pharmacist : AIta Janse Van Rensburg

07 December 2OL8

SUSPENSION

We act on behalf of Rubicon Group Proprietary Limited ("Rubicon")

Our instructions are to advise you as we hereby do that Rubicon has resolved to suspend you with immediate effect in order to conduct an inquiry and a disciplinary hearing at which you will be provided with an opportunity to present you version of events. The suspension is for an indefinite period and will be reviewed based on the outcome of the disciplinary hearing to be arranged. The reasons for the suspension are the following: 2.L.

Failing to carry out and obstructing the implementation of instructions provided by the

management of Rubicon regarding the supply of medical supplies to Louis Pasteur Holdings Hospital Proprietary Limited ("LPHH"); 2.2

Facilitating interference in and the unlawful management of the pharmacy by the Business Rescue Practitioner appointed to manage the affairs of LPHH ("BRP") contrary to specific instructions provided by the management of Rubicon;

2.3

Unlawfully facilitating the ordering of medication by the

BRP and

payment of suppliers on

the account of Rubicon; 2.4

Conspiracy and collusion with the BRP to set up a new pharmacy in competition with Rubicon;

2.5

Conspiracy and collusion with the BRP to entice and solicit the employees of Rubicon to join the employment of a new pharmacy in competition with Rubicon;

2.5

Misconduct and fraud based on the above allegations.

Due to the serious nature of the allegations against you, Rubicon has resolved to suspend you to avoid any interference with investigations to verify such allegations.

Directors: Aubrey Manong LLB (UL), Tshepang Mokotedi 84 LLB, LLM (Tax) (Wits) Address:164 KatherineStreet, Pinmill Farm, Block F, Ground Floor, Sandown, Sandton,2196 Tel :011 262OLl3 / 0456 Fax:011 2620439 Email : tm@ manongpila neinc.co.za

nrr\S

Annexure I - Letter of Suspension in respect of Mrs Van Rensburg dated 7 Dec 2018 - Page 2 of 2

You are hereby advised

183

to relinquish control of all your responsibilities and items or tools of trade

relating to your employment with Rubicon. ln particular you are requested to advise the South African Pharmacy Council of your suspension with immediate effect.

You will be provided with details on the disciplinary hearing allegations in the near future.

to be held in respect of the above

Yours faithfully

Tshepang Mokotedi M PM lncorporated

Kindly sign below to confirm receipt of this letter:

Signatu re

Date:

Directors: Aubrey Manong LLB (UL), Tshepang Mokotedi BA, LLB, LLM (Tax) (Wits) Address:L64 Katherine Street, Pinmill Farm, Block F, Ground Floor, Sandown, Sandton, 2L96

Tel:OLL262011310456 Fax : OtL262 0439 Email : tm@ ma nongpila neinc.co.za

1,/^ T.ft

Annexure J - First Respondents Letter to the Applicants Attorneys dated 14 Dec 2018 - Page 1 of 26

184

^t etiennffibusiness tescrJe Your Ref/U Verw

Date/Datum

Our Ref/Ons Venru ETIENNE NAUDE SARIE JOSLING f 072 480 1753 (Switchboard) Fzu< 086 204 2642

1.4

DECEMBER 2018

*ag*3 *{.t1 :{*k,e* "zffi

MPM ATTORNEYS

$ANpfoN Attention : Tshepang Mokotedi Dear sir BUSINESS RESCUE : LOUIS PASTEUR HOSPITAL HOLDINGS

RUBICON

We refer to your recent letter dated 12 December 2018 as well as your previous letters of 10 December 2018 and 25 October 2018.

After a full investigation of the relationship benrueen Louis Pasteur Hospital Holdings (Pty) Ltd (LPHH) and your client Rubicon, I came to the conclusion

that there was no business agreement or contractual relationship between LPHH and Rubicon for purposes of pharmacy related services, nor was there

any lease agreement between LPHH and Rubicon for purposes of the premises occupied by Rubicon.

739 Blesbok

Sfeet Rietfontein A/H, Mooikloof, Pretoria East - GPS : $25.84923 E28.32128 Tel : 012 4801753 Fax : 086 204 264.2 Enuil : pafi*.@qry*r,*sk.rx-.za P O Box 92082, MOOIKL0OF, 0059; C/O Mariana Pera Docex

Etienne Jacqures Naude - Parher Lonika van der \ttatt - Professional Assistant Thys Naude - Candidate Attorney

4.0^

Edelweisse Oosfrruizen - Candidate Attomey vAT N0 4680217462

I\A.F

Annexure J - First Respondents Letter to the Applicants Attorneys dated 14 Dec 2018 - Page 2 of 26

I also

185

determined that LPHH paid most, if not all, of the expenses of Rubicon,

including salaries of employees and payments for purchases on a retail basis. All the discounts on wholesale purchases were also given to Rubicon. On the other hand, Rubicon did not share any profits with LPHH, nor did it

make any payments to LPHH for these benefits. 4.

came to the conclusion that the arrangement is not in the best interests of

LPHH and I therefore determined to end the relationship during October

20L8. LPHH therefore terminated all the above payments from effect of 1 November 20t8.

As a result, thereof, Rubicon attempted to suspend its only pharmacist registered with the Pharmacy Board Mrs Alta van Rensburg, with reference to Rubicon's pharmacy licence.

She took the view that this constituted constructive dismissal and reported her dismissalto the Pharmacy Board.

The effect thereof is that Rubicon does not currently have in its employ a registered pharmacist and it cannot therefore dispense medicine under its licence. lnsofar as it is doing so, it is doing so illegally and unlawfully.

LPHH also cannot therefore conduct any business with Rubicon under these

circumstances. 9.

On 25 October 2018 you wrote a letter to me on behalf of Rubicon claiming certain payments and stating the following: "Future supply of medication and equipment to LPHH is hereby suspended

with immediate effect until the amount of R6 622 75t.0O in respect of post

(\t

(I)

business rescue obligations has been paid."

u0 (d

O. 73$ Blesbok $fest, Rietfonbin A/H, lttuoikloof, Pretoria East - Gp$: $25.&+923 E28.3t128 Tel : 0124801753 Fax:080 204 ?642 Email P O Box 92082, MOOIKIOOF, 0059; C/O Mariana pena Dooex Etienne Jacques Naude - Parher Lonika van dsr Watt - Profes$ional Assistant Thys Naude - Candidat* Attomey Edelwei$$e Oosthuizen - Sandidate Attomey

vAT NO 48S02174S2

I^tae

Annexure J - First Respondents Letter to the Applicants Attorneys dated 14 Dec 2018 - Page 3 of 26

186

As a result, thereof, writer had no other alternative but to make the necessary

plans to source medication and equipment somewhere else. Writer has done so and your client has no basis or grounds for complaining in respect thereof.

11.

Your client's actions in this regard put the lives and the health of patients in danger and prejudiced the business operations of LPHH and the hospital.

12.

Writer answered your letter in terms of a letter dated 26 October 2018, which I

annex hereto, in which I denied the allegations of the amounts claimed by

Rubicon, and wherein it was recorded that by agreement between your Mr Dingaan and myself, LPHH would not pay any further salaries to the staff of Rubicon, and that as from November 2018 Rubicon would pay its own staff.

13.

Further requests to meet with your client and/or yourselves to negotiate a satisfactory resolution to the situation fell on deaf ears and were ignored.

L4.

Writer has rejected as business rescue practitioner the claim of R4 783 620.00, as there are no supporting documents for this claim.

L5.

The amount of R9 A22 764.00 has been recognised by myself and it will be included in the business rescue plan. ldenythatthe amount of R6 622751,.00 is outstanding. Writer has access to the books of account of Rubicon and there is simply no basis for this claim.

Furthermore, your client has refused to provide any supporting documents for this claim.

Writer has also suggested that an independent auditor should be appointed by the parties to do a reconciliation and investigation of these claims. This

cno

was refused by your client.

(ll O.

739 Blesbok $freet, Rietfontein ldH, trrtooiklool Pretoria East - GP$ : S25.814923 828.32128 Tel : 012 4801753 Fax: 086 204 2U2 Ennil i sar&W&fiwakryr"zq P 0 Box 92082, MOOIKLOOF, 0059; C/O Mariana Pena Dooex Etienne Jaoques Naude - Parher Lonika van der Watt - Professional Assistant Thys Naude - Candidate Attomey Edelweisse Oosftuizen * Candidate Attomey

vAT NO 468021 7462

{

n4.R ,/

tf^

187

Annexure J - First Respondents Letter to the Applicants Attorneys dated 14 Dec 2018 - Page 4 of 26

l-8.

Your client owes SARS approximately R1 million and any amount that LPHH

would pay into the bank accounts of Rubicon, is in danger of being attached by SARS. LPHH is therefore simply not in a position to do anyfurther business

with your client and is in law not obliged to do so. 19

Mrs Alta Janse van Rensburg, the pharmacist, has now been employed by LPHH, LPHH is currently sourcing its medical supplies and equipment from designated suppliers who are supplying LPHH and who are invoicing LPHH directly.

20.

On 10 December 2018 you wrote a letter claiming the abovementioned amounts to which I have answered above, as well as an amount on loan account of R233 280 000.00.

21,.

I deny the allegation that the alleged amount of R233 280 000.00 exists on loan account with LPHH in favour of your client. There is simpty no basis for

such a claim and no basis, grounds or supporting documents have been provided to me substantiating such a claim. 22

I have also rejected this claim and the reasons for rejection of the claim are

set out in the business rescue plan. 23.

On 10 December2018 an email was sent by your client indicating that Rubicon Pharmacy have been instructed by its directors to temporarily discontinue all the admin support it provides to the hospital with immediate effect. lt included processing of credits on payment accounts, capturing of invoices and verifying prices, maintaining the price file, all audit queries and ordering and issuing of theatre stock. The email stated that it will continue therewith until proof of payment is received.

\ilo

h0 (c

tr 739 Blesbok Steet, Rietfontein AlH, Mooikloof, Pretoria East - GPS : S25.84923 E28.32128 Tel : 012 4801753 Fax : 086 m4 2U2 Email i *frfrpffiq?fr{qhffi,za P O Box 92082, MOOIKLOOF, 0059; CIO Mariana Pena Docex Etienne Jaques Naude - Partner Lonika van der Walt - Professional Assistant Thys Naude - Candi&te AttomeY Edelweisse Oosttuizen - Candidate Attomey vAT NO 4680217462

M .0

Annexure J - First Respondents Letter to the Applicants Attorneys dated 14 Dec 2018 - Page 5 of 26

24.

thereafter wrote a letter on

188

December 2018 to yourselves indicating that

insofar as any agreement may have existed between LPHH and Rubicon,

which is denied. this constituted a repudiation of any such possible agreement, which I accepted and therefore I cancelled any possible agreement that may have existed between LPHH and your client, Rubicon. 25.

I have now received a letter dated 12 December

2018 from yourselves

alleging that I am trying to maliciously harm Rubicon's business, which is not

true and incorrect. LPHH has no agreement with Rubicon and cannot be forced to do business with Rubicon, lt is in fact Rubicon that has refused to do further business with LPHH. 26.

It is further alleged that suspension of the shared services is done with the intention of diverging business from Rubicon to a proposed new pharmacy. This allegation is ludicrous, as I have shown above, it is your client that has suspended its servicesto LPHH, which has caused me to take the necessary emergency measures to protect the hospital and its patients.

As I have mentioned Alta Janse van Rensburg has been constructively dismissed by yourselves and she is currently in the ernploy of LPHH. LPHH is entitled to purchase medical supplies from any medical supplier and is not

bound to do business with Rubicon.

28.

Your client required certain undertakings, which I will not provide.

2S.

I have no

obligation to make any payments as requested and I have diverted

no medical supplies from Rubicon. Mrs Alta van Rensburg is now working for LPHH. There is no question of a new pharmacy being created by LPHH. LPHH is simply taking emergency measures to maintain its required supply

of medical supplies and equipment, which it is entitled to do.

rno

h0 IU

O. 73S Blesbok Smet, Rietfontein A/H, h{ooikloof, Prehria East - GPS : $2$.84923 828.32128 Tel : 012 4801753 Far : 086 204 264? Ernail : W#ffiWps*k,fffi,#., P O Box 92082, MOOIKLOOF, 0059; C/O Mariana Pera Docex g Etienne Jacques Naude - Partner Lonika van der Walt

Thys Nar.rde

Professional Assistant

- Candidate

Edetweisse Oos$ruizsn

Attomey

Candidate Attomey

vAT NO4680217462

/\ \\r

Annexure J - First Respondents Letter to the Applicants Attorneys dated 14 Dec 2018 - Page 6 of 26

189

You threaten with an urgent court application. Firstly, the sequence of the correspondence and events that happened as set out above, clearly illustrate

that no application can or will be regarded by any court as urgent, that your client may wish to bring. 3L.

Secondly, LPHH has no binding agreement in terms of which it has to conduct business with your client, There is no amount that LPHH has to pay to your client at this point in time, and payment of any alleged outstanding amount, can never be dealt with on an urgent application basis.

32.

Your client is further occupying premises to which it is not entitled at all as it

has no lease agreement with LPHH or for that matter anyone else. lt is therefore unlawfully in the premises it currently occupies. 33

It was your client itself that suspended all services and decided to discontinue services to LPHH, and therefore no courtwill entertain any urgent application or your clients behalf contrary to your clienfs own actions.

34.

A court would regard the actions of your client as having created its own urgency and having been the cause of its own problems. There is therefore clearly no basis for any urgent application and there is also no legal basis for any relief that your client may wish to seek against LPHH and/or myself.

35.

I have now properly and in detail set out the position of LPHH and myself, and this letter will be disclosed to the urgent court, should your client nevertheless want to bring an urgent application. ln such an event, I will not

only seek an attorney and client costs order against your client, but also a cost order de bonis propriis against yourself, on the basis that any urgent application will be totally irresponsible, malicious and vexatious under the circurnstances.

\oo

uo (E

O. 739 Blesbok SUeet, Riefontein A/l-1, lvlooikloof, Pretoria East - GP$ : 525.84923 E28.32128 Tel :0124801753 Fax:086 m4 2642 Email P O Box 92W2, MOOIKIOOF, 0059; C/O Mariana Fena Docex Etienne Jaoques Naude - Parher Lonika van der Watt - Professional Assistant Thys Naude - Candidate Attomey Edelweisse Oosttuizen - Candidate Attomey vAT N0 4680217462

:WM

Annexure J - First Respondents Letter to the Applicants Attorneys dated 14 Dec 2018 - Page 7 of 26

36.

190

lf your client is aggrieved about any claims that I have not recognised, it should institute action for payment and prove its claims. There is nothing urgent thereto.

For the sake of completeness, I annex hereto copies of all the letters and

emails that I have referred to above.

Regards

Busi

This office will cfose on the 74th December Z0fg at rzhOo and will re-open again on the 3'd January 2079

fr.o

b0 (6

O739 Blesbok $fieet, Rietfontein A/l.l, Mooikloof, Pretoria East - GP$ : $25.84923 828.32128 Tel : 012 4801753 Fax : 086 204 2642 Email : swfrvWa{.1ryrqk'ry}"4a P 0 Box 92082, MOOIKLOOF, 0059; C/O Mariana Pena Docex Etienne Jaoques Naude - Partner Lonika van der Walt - Professional Assistant Thys Naude - Candidate Attomey Edelweisse Oosthuizen - Candldate Attomey vAT NO 4680217462

I\^h

,f^

Annexure J - First Respondents Letter to the Applicants Attorneys dated 14 Dec 2018 - Page 8 of 26

$arie Joslins From:

Ts hepang Mokotedi <tm @m pm lav'ryers.co,za>

$ent: To:

12 December 2018 12:17 PM sarie@enprok.co.za 'JUSTIN ADRIANCE'; 'Thys Naude'; 'Etienne Naude' Re: B/RE$CUE : LPHH - Rubicon BRP Letter *12*12-201 8"pdf

Gc:

$uhject: Attachments

Dear Sir Kindly find attached a letter for your attention" Regards

Tshepang Mokotedi - Director MPM lnc 164 Katherine Street, Pinmill Farm, Block F, Ground Floor, Sandton,2196 Tel+271L262 0113 | Mob + 27 825510171 I Fax+27 lL262A439

From: Sarie Josling <sarie@enprok.co.za> Reply-To: <sa rie @en prok.co.za> Date: Wednesday, 12 December 2018 at 09:19 To:'Tshepa ng Mokoted i' <tm@mpmlawyers.co.za> Cc: 'JUSTIN ADRIANCE' <justin.adriaanse@icloud.com>, 'Thys Naude' <litigation@enprok. co.za>,'Etienne Naude' <ejnaude@mweb.co.za> Subject: B/RESCUE : LPHH - Rubicon

t edefl nffifisLmirress rcscl,.e

Dear sir

Attached please find our letter dated 12* Decemher 20L8. Kind regards

,flana

/ Vriendelike groete

frrfrrf

ETI ENN â&#x201A;Ź NA U D E ATTORNEYS FAX : 086 204 2642

192

Annexure J - First Respondents Letter to the Applicants Attorneys dated 14 Dec 2018 - Page 9 of 26

SWTCHBOARD ,, 01.2 4801,753 P O BOX 92082, MOOTKLOOF, 0059

ST RIETFONTEIN A/H, A4OOIKLOOF, PRETORIA EAST GPS Co-ordinates : 525.84923 828.321,28 739 BLESBOK

trftr*g,

*** ,,t

q**

* r*

{

This office witl close on the 74th of December 2O78 and will re-open again on the 3'd of January 2Ol9 WTSHTNG YOU A BTESSED FESTIVE SEASON AND

PROSPEROUS 2A79

\ 2

193

Annexure J - First Respondents Letter to the Applicants Attorneys dated 14 Dec 2018 - Page 10 of 26

$?...}.s.

By Email Busine$s Rescue Practitioner

739 Bleshok Street

Rietfontein A/H

Mooikloof Pretoria East e-rnail : sa rie@en prok.co.za

for the attention of: Etienne Naude L2 December 2018

Dear Sirs

EUSINESS RESCUE: IOUIS PASTEUR HOSPITAIHOIDINGS PROPRIETARY tlMlTED

1. 2

('LPHH")

We refer to your two letters dated 12 December 2018 and our previous correspondence. We re-iterate our instruc{ons set out in our letters dated 7 December 2018 in which we brought the following to your attention: 2.1.Your recent communication to the effect that the hospital has partnered with a new pharmacy to be set up is a clear indication to Rubicon Group Proprietary Limited ("Rubicon") of your continued efforts to maliciously harm its business; and 2.2. Your refusal to make payments of the amounts owing, suspension of the shared services and continued interference in the management of Rubicon is done with the intention of diverting business from Rubicon to the proposed new pharmacy;

It has come to Rubicon's knowledge that you are currently colluding with Alta Janse Van Rensburg, who has been suspended by Rubicon, to divert medical supplies ordered in the name of Rubicon to a storage facility under your control.

Rubicon's instructions are that you provide a written undertaking by the close of business today that you will refrain from all malicious conduct against it and in particular:

a. You will make payments of all outstanding amounts with immediate effecU b. Return all the medical supplies diverted from Rubicon; Dlrectors:Aubrey Manong tLB (UL), Tshepang Mokotâ&#x201A;ŹdiBA, LIB, LLM (Tax) (Wits) Address: 164 Katherine Street, Pinmill Farm, Block F, Ground Floor, Sandown, Sandton, 2196 Tel :011 262 01L3 I 0436 Fax : 011 262 (X39 Email: tm(O manonBprlaneinc.co"za

Nt lq

Annexure J - First Respondents Letter to the Applicants Attorneys dated 14 Dec 2018 - Page 11 of 26

194

c. Cease collaboration with suspended Rubicon employees; and d. Retract communication to the effect that the hospital will be collaborating with a new pharmary or that Rubicon is no longer in operation

failing which Rubicon will approach a court to to seek relief on an urgent basis and the costs of such action will be claimed against you on an attorney and client scale,

Yours faithfully

TshepanB Mokotedi

MPM Incorporated

Directors: Aubrey Manong LLB tUL), Tshepang Mokotedi B& LLB, LLhl (Tax) {Wits) Address: 164 KatherineStreet, Pinmill Farm, Slock F, Ground Flcor, Sandnwn, Sandton, 2196 Tel: 0L12620113 I A456 Fax : 011 262 0439 {i

T r,rz

ffi}

ry3

{* * y,p tl

{:, 1,,*

" v.,J

,f 0t{\O

195

Annexure J - First Respondents Letter to the Applicants Attorneys dated 14 Dec 2018 - Page L2 of 26

Sarie Josl Tshepang Mokotedi <tm@mpmlawyers.co.za> 10 December 2018 12:33 PM sarie@enprok .co.m 'JUSTIN ADRIANCE'; 'Thys Naude'; 'Etienne Naude' Re: B/RESCUE : LPHH - Rubicon BRP Letter -10-1 2-2018.pdf

From: Sent: To: Cc:

Subiect: Afiachments:

Dear 5ir

Kindly find attached a letter for your attention. Kind Regards

Tshepang Mokotedi MPM Inc

Director

Tel: +27 IL262 0113 Mobile: + 27 82 553 OITL

From: Sarie Josling <sarie@enprok.co.za> Reply-To: <sarie@en prok.co.za> Date: Monday, 10 December 2018 at 08:38 To:'Tshepang Mokotedi' <tm@mpmlawyers.co.za> Cc 'JUSTIN ADRIANCE' <justin.adriaanse@icloud.com>, 'Thys Naude' <litigation@enprok.co.za>, 'Etienne Naude' <ejnaude@mweb.co.za> Subiect: B/RESCUE : LPHH - Rubicon

#ienneffiru$iness rp$f,ue

Dear sir Your letter dated 7" December 2018 refers.

We shall be pleased to learn when we can receive a copy to all our previous letters. ln your letter dated 3. December 20L8 you state that LPHH is in debited to Rubion in several

amounts. 1

/r.,r r+

Annexure J - First Respondents Letter to the Applicants Attorneys dated 14 Dec 2018 - Page 13 of 26

196

We have on a number of occasions requested you what'several amounts' is, but you have failed to reply.

We once again request you to furnish us with the exact amount outstanding according to your records. Yours faithfully

{tue rl/oA. ETIENNE NA UD E ATTO RNEYS

fiELL : 082 491. 8559 FAX : 086 204 2642

SwTcHBoARD

: 012 4801753

P O BOX 92082, MOOTKLOOE 0059 739 BLESBOK

ST RETFONTEINA/H, MOOIKLOOE PRETORIA EAST

GPS Co-ordinates : 525.84923 E28.32L28

r{fr

Annexure J - First Respondents Letter to the Applicants Attorneys dated 14 Dec 2018 - Page

t\lANCING

1.4

197

of 26

;&Hi;

Wffiwfr-

{ww,.ew*

Mc}t{c}Tgr}r Ir-rc.

By Ernail

Business Rescue Practitioner 739 Blesbok Street

Rietfontein A/H Mooikloof Pretoria East e-mail : sa rie @enprok.co,za

for the attention of: Etienne Naude 10 December 20L8

Dear Sirs

BUSINESS RESCUE : IOUIS PASTEUR HOSPITAL HOIDINGS PROPRITTARV LIMITED ("LPHH"]

We refer to previous correspondence and your email of earlier today

Rubicon Group Proprietary Limited's ("Rubicon") claims against LPHH are the following: 2.1. An amount of R 4 783 620 (four million seven hundred and eighty-three six hundred and twenty Rands) as at 31 December 2017;

2.2.An amount of R 9022764 (nine million twenty-two thousand seven hundred and sixty- four Rands) in respect of medical supplies as at 07 June 2018; 2.3.An amount of

R 6 622751(six million six hundred and twenty-two thousand seven hundred and fifty-one Rands) in respect of post business rescue medical supplies as at 24 October 2018; and

2.4.An amount of R 233 280000.00 (two hundred and thirty-three million two hundred and eighty thousand Rands) on loan account plus capital. 3

Kindly advi$e what your position is regarding the above clainls.

Rubicon requests that the creditors meeting scheduled postponed pending resolution of all disputes.

Directors: Aubrey Ma nong LLB (U L), Tshepang Mokotedi BA tt3, LlfU (Tax! {Wits} Addrass: L64 Katherine Street, Pinmill Farm, Block F, Ground Floor, Sandown, Sandton, 2136 Tel : 011 262 0113 / O+S0 Fax :011 262 0439 Err xaitr:

Lm@

rm'&

nfr ngpi*a

*\rttr .t *

r.&

for Wednesday 12 December 2018

lwft

Annexure J - First Respondents Letter to the Applicants Attorneys dated 14 Dec 2018 - Page 15 of 26

198

Yours faithfully

Tshepang Mokotedi

MPM lncorporated

Directors: Aubrey Manong LLB (UL), Tshepang Mokotedi BA tIB, t-t-nn (Tax) (Wits) Address: 164 Katherine Street, Pinmill Farm, Block F, Ground Floor, Sandown, Sandton, 2196 Tel : A*2620113/0+Se Fax: O17262U39 EmatN: lrnffi m&ft*ng,pilaneint s* .za

)

l'4 fr

199

Annexure J - First Respondents Letter to the Applicants Attorneys dated 14 Dec 2018 - Page 16 of 26 I

ArFlunuff ron THE pnooF oF R ct*fit#w ln thc busln*rs ngf,cue of :-

tot

ts nA$rHrnrro$prfrAl fIorn ffG$ (pry) LTD

(hereinafter referred to as the said cornpany/business rescue)

Full Names of the creditor : Ruhicon Grcup

(Ftf) Ltd

(hereinafter referred to af the said'Creditor')

Address in full of the crsditor

7s Floor Lauis Pasteur Hedical Centre, 37d Francis Baardt Street, Fretoria 0001

O Box numben

P O B0( 558If

Arrade hetoria 000I

Total amount of the claim: R 233 280 00G00

( Two Hundrcd and Thirty Three Dlillion Two Hundrcd urd Eighty Thourand Rurd ) as at the 306 offune 2018 and escalating at 816 per annum from that date.

l, Ra'ees Ahmed Bava lD Number 880620 5179 08 0 do hereby make oath and sa| that I am a director of Rubicon Group (Pty) Ltd

(hereinafter referred ta as the $aid creditor)

r-lo

A-

b.Qrft,A.8

4A Mn

200

Annexure J - First Respondents Letter to the Applicants Attorneys dated L4 Dec 2018 - Page 17 of 26 a

That I have personal knowledge of the facts hereinafter stated.

LOUIS PASTEUR HOSPITAL HO,.D.INGS

Pfn I-ID which company has been

placed under business rescue proceedings was at the date of business rescue, and still is, truly indebted to the said creditor in the sum of R 233 280

000{0

Thirty Three Million Two Hundred and EightyThousand Rand ) as at the 30th ofJune 201 I and escalating at 6% ( Eight Percent ) per

{ Two Hundred and

annum from that date.

That the said debt arose in the manner and at the time set forth ln the account hereunto annexed and supporting documents,

This claim was not acquired by cession after the institution of the proceedings by which the company was placed under buslness râ&#x201A;Źscue.

Signature by the director of and for end on bchalf of the creditor

StMSllilF

't[",H;::'ffi :l*:'TruH"":;]1S[&U,,,*ff

lX?gEXf,^

deponent having acknowledge that he/she knovvs and understands the contents of this in accordance with the requirements of Reg

b@t

OEM EtsEN EE$BP

tshI

fl gENTNUM

ml0 ,0$- 0I

fr*r,**'fr ttfr

CENTRE

AFRICAN

6R, Q..A.B

tt'D

Annexure J - First Respondents Letter to the Applicants Attorneys dated 14 Dec 2018 - Page 18 of 26

201

Sarie Joslins Tshepang Mokotedi <tm@m pmlawyers.co.za> 25 October 2018 04:01 PM Thys Naude

From: Sent: I

lo:

SARIE Re: RUBICON GROUP / LPHH BRP Letter 25-10-201 8.pdf

Gc:

Subject:

Attachments

Dear Etienne Please find attached a letter for your attention.

Kind Regards

Tshepang Mokotedi MPM lnc

Director

Tel: + 27 11262 0113 Mobile: + 27 82 553 OLTL

From: Thys Naude <litigation@enprok.co.za> Date: Friddy,19 October 2018 at 1L:27 To: Tshepang Mokotedi <tm@rn pmlawyers,co .za> Subject: RUBICON GROUP I LPHH Good day Tshepang Please find attached a letter for your attention. Kind regards

Thys Naude

,r^

,/\

t"\

202

Annexure J - First Respondents Letter to the Applicants Attorneys dated 14 Dec 2018 - Page 19 of 26

AN o N (I

W:::'k #w.- ffiuu,w,',e,

w;,;

fVI (}

KclrE

I In c

By Email

Buslness Rescue Practhloner 739 Blesbok Street Rle,tfonteln VH

lvlooikloof Prctoria East e-m

ai I : sa

rie {9enprok.c0.ra

for the attention sf: Etienne Naude 25 October 2018

Dear Sir

BUSlilEst RE!rcUE : LOUIS PASIEUI llOSP[tAL tlOLDlIlG3 PROPRIETARY UMffiD

l'tPH]l,l

We refertothe abote business nescue and our prcuious conespmdene.

We re-herate our Instrucdons set out in our previous correepondene In whlch ure advlsed you that: 2.1. Rublcon Group Proprietary Umiteds ('Rublcon"l obligations to lts suppllers are currently due and payable. The suppllerc have suspended supply of medication to Rubicon arisingfrom failure to pay outstanding amounB.

2.2. The practitioner has unduly preferred all the other trade credltors ln a similar position with Rubicon in making disproportionate and regdar paymenB torards their Indebtedness; 2.3.The total amourt payable by [PHH to Rublcon as at 24 Octobcr 2018 is R 20 429135 (menty million bur hundrcd and twenty-nine thousand one hundred and twertffiw Rands) made up as fdlorYs:

2.3.1.

An amount of R 4 783 620 (four rnillion seren hundred and elghU-three slx hundrcd and twenty Randsl as at 31 Deember 2017. lffe note that this amount w'as not

lncluded as part of Rubicort's claim as the financial recotds for Rublcon werc not finalised at the time of suhmlsslon of daims to the practitioner; 2.3.2. An amount of B 9 022 754 {nini million hrcntFtrro thousand seven hundred and slxty-fuur Randsl as at 07June 2018; and EbillorrAuhrrM.mntll3(U[Trhprfi/UoBilAAU&Ltltl (frrl (Wttrl ,

rdfiE 16{ r.drcrlnestrr.t fd:01126:10il310f56 tur:Otl2t2Otil9 Emrll;

Plnrnlll Frrm, Bloct F, Ground Hoor, Sandorn, Stndton,2195

1r.r

tmtms norupllenednc.to$

l\&4+

203

Annexure J - First Respondents Letter to the Applicants Attorneys dated 14 Dec 2018 - Page 20 of 26

2.3,3.

An amount of R 6 622 751 {slx million six hundred and tnenty-trro thousand seven hundred and fifty-one Rands) in rerpect of post buslnass reecue obllgatlons of LPHH to Rubicon.

Our instructions are to and wa hercby demand lmmediate payrnent of an amount of R 6 622 751(slx mllllon slx hundred and trentptwo thousand seven hundred and fifty-one Rands| rcpresendng amounts payable in respect of post business nescue obligations of LPHH to Rublcon to ensure that the pharmacy meets iB ongoing obli,gations. To the extent you are not ln a posltion to make paylflent of the entirc amount kindly provlde a plan accefiable b Rubicon on hwthis amount will

be paid. 4.

Future supply of medlcatton and equipment to LPHH is hereby suspended with immedlate effea until the amount of R 6 6?:7751(six million sh hundred and trrverfi-two thousand sewn hundred and fiftpone Bands| in respect of post buslnees rescue obl@tlons has been paid. Rutricon will condnue to supply emergenry and lntenslve care related medication and equipment to LPHH as and when requlrcd.

All future supply of medication and equlpment wlll be made on a cash basis to IPHH.

Rubicon requires acceptable securtty in respect of

You are advlsed

alloutsandhg amoums to date.

to rufraln from prwldlng any lnstructions to the staff or

interfering with the

management and operations of Rubimn. As a buriness rescue practitloner of IPHH there ls no legal basis hryou b interfere In tha managâ&#x201A;Źment and operatlons of Rublcon. Should you fall to make payment of the amount set out abotre and to aomply wlth the requests set out in this letter, we are instrucled to make an appllcailon on the grounds set out in Sections 130

and 119 of the CompanlesAct 9.

Your fallure to make tlmeous payrnents to Rubicon will continue to compromise the carr prcvided by IPHH to lB patients. lt ls thereforc irnportant that Ore situation be remedied as soon as posslble to avoid any frrrther compromise of the hosplAl's servlces,

10,

Kindly advise when the Practitioner wlll be ln a posltlon to effect payrnent of the abovr amount to Rublcon,

Yours

Dlndan: Aubrrry Mernng LtX (UtJ,ISrepaA ttidoE!

lddnrr:

TC : 011 262

oltl / o4s6

Fu : 011 262 0.*:19 e ma n ongp tland nc-ro ;rr

Srnr l h Err

BA U,q

16,1 l(gthedno SUteL Plnmlll Fenn, Blod( F, Ground

tIM [rrr] (ttlttsl

Flmr, Srndown, Sandton,

21!16

4.,4 rwo

Annexure J - First Respondents Letter to the Applicants Attorneys dated 14 Dec 2018 - Page

of 26

204

,,.ils

MAN()NG

W::3u&"

/k,w.&ffi:

M (}KOTEDT INC.

By Email To: The Staff of Rubicon Group Proprietary Umited

25 October 2018

BUSNESS RESCUE : LtOUlS PASTEUR HOSPTAL HOIDIilGS PROPRIEIARV

uMmD ("tPHlf)

We refer to the above business rescue.

As you may be aware, IPHH Is currently

The pharmacy ls owne$ managed and operated by Rubicon 6roup Proprietary Limited {'Rubicon"} and forms a separate legal entity from [PHH/ the hospital.

Rublonlthe pharmacy provldes medical supplies

in business rercue. Etienne Naude of Etienne Naude Aftorneys has been appointed as a business rrscue practitioner in respect of |,.PHH.

LPHH/the hospital

on an arm's

length

commercial arrantement.

Rubicon is not in buslness rrescue.

You are hereby advlsed not to tike any lnstructions from the buslness !:escue of practitloner appointed in respect of LPHH.

lnstructions relating to the management and operations of the company wlll be prwided by +27 {0} 12 336 6158 and email: l-awrence Chetty who can be contacted at , i: -r'.i.]

,: , , i)i i:r'i

Yours

llnrctax A$rr,y Mamng

lLB (UU, TsftnprEt{olffillBA,lJ8, [I-Tti (Tax) (WIts] 164 Katlrerlne StrEGt, Plnmlll Farm, Block F, Ground Floor, Sardoryn, Sandton, 1196 Tel :011 262 0113 / OlSa

lddrur:

Fax;011262 0f,:tll E

mail ;

t*t*

ff.ur**W#l an*tfia,ffi e&

4A MB

Annexure J - First Respondents Letter to the Applicants Attorneys dated 14 Dec 2018 - Page 22 of 26

20s

Sarie Josli From: Sent: To: Cc:

Subject: Attachments:

Thys Naude <litigation@enprok.co.za> 26 October 2018 02:47 PM Tshepang Mokotedi Sarie Josling RUBICON / LPHH

SKMBT

4231 81 0261

4560.pdf

Dear Sir Please find attached a letter for your attention.

Kind regards Thys Naude

n 1

rWR

Annexure J - First Respondents Letter to the Applicants Attorneys dated 14 Dec 2018 - Page 23 of 26

rescue Your Ref/U Verw

Our Rsf/Ors Venr ETIEf$ttE NAUDE

TSHEPANG MOKOTEDI

Date/Datum 2S OCTOBER 2018

TUAftLIH LOI'W

Ote +SO trSJ (S#rchboard)

Fax 086

ZO+ Z6qz

*yq$qryryq!*q.#

MPM INC ATTORNEYS

RE:RUBICON

/ LOUIS PASTEUR HOSPITAL HOLDINGS.

Dear Sir

I refer to your letter dated 25 October

a,lg.

Ad Paragraph Z.l and 2.2

?. I deny this paragraph 4{ ppnsmpql*.l

I have no knorledge this claim. I deny that LPHH oryes this amount to Rubicon.

Ad paragraph 2.3.?

I admit this amount, however there is a Moratorium on all debt pre-business rescue.

Therefore, this amount is not due and payable.

13$ B'lesbok Stueet, Riethntein

ryH, Mggkloof, Pretona Emt - GpS : $25.g4llg3 g4,31ln Td:012{801753 Fax:086201 XlZ fmaii P O Bo( mA2, iTOOIKLOOF, 0OSg, CfO

,M ffi

Etbrme Jacrye hlaude _ Fartner Lonika rran der Walt - professlonalAssbhnt Ttr!,s Flaude - Canddate Attomey Edel$rchse Oosthuiasn - Canddate Aitorney

VAT r\lo 4fi804i74$2

206

207

Annexure J - First Respondents Letter to the Applicants Attorneys dated 14 Dec 2018 - Page 24 of 26

2.3.3

I deny that this amount is now due and payabte.

we have

paicr approximatery R 640

0oo to a number of your suppriers yesterday.

6. I deny that this arnount is due and payable.

4-g

7. Your Mr Dingaan Duka met with the practitioner and it was agreed that the irnplementation of this letter u,ill be suspended until ruesday 3o october zolg.

8. We shall be pleased b hear from you wtren the meeting willtake

plaoe Tuesday

afternoon.

9' We place on reord that by agreement

betrrrreen your Mr Dingaan and

the practitioner of LPHH, LPHH shail not pay any further sataries to the staff of Rubicon. As from November 2Ol8 Rubicon shall pay its own staff.

lo'l shall be Peased to receive the original

Youns

contract between LPHH and Rubicon

faithtully/,

,.*'

4n l^-F

Annexure J - First Respondents Letter to the Applicants Attorneys dated 14 Dec 2018 - Page 25 of 26

zo8

$arie Joslintr Sarie Josling <sarie@enprok.co .n> 12 December 2018 09:1S AM 'Tshepang Mokotedi' 'JUSTIN ADRIANCE'; 'Thys Naude'; 'Etienne Naude' B/RESCUE : LPHH - Rubicon

From: $ent: To: Cc:

$ubject: Attachments:

SKM_C3081 81 2 1 209093. pdf

t ethenneffihmilffi Dear sir

Attached please find our letter dated L2" Decernber

201-8.

Kind regards / Vriendelike groete

,fs* e#rf ETIâ&#x201A;¬N NE NA UD E A TTORNEYS

FAX, 086 204 2642

swrcHBoARD

: o12 480175s

P O BOX 92082, MOO|KLOOF,0059

ST RIETFONTEINA/H, MOOIKLOOE PRETORIA ilST GPS Co-ordinates : 525.84923 E28.32128 739 BLESBOK

*; +*o'

.***ffffi W'

This affice will close $n the L#th of llecern&er 2$78 and witt re-open again fin ffte 3.d of January ZOlg WTSHING YOU

BLESSED FESTTVE .SETSO'V AND

PROSPEROUS 2079

4.,n I

l^ rr

Annexure J - First Respondents Letter to the Applicants Attorneys dated 14 Dec 2018 - Page 26 of 26

209

q etien@usinessIescLJe Your Ref/U Verw

Our Ref/Ons Verw

DaterDatum

EflENNE FIAUDE SARIE JOSLING

12 DECEMBER

24ffi

0U 480 X753 (Switchboard) Fax 088 2A42M2

MPM ATTORNEYS

s_aNproN Affien[rsn : Tshepang.lVlekptsdi Dear sir

f..

Your letter dated 10 Decernber 201.8 refers.

Kindly furnish me with itemised accounts on the accounts that your clients allege that LPHH owes them.

telephoned mr Dedanie the Director of Rubicon Group to set up a meeting to discuss the outstanding amount.

He informed me that he is out of town but that I should meet with you.

I shall be please if you could telephone me on 082 491 8559 to discuss your

clients claim,

I look fonruard to receiving a reply from you

Regards

Busi

// Practitioner 739 Blmbok SfiEet RistftmbinArH, lrooHoot Frstoria East - GPS : $25.81S23 E28.32128 Tel ; 012 4801753 Far :086 a04 26{2 Email : P O tso( 9m82, iIffiO|KLOOF,0059; C,0 Marlane PsnE llocex Etienne Jaoques Hatde -

ffiier

Lonika van der UVatt - Profnsrtional Assishnt Thyr Naude * Cendidah Atnrnay

Edelffilsse oosfrluimn - Candilab Attsney vAT N0 4680217102

4,tA l.t&

Annexure K - Email Correspondence between Applicant and its Suppliers - Page 1 of 16

Please follow chsin of emails Foruvarded message

------

From: Firose Khan <firose@louispasteur.co.za> Date: Fri, 21 Dec2018 at 08:10 Subject: FW: RUBICON GROUP.........URGENT fo: Delpaul, Eugenie <Eugenie.Delpaul@smith-nephew.com>, <ordersptn@smith-nephew.com>, 3c: <yaseeraamodl@gmail.com>, <MOTIOZAIR@gmail.com>, <sent@louispasteur.co.za>

<Michelle.Rosewall@smith-nephew.com>

2lease cancel all orders /Vill place orders directly to you

Louis Pasteur kivate Hospital itriving to delivrr r*orld elas* and legenrlaft trn'ire

FIROSE I(HAN Pha,rrnaey / tnediea,l

bu,g tet.

Lou,is Pa,steurr hioa,te Hoqtita,l

374 fra,neis ba,qtd strrcet tstoatre TEr.

: OI2AA66054

CEIJ.: O882978997

Annexure K - Email Correspondence between Applicant and its Suppliers - Page 2 of

EfrlAIL ; firose@louispasteur.co.za

From: ordersptn <Ordersptn@smith-nephew.com> Sent: 20 December 2018 04:52 PM To: Firose Khan <fi rose@louispasteur.co.za> Cr: Delpaul, Eugenie <Eugenie.Delpaul@smith-nephew.com>;

Subiect

1.6

211

Rosewall, Michelle <Michelle.Rosewall@smith-nephew-com>

RE: RUBICON GROUP.........URGENT

Firose

I have has some orders from her see emails attached.

Are these valid or do I need to cancel them from our system.

Please advise as a matter of urgency.

Thanks

sf sffiith&n*pherv $upprting l*ealiheare professisnals frr *ver Ordersptn

Client Services, South Africa

ord ers ptn @s m ith-nep

15S

y*ars

ew. co m

+27 0800 00 28 99 I +27 31 242 81

+27 0800 33 1 1 50

From: Firose Khan <firose@louispasteur.co.za> Sent: Thursday, 20 December 2018 4:07 PM To: orders@technomedsa.co.za; 'Assist Africa' <assist.africa@teleflex.com>; Cc:

ordersptn <Ordersptn@smith-nephew.com>

sent@louispasteur.co.za

subJect: FW: RUBTCON GROUP.........URGENT lmportance: High

CAUTION: External email REMINDER: Do not click links or open attachments unless you know the sender & are expecting the email.

To whom it may concern,

This email is sent on behalf of the director and management of Rubicon Group (The Hospital Pharmacy)

No orders should be accepted from any parties other that Firose Khan or Ozair Moti. All orders will be placed via the Surgicom Order System or if telephonic order, via Ozair or Firose

All orders should be delivered to the Pharmacy Receiving Area. Alta J van Rensburg has been suspended until further notice as Pharmacy Manager and Marina Schrade nee Beckley is no longer an employee of Rubicon Group and no orders should be accepted from the above persons.

For any further queries, please call

Yaseera Amod

083 310 2999

Pharmacy Admin Manager

Ozair Moti

084 531 31 1 3

Pharmacy Admin Supervisor

Firose Khan

083 297 8937

Pharmacy Buyer

1 ,r Defr

212

Annexure K - Email Conespondence between Applicant and its Suppliers - Page 3 of 16

This email and any files transmitted with it are confidential and intended solely for the use of the individual or entity to whom they are addressed. lf you have received this email in error, please notify the system manager. Please note that any views or opinions presented in this email are solely those of the author and do not necessarily represent those of the company. Finally, the recipient should check this email and any attachments for the presence of viruses. The company accepts no liability for any damage caused by any virus transmitted by this email.

CAUTION: External email REMINDER: Do not click Iinks or open attachments unless you know the sender & are expecting the email Order nr LPPH 19112118 Please send us 2 x 10 Opsite incise 28 x 30cm Thx

0825678552

Alta Janse van Rensburg Email : alta@louispasteur.co.za

Forwarded message From : <alta@lou ispasteur .co.za>

To: Ordersptn <Ordersptn@smith-nephew.com> Cc: Bcc:

Date: Wed, 19 Dec 2018 08:04:56 +0200 Subject: FW: order - Order No LPPH 1911212018

CAUTION: External email REMINDER: Do not click links or open attachments unless you know the sender & are expecting the email'

From : alta@louispasteur.co,za <alta@louispasteur. co.za>

Sent: Wednesday, 19 December 2018 07:53 To :'orderssptn @sm ith-nephew. com' <orderssptn @sm ith-nephew. com > Subject: order - Order No LPPH 1911212018

4A A4.R

Annexure K - Email Conespondence between Applicant and its Suppliers - Page 4 of L6 We need urgently the following: 3

213

x 10 Allevyn non adhesive 20cm x 20cm

Thanks 0825678552

Alta Janse van Rensburg Email : alta@louispasteur.co.za

This email and any files transmitted with it are confidentia! and intended solely for the use of the individual or entity to whom they are addressed. lf you have received this email in error, please notify the system manager. Please note that any views or opinions presented in this email are solely those of the author and do not necessarily represent those of the company. Finally, the recipient should check this email and any attachments for the presence of viruses. The company accepts no Iiability for any damage caused by any virus transmitted by this email.

----

Fonivarded message From: <alta@louispasteur.co.za> To: Ordersptn <Ordersptn@smith-nephew.com> Cc: Bcc: Date: Tue, '18 Dec 2018 10:46:06 +0200 Subject: RE: order - Rubicon trade as the hospital pharmacy CAUTION: External email REMINDER: Do not click links or open attachments unless you know the sender & are expecting the email.

----

I did not give a order no but you can use

LPPHl18l12l2018

Please this is urgent order Thanks Alta 0825678552 Rubicon group trade as the hospital pharmacy

From : Ordersptn <Ordersptn @sm ith -ne phew. com>

Sent: Tuesday, 18 December 2018 10:27 To: alta@lou ispasteur.co.za Subject: RE: order - Rubicon trade as the hospital pharmacy

What order no.

sn150 Ordersptn

Client Services, South Africa

orde rs ptn@ sm ith-nep hew. com

+27 0800 00 28 99 I +27 31 242 81 1 1

+27 0800 33 1 1 50

From :

a lta @ ou I

ispasteu r .ca .za <a lta@lou

pasteu

co.za>

Sent: Tuesday, 18 December 2018 8:18 AM To: Ordersptn <Ordersptn@smith-nephew.com > Subject: order - Rubicon trade as the hospita! pharmacy

CAUTION: External email

Mro

REmAomxotrhUtclErrnileorrffpo&&n6Ghs[rean0qplinntrard,i&Ssn$iapecea6a6@f"1t6

214

Just a follow up I did order Allewyn non adhesive 20cm x 20cm. Did you send the stock

Thanks 0825678552

Alta Janse van Rensburg Email : alta@louispasteur.co.za

This email and any files transmitted with it are confidential and intended solely for the use of the individual or entity to whom they are addressed. lf you have received this email in error, please notify the system manager. Please note that any views or opinions presented in this email are solely those of the author and do not necessarily represent those of the company. Finally, the recipient should check this emai! and any attachments for the presence of viruses. The company accepts no liability for any damage caused by any virus transmitted by this email.

This emai! and any files transmitted with it are confidential and intended solely for the use of the individual or entity to whom they are addressed. !f you have received this email in error, please notify the system manager. Please note that any views or opinions presented in this email are solely those of the author and do not necessarily represent those of the company. Finally, the recipient should check this email and any attachments for the presence of viruses. The company accepts no liability for any damage caused by any virus transmitted by this email.

Fonrvarded message ----------<alta@louispasteur.co.za>

From: To: Ordersptn <Ordersptn@smith-nephew.com> Cc: Bcc: Date: Tue, 18 Dec 2018

08:17:g +0200

Subject order - Rubicon trade as the hospital pharmacy CAUTION: External email REMINDER: Do not click links or open attachments unless you know the sender & are expecting the email. Just a follow up ldid orderAllewyn non adhesive ZOcm x 20cm. Did you send the stock

Thanks 0825678552

Alta Janse van Rensburg Emai! : alta@louispaste ur.co.za

Forwarded message ---------

\lt'a

_ Annexure K - Email Correspondence between Applicant and its Suppliers - Page 6 of 16 From: <alta@louispasteur.co.za> To: Ordersptn <Ordercptn@smith-nephew.com>

215

Cc: Bcc: Date: Thu, 20 Dec 2018 06:58:25 +0200 Subject: New order - Louis pasteur / Rubiconffhe hospital pharmacy

CAUTION: External email REMINDER: Do not click links or open attachments unless you know the sender & are expecting the email. Order nr LPPH 19112118 Please send us 2 x 10 Opsite incise 28x 30cm Thx 0825678552

Alta Janse van Rensburg Email : alta@louispasteur.co.za

Forwarded message From: <alta@louispasteur.co.za> To: Ordersptn <Ordersptn@smith-nephew.com> Cc: Bcc: Date: Wed, 19 Dec 2018 08:04:56 +0200 Subject FW: order - Order No LPPH 1911212018

CAUTION: External email REMINDER: Do not click links or open attachments unless you know the sender & are expecting the email.

From : a lta@ lou ispaste

u r. c

.za <alta@ lou ispasteu

r. c o

.za>

Sent: Wednesday, 19 December 2018 07:53 To :'ord erssptn @sm

ith

-neph ew. com' <orde rssptn @s

ith-nep

ew. co m>

Subject: order - Order No LPPH 1911212018

We need urgently the following: 3 x 10 Allevyn non adhesive 20cm x 20cm

Thanks 0825678552

Alta Janse van Rensburg Email : alta@louispasteu r,co.za

216

Apnexurg K - Email Conespondence between Applicant and its Suppliers - Page 7 of 16 FoMaroed message From: <alta@louispasteur.co.za> To: Ordersptn <Ordersptn@smith-nephew.com> Cc: Bcc: Date: Tue, 18 Dec 2018 10:46:06 +0200 Subject: RE: order - Rubicon trade as the hospital pharmacy

CAUTION: External email REMINDER: Do not click links or open attachments unless you know the sender & are expecting the emai!. did not give a order no but you can use LPPH/1811212018

Please this is urgent order Thanks Alta 0825678552 Rubicon group trade as the hospital pharmacy

rom : Ordersptn < Orde rsptn @s

m ith-

nephew. co rn>

Sent: Tuesday, 18 December 2018 10:27 To: alta@louispasteur. co.za Subject: RE. order - Rubicon trade as the hospita! pharmacy

What order no.

?f srr-rith*n*g*ew Supp*rting health*arâ&#x201A;Ź prsf#ssi**atx f*r ##&r ?S# yffirs Ordersptn o rd

I Client Services, South Africa

ersptn @smith-nephew. com

T +27 0800 00 28 99 I +27 31 242 81 11 F

+27 0800 33 1 1 50

ro m :

a lta @ I o u i s pa

ste

u r.

co .za <alta @

o u i s pa

ste u r. co .za>

Sent: Tuesday, 18 December 2018 8:18 AM To: Ordersptn <Ordersptn@smith-nephew.com> Subject: order - Rubicon trade as the hospital pharmacy

CAUTION: External email REMINDER: Do not click links or open attachments unless you know the sender & are expecting the email.

Just a follow up I did order Allewyn non adhesive 20cm x 20cm Did you send the stock Thanks

0825678552

t Alta Janse van Rensburg Email : alta@louispasteu r.co.za

I\^-D

Annexure K - Email Correspondence between Applicant and its Suppliers - Page 8 of 16

217

Foruarded message --------- <alta@louispasteur.co.za>

From: To: Ordersptn <Ordersptn@smith-nephew.com> Cc: Bcc: Date: Tue, 18 Dec 2018 08:17:54 +0200 Subject: order - Rubicon trade as the hospital pharmacy CAUTION: External email REMINDER: Do not click links or open attachments unless you know the sender & are expecting the email Just a follow up I did order Allewyn non adhesive 20cm x 20cm. Did you send the stock

Thanks 0825678552

Alta Janse van Rensburg Email : alta@louispasteur.co.za

This email and any files transmitted with it are confidentia! and intended solely for the use of the individual or entity to whom they are addressed. !f you have received this email in error, please notify the system manager. Please note that any views or opinions presented in this email are solely those of the author and do not necessarily represent those of the company. Finally, the recipient should check this email and any attachments for the presence of viruses. The company accepts no liability for any damage caused by any virus transmitted by this email.

Fonryarded message ---------From: Tendani Muligwe <vhaligwetb@gmai!.com> To: Tshepang Mokotedi <tm@mpmlawyers.co.za> Cc: Bcc:

Date: Fri, 14 Dec 2018 15:29:46 +0200 Subject: Fwd: FW: Delivery for Louis Pasteur Private Hospital Hi T

Please look at this email trail ,it implicate alta and UPD seems to be backing down we still have to send them an email and they should advise why they change the name of the invoice and delivery without proper documentation.

------

Fonrarded message From: Louwtiie Heunes <lheunes@upd.co.za> Date: Friday, December 14,2018 Subject Re: FW: Delivery for Louis Pasteur Private Hospital To: Yaseera Amod <yaseeraamod 1 @gmail.com>

-----

"vhaligwetb@gmail.com" <vhaligwetb@gmail.com>, Kseran Diahnan <KDiahnan@upd.co.za>

Dear Yaseera,

We did not change the location of the delivery, as delivery changes can only occur with valid change of address paper work, such as a pharmacy license.

.,4

Mtfr

Annexure K - Email Correspondence between Applicant and its Suppliers - Page 9 of 16

218

Regards

Louwtjie Heunes Debtors Supervisor

UPD Ht Sf ItYII

HTTLI}ICATT

Switchboard:

+27 (0)-11 470 1000

Direct:

+27 (Ol10 210 3382

Fax

+27

865 764 199

lheunes@uod.co.za www.upd.co.za

14 Tamar Avenue Lea Glen, Roodepoort

From: Yaseera Amod [mailto:yaseeraamod

Sent: 14 December 2018 2:42

@gmail.com]

To: Louwtjie Heunes Cc: alta@louispasteur.co.za; Mavis Tsatsinyane; firose@louispasteur.co.za; vhaligwetb@gmail.com

Subject: Re: FW: Delivery for Louis Pasteur Private Hospital

Dear All

Please take note Alta has been suspended from Rubicon Group Pty ltd (The Hospital Pharmary) on the 7th of December.. Marina is also no longer an employee of Rubicon and UPD should not be taking any unlawful instructions from either of them regardimg the cunent pharmacy account. They are not authorised to place orders using this account as well. I am very upset as to how a big company as yourself will change the name on an invoice without ffg proper procedures..

legal team and necessary action will be taken against guitly and lunawful parties. Enjoy your weekend. Yaseera Amod Pharmacy Admin Manager

On Fri, 14 Dec 2018, 12:44 PM Louwtjie Heunes <lheunes@upd .co.za> wrote: Dear Alta,

With reference to the e-mail trail below.

Please note I changed the legal entity back to Rubicon Group (PTY) LTD as per instruction from Yaseera (cc'd in this mail).

Please provide official documentation to support the name change should you want it changed?

Regards

Louwtjie Heunes Debtors Supervisor

I'tP

Annexure K - Email Conespondence between Applicant and its Suppliers - Page 10 of 16 Switchboard:

+27 (0) 11 470 1000

Direct:

+27 (O) 10 210 3382

Fax

+27 (0) 865 764 199

21 9

lheunes@upd.co.za www.upd.co.za

14 Tamar Avenue

Lea Glen, Roodepoorl

From: Louwtjie Heunes Sent: 14 December 2018 L2:26 PM To: Mavis Tsatsinyane Subject: FW: Delivery for Louis Pasteur Private Hospital

From: Louwtjie Heunes Sent: 13 December 2018 1:12 To: Keeran Diahnan

Cc: Ryan Conybeare

Subject: RE: Delivery for Louis Pasteur Private Hospital

Hi Keeran,

Amended as requested. All invoices from now will show Louis Pasteur Holdings

Trading name remains The Hospital Pharmacy.

Regards

Louwtjie Heunes Debtors Supervisor

Switchboard:

+27 (0) 11 470 1000

Direct:

+27 (0) 10 210 3382

Fax

+27 (0) 865 764 199

lheunes@upd.co.za www.upd.co.za

14 Tamar Avenue

Lea Glen, Roodepoott

From: Keeran Diahnan Sent: 13 December 2018 1:08 To: Louwtjie Heunes

Cc: Ryan Conybeare

Subject: FW: Delivery for Louis Pasteur Private Hospital

.tA,O

220

Annexure K - Email Conespondence between Applicant and its Suppliers - Page 11 of 16 Hi Louvrrtjie

Please could you make the necessary changes as per the customers request AIso include the information in the initial email below

From : a lta@lou ispasteu r .co.za [mailto :alta@

uispasteu r .co

.zal

SenU 13 December 2018 01:03 PM To: Keeran Diahnan Subject: RE: Delivery for Louis Pasteur Private Hospital

Acc nr 84950

From: Keeran Diahnan <KDiahnan@upd .ca.za> Sent: Thursday, 13 December 2018 12:40 To: alta@louispasteur.co.za

Subject: RE: Delivery for Louis Pasteur Private Hospital

Hi Alta

Thank you for your email

Which UPD acc number do you use to order ?

From : a lta@lou ispa ste u r .ca.za [ma

Sent: 13 December 2018 12:35

lto : alta@lou i spa steu r .co

.za)

To: Keeran Diahnan

Subject: RE: Delivery for Louis Pasteur Private

Hospital

Yes please if the invoice can say Louis Pasteur Holdings 374 Francis baard street Pretoria Thanks so much Alta

From: Keeran Diahnan <KDiahnan@upd.co.za> Sent: Thursday, 13 December 2018 12:26 To: alta@louispasteur.co.za Cc: Ryan Conybeare <RyanC@upd .co.za>

Subject: RE: Delivery for Louis Pasteur Private Hospital

Hi Alta

From conversation with Ryan, there is requirement to have the change to the name reflecting on the invoice

Please advise on the detail

Regards Keeran

From: Keeran Diahnan Sent: 13 December 2018 07:59 AM To:'alta@lou ispasteu

r. c

a .za'

Subject: RE: Delivery for Louis Pasteur Private Hospital

14" {+ Good Day

..Annexure K - Email Correspondence between Applicant and its Suppliers - Page 12 of 16

Thank you for your notification

221

I have advised our fleet management

Regards Keeran

From : a lta@

lou ispasteu

co.za [ma

lto : a lta@ lo u ispa steu r. c o.zaf

Sent: 13 December 2018 07:36 AM To: Keeran Diahnan Subject: Delivery for Louis Pasteur Private Hospital

Hi I spoke to Ryan yesterday and he gave me your info. Will you please tell the guy who deliver our stock to deliver it in room 849 on the 8h floor. No deliveries to the pharmacy please. lf he stop down in the street he must just call one of the security to assist him please.

Thanks 0825678552

Alta Janse van Rensburg Email : alta@louispasteur.co.za

On 14 Dec 2018 12:44 PM, "Louwtjie Heunes" <lheunes@upd.co.za> wrote: Dear Alta,

With reference to the e-mail trail below.

Please note I changed the legal entity back to Rubicon Group (PTY) LTD as per instruction from Yaseera (cc'd in this mail).

4,r" M-ft

and its suppriers-Pase 13 or16

p,easeprovideom.i"roo",,,lll:#:.:-"T:l:::'"'ffii:ffit:y,,T TJH#

222

Regards

Louwtiie Heunes Debtors Supervisor

Switchboard:

+27 (0) 11 470 1000

Direct:

+27 (O\ 10 210 3382

Fax

+27 (O\ 865 764 199

lheunes@upd.co.za www.upd, co.za

14 Tamar Avenue Lea Glen, Roodepoort

From: Louwtjie Heunes

Sent: 14 December 2018 L2:26 PM To: Mavis Tsatsinyane Subject: FW: Delivery for Louis Pasteur Private Hospital

From: Louwtjie Heunes

Sent: 13 December 2018 1:12 PM To: Keeran Daahnan

Cc Ryan Conybeare Subject: RE: Delivery for Louis Pasteur Private Hospital

Hi Keeran,

Amended as requested. All invoices from now will show Louis Pasteur Holdings

Trading name remains The Hospital Pharmacy.

Regards

Louwtjie Heunes Debtors Superuisor

Switchboard:

+27 (O) 11 470 1000

Direct:

+27 (O) 10 210 3382

Fax

+27 (O) 865 764 199

lheunes@uod,co.za www.upd. ca.za

14 Tamar Avenue Lea Glen, Roodepoort

Annexure K - Email Correspondence between Applicant and its Suppliers - Page 14 of 16

223

From: Keeran Diahnan

Sent

13 December 2018 1:08

To: Louwtjie Heunes Cc: Ryan Conybeare

Subject: FW: Delivery for Louis Pasteur Private

Hospital

Hi Louwtjie

Please could you make the necessary changes as per the customers request Also include the information in the initial email below

From : a lta@lou spaste ur co .za [mailto a lta@ lou spasteu SenE 13 December 2018 01:03 PM To: Keeran Diahnan Subject: RE: Delivery for Louis Pasteur Private Hospital i

co.za

]

Acc nr 84950

From: Keeran Diahnan <KDiahnan@upd .co.za> Sent: Thursday, 13 December 2018 12:40 To: alta@louispasteur. co.za Subject: RE: Delivery for Louis Pasteur Private Hospital

Hi Alta

Thank you for your email

Which UPD acc number do you use to order ?

From : alta@louispasteu r. co.za [mailto

Sent: 13 December 2018 12:35

lta@ lou ispasteur. co.za]

To: Keeran Diahnan

Subject:

RE: Delivery

for Louis Pasteur Private Hospital

Yes please if the invoice can say Louis Pasteur Holdings 374 Francis baard street Pretoria Thanks so much Alta

From: Keeran Diahnan <KDiahnan@upd .co.za> Sent: Thursday, 13 December 2018 12:26 To: alta@louispasteur. co.za Cc: Ryan Conybeare <RyanC@upd .co.za>

Subject: RE: Delivery for Louis Pasteur Private Hospital

("'r^

Hi Alta

From conversation with Ryan, there is requirement to have the change to the name reflecting on the invoice

- Please advise on the detail

t\^,Ib

Annexure K - Email Correspondence between Applicant and its Suppliers - Page 15 of 16

224

Regards Keeran

From: Keeran Diahnan

Sent: 13 December 2018 07:59 AM To:'alta@louispasteur.co.za'

Subject: RE: Delivery for Louis Pasteur Private Hospital

Good Day

Thank you for your notification

I have advised our fleet management

Regards Keeran

From : a lta@lou ispasteu r .co,za Ima

lto : a lta@ lo u ispasteu

r. c

o.zaf

Sent: 13 December 2018 07:36 AM To: Keeran Diahnan Subject: Delivery for Louis Pasteur Private Hospital

Thanks 0825678552

Alta Janse van Rensburg Email : alta@louispasteur.co.za

1.4 a

Annexure K - Email Correspondence between Applicant and its Suppliers - Page 16 of 16

225

presence of viruses. The company accepts no liability for any damage caused by any virus transmitted by this email.

[Message clipped] View entire message 6 attachments

noname 10K

noname 11K

noname 45K

n noname 10K

noname.eml 210K

il noname.eml 90K

fw-$b

Annexure L - Statement of amounts owed by the Second Respondent to the Applicant - Page

RUBTCON

GROUP(PTY)LTD

of 2

226

}> r*)rco1

374 Francis Baard Street, Pretoria, 0002

Group

Box 1 1876, The Tramshed, Pretoria, South Africa 0126

Tel 27

REC,SIRAil0N NO: I 995/007

12 336 6000 Fax; 27 12 336 6047

5/07

STATEMENT TO:

LOUTS PASTEUR

HOSPITAI HOLDINGS ( PrY) LTD

Address:

THE TRAMSHED VAT

NO:

LOU 001

ACCOUM NUMBER

PO BOX 1"1"876

STATEMEM DATE

OOOI"

201,8

49301s8938

VAT NO:

40501"52778

27 Dwember

This statement is for invoices issued from date of commencement of Business Rescue on the 8th June 2018 to the 21st December 2018

DATE OF

STATEMENT

21 12 2018

AMOUNT

DETAILS

TOTAL JUNE INVOICES

5 574 0I7.37

Less: Payments Received from 8 June 2018

-4 550 000.00

TOTAL JULY INVOICES

5 266 852.35

Less: Payments Received July 2018

-5 950 000.00

TOTAL AUGUST INVOICES

5 950 164.95

Less: Payments Received Aug 2018

-4 500 000.00

TOTAL SEPTEMBER I NVOICES

5 437 642.45

Less: Payments Received Sept 2018

-3 403 000.00

TOTAL OCTOBER INVOICES

6 458 629.24

Less: Payments Received Oct 2018

-650 000.00

Less: Payments Made direct to Suppliers by LPHH in Oct 2018

-2 076 519.37

TOTAL NOVEMBER INVOICES

6 57L 478.72

Less: Payments Received Nov 2018

Less: Payments Made direct to Suppliers by LPHH in Nov 2018

-3 329 939.78

TOTAL DECEMBER INVOICES

3 782 220.15

Less: Payments Received Dec 2018

TOTAL DUE AS AT 21ST DECEMBER 2018

14 591 546.08 t

f\[f

Annexure L - Statement of amounts owed by the Second Respondent to the Applicanl - Page 2 of

RUBTCON GROUP(

PTY) LTD

227

r*)rco1

374 Francis Baard Street, Pretoria, 0002

Group

Box 11876, The Tramshed, Pretoria, South Africa 0126 REC,SIRA7]0N NO: I 995/007 17 5/07

Tel:27 12336 6000 Fax; 27 123366047

STATEMENT TO:

LOUIS PASTEUR HOSPITAL HOLDINGS (

PrY) LTD

Address: PO BOX 1"1876 THE TRAMSHED VAT

NO:

ACCOUM NUMBER

LOU 001

STATzuEM DATE

21 Dxember 2018

OOOI.

4050152778

UAT

49301"58938

This statement is for invoices issued prior to the date of commencement of Business Rescue on the 8th June 2018. An amount of R 9 million has already been acknowledged by the Practitioner. The balance is the amount owing at the end of Dec 2017.

DATE OF STATEMENT

21 12 2018

AMOUNT

DETAILS

4 783 620.00

TOTAL JANUARY 2018 INVOICES

4 663 685.85

Less: Payments Received January 2018

TOTAL FEBRUARY 2018 INVOICES

Less: Payments Received February 2018

TOTAL MARCH 2018 INVOICES

6 925 637.L4

Less: Payments Received March 2018

-3 750 000.00

TOTAL APRIL 201 8 INVOICES

7 !84 240.23

Less: Payments Received APRIL 2018

-5 700 000.00

TOTAL MAY 2018 INVOICES

6 87L 5L4.L4

Opening Balance on 1 Jan 2018

Above is based on draft financial statements of Second Respondent for 31st December 2017

Less: Payments Received MAY TO 7 JUNE

2018. Add: lnterest at Prime plus

2o/o

for 6.5 months

TOTAL DUE AS AT 21 st DECEMBER 2018

5 027 686.76

R -L2 200 000.00

-793 000.00

13 806 384.L2

4A A

ru\'rf

AnnexureMlFinancial Statementsof LPHHfor3lDec2016signedbyFirstRespondent -Page1of43

229 *

88 INDEPENDENT AUDITORS REPORT

To the Shareholders of Louis Pasteur Hospital Holdings (Pty) Ltd

Report on the Audit of the Annual financial 9tatemenE

Disclaimer of Oplnion We werc engaged to audit the financia! statements of Louis Pasteur Hospital Holdings (Pty) Ltd set out on pages I to 4L, which comprise the Statement of financial position as at 31 December 2016, and the statement of profit or loss and other comprehensive income, staternent of changes equity and statement of cash flows ificant accuunting policies. for the year then ended, and notes to the financial statements, i We do not express an opinion on the financial statements of of the significance of the rnatters described in the Basis for have not been able to obtain sufficient appropriate audit these fi nancial statements.

Basis

Hospital Holding$ (Pty) Ltd. Because Opinion section of our report, wC a basis for an audit opinion on

for Disclaimer of Opinion

As indicated in note x to the financial statements, the year ended 31 December 2016 (2015: R 921 736 net 769 net total assets by R 111 992 001 (2015: plan will for business rescue and that the have however, the directors and the business the plan along with agreements from the

a net loss of R 158 395 770 for the date, its total "liabilities exceeded its note states that the company has filed company to continue in operations, us an approved business rescue

will enable the entity to continue us with cash flow forecasts to the going concern basis of it is appropriate to prepare the

basis

Louis Pasteur Hospital informatlon

Rled

over

to the

placed a

were

determine

rescue. Control of the entity and access to rescue practitioner. Due to the restriction accounting records, we were unable to obtain following mattets. As a result of these matters, wâ&#x201A;Ź amounts were necesffiry.

from the directors that they have fulfilled their of ilre financial statements in accordance wlth and the requirements of the Companies Act of South Africa. We International frorn the directors that we had been provided with all the were also unable to in terms of the audit engagement letter and that all transactions relevant inforrnation in the financial statements. The directors werc not prepared to provide had been recorded and we could not determine the effect of the lack of such us with these representations. represenhtions on the financial position of the Company at 31 December 2016, ot the financial peformance and cash flows for the year then ended.

We were responsibility

obtain the

No supporting documentation could be provided on loans tofrom group companies. The auditor was unable to obtain minutes for meeting held during the year under audit. Permission was not granted to obtain loan confirmations of the yearend bahne. No information could be obtained from management with regard to the impairment assessment or advances and repayment made during the year, Consequently, we werg unable to determine whether any adjustnrents to toans to/from group companies stated at R 15 691 686 in the financial statements was necessary.

Nexi{ Page

5EB&T r.A1F

22fi

AnnexureMLFinancial Statementsof LPHHfor3lDec2016signedbyFirstRespondent -Page2of43

Management could not provide us with impairment assessment for other financial assets. We were also unable to obtain agreements for other financial assets. Consequently, we were unable to determine whether any adjustments-to other financial assets as well as the impairment oeense amount stated at R 51 659 700 in the financial statements was necessary.

The auditor was unable to confirm the trade and other receivable balance at year end. Management could not provide us with supporting documentation with regards to bad debts written off, adiusting journals passed and their basis regarding discounting of debtors. Consequently, we were unable to determine whether any adjusgnents to tra-de anJother receivables as well as bad deb,ts expense stated at R 4 675 896 in the financial statements were correct. Management could not provide reasonable o<planation for the tease rental straight lining performed on the new l&se entercd into during the year under audit. Consequentlya,llre...ryere unable to determine whether any adjusbnents to account 8200 for operating lease liability, stated:$t R fO ZO+ 678.75 in the financial statements

was necessary. amounts between the billing system and the explanation could bp obtained. Consequently, we accounts for rendering of seruices stated at R

The auditor was unable to reconcile the revenue accounting system. Variances were identified for were unable to determine whether any 269 413 538 in the financial statements was

The auditor was unable to confirrn supporting documentation for the

Management

determine whether any adjustments to stated at R 113 245 337 in the financial

muld not

Provide

. Consequently, we were unable to

and other payroll expense accounts

expense

it evidenm with regard to related party

The auditor was unable to obtain sufficient transactions and account balances.

legal confirmations. The auditor therefore could could have an impact on the financial statements.

Management did not not ascertain if there

year end. Insufficient information was available

The auditor was unable to obtai frorn both management and. the

Other Platter

- Repofts Required

with regards to subsequent events hy the Cornpanies Act

The annual financial $atements include the Directors'Report as required by the Companies Act of South Africa. The directors are responsible for this other information.

We have read the other information and, in doing so, considercd whether the other information is rnaterially inconsistent with the financial Statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated. However, due to the disclaimer of opinion in terms of the International Standard on Auditing tfsn) ZOS (Revised), tttodiflcations to the Opinion in the Independent Auditor/s Report, we are unable to report further on this other information. Responsi bi t ities of the dircctorc for the Financial StatemenE

The directors are responsible for the preparation and fair presentation of the financial statements

accordance with International Financial Reporting Standard and the requirements of the Companies Act of South Africa, and for such internal control as the directors determine is necessary to enable- the preparation of annual financiat statements that are free from material misshtement, whether due to fraud or error.

Page

$ffiil* F^.N

AnnexureMlFinancialStatementsof

LPHHfor3lDec2016signedbyFirstRespondent -Page3of43

z!ro

In preparing the financial statements, the directors are responsible for assessing the company's abilityto mntinue as1 going con@rn, disclosing, as applicable, matters related to going .@ncern and using the going concern baiis of accounting unless the directors either intend to liquidate the company or to cease operations, or have no realistic alternatlve but to do so.

Auditor's Responsibilities for the Audit of ttre Financial Statements Our responsibitity is to conduct an audit of the company's financlal statements in acaordance with International Standaids on Auditing and to issue an auditor's repoft. However, because of the matters described in the Basis for Disclaimer of Opin-ion section of our repott, wewere not able to obtain sufficient appropriate audit evidence to provide a basis for an audit opinion on these financial statements.

We are independent of Louis Pasteur Hospital Holdings Ltd in amrdance with the Independent Regulatory Board for Auditors Me of Profssionat bndud for Registerd Auditorc (IRBA Me) and other independence requirements applicable to performing audits of financial statemenb in South Aftica. We have fulfilld our other ethical responsibilities in accordance with the IRBA Code and in accordance with other ethical requirements applicable to performing audits in South Africa. The IRBA Code is mnsistent with the International ethrcs Standards Board for Accountants Me of Ethia for ProfssionalAccounbnB (Pafts A and B).

Report on Other Legal and Regulatory Requircments In accordance with our responsibilities in terms of sections +4(2) and aa(3) of the Auditing Profession Act, we report that we have ideniified reportable irregularities in terms of the Auditing Profession Act. We have reported such matter to the Independent Regulatory Board for Auditors. The matter peftaining to the reportable irregularity has been described in note 34 to the financial statements.

Nexia SAB&T Y M Hassen Dlrector Registered Auditor rc< Novernber 2018 Centurion

Page

#li{'^ $ 5AB&T

AnnexureMlFinancialstatementsof LPHHfor31Dec20l-6signedbyFirstRespondent

zlfl

-Page4of43

119 Witch-HaaelAvenue Hlghveld Technopark

Nexia 5AB&T

f,enturlon P

O Box 10512

Centurion

accountants I auditors I consultants

00.16

T: +271OI126828800 F: +27 (O112 682

INDEPENDENT AUSITOR'$ REroRT

88ol

www.nexia-sabt.co.za

To the Shareholderc of Louls Pasteur Hosgbl Holdings (Pty) Ltd

Raport on th. Audit of the Annual Financlal statements Disdalmer of Opinion audit the annual financial statements of louis pas&ur Hospltal Holdlngs (P!Y) Ltd, whictt Positon as at 31 December 2016, and the Statement of Profit or Loss and comp*se Odrer C.ornprehenstue tncome, Statement of Changes in Equlty and Statement of Cadt Florvs fur tfie year then ended, ani noEs to the annual financial st tements, induding significant ac@unting policies.

We were engaged

ttd Stement of Financial

We do not express an opinion on the acompanying financial statemerts of tolb Pasteur Hospltal Holdings (pty) Ltd. Aecluse of the significance of the mattsrs detcrlbed in the Basis fur Disdaimer of Opinion section repon we have not been able to obtain sufficlent appropriate audit evid€nc to provide a basis for an audit opinion on these financial statements.

ifii,r Basis

for Disclaimer of OPinion

Due to Louis pasteur Hospltal Holdings (Pty) Ltd.3 poody maintalned accounting recotds, we were unable to obtain sufficient approprlate audit evidence to substanuate the hllowing matErs. As a rcsult of these matters, we were unable to d€termlne whether any adrusfiients to tilese amounts wet€ neAessary,

Management did not assist us :n obtahing er<temal legal coafirmauons. In addlfion, no supporting doornrentaton was provided for on two legal claims lnstihlt€d against the entity onemed. We oould not ascertain il there was a possible contingent llablllty, pro/ision or liabillty b have been acoounbd for

i I

resarding the closing balances Es at SL Oecember 2016 by alternative mean$. unable to sbtfiin sufficient appropriate audit evidence to veriff th* impairment of doubtful bad debts and acffued lncorne at 31 Decernber 2016. We were unfible to obtain sufficient appropriate audit evidence to veriff the validity nf the debenture agreement entered into betnteen Louis Pasteur Hffipnal Holdings (Pty) Ltd and Holdings (ny) Ltd. We were unable to ohtain sufficient appropriate audit evidence to determine the revenue and purchases.

Wi were

still be in?

on revcnuc?

Clnrp*rron" f,lr tl ltcdoP+ Chkt t ril{utrv* AGwr }tt g Adarn

S^B&T Cmrttrt<l tc*ourtrnlt hffi.pofft# B llt CorrrgrqyRr$itf .tnn Hl,lscr 1997I0 lS869r?I

9lrz9,

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AnnexureMlFinancial Statementsof LPHHfor3lDec2016signedbyFirstRespondent -Page5of43

238

we were unable to obtain sufficient appropriab audit evidence b verfy the accuracy and mmpleteness of t11e loans to related and associabd companies fur the year ended 31 December 2016 as no loan agreemen6 or loan conftrmadon or suppot for the tansactions making up the dosing balance could be proviaeO. Furthermore an investigauon is cunenty being onduc&d by other auditors to itnestigate an illeged daim against the company. At $e date of our aud:t report, the lnvestigation ls sUll cortinuing and has not been finalised.

Durlng the audit we noted that there were no minutes of meetings malntained bJ the company, Corsequenuy, we were unable to confirm the validity and approal of relevant tansacthns. Emplojee costs :nduded amounts paid on behalf of Rubicon Group (fty) Ud (formedy, Qudran Emma fralmis (Pty) Ltd). No correctng adjusunenE weie prccessed by the entity, in order to @nt€t the misstatement resulting in an overstatement of operating expenditure. In terms of IAS 17 (Leases), there was a misstatement in $e adjusunent ior the sbaight lining of the has resulted in an under-statement of operating expenditure and the tiability for r€ntal expense. opera6nd bases for the year. C-onsequendy, adrusfrnents to the defuned tax balance relating to leases has not been accounted for.

ttii

Otlter

ilatar -

Reports Reguired by:he Compani6 Act

The annualfinancial statemenB lnclude the Directors'Report as requlred bythe Compani6 Act of Sol,lh

Afrio.

The directors are responsible for thls other infurmation. We hat/e read the odrer information and, in doing so, aonsldered whether the otJrer informa0on is materially inconsisbnt with the financial slatements or our knowledge obtalned ln the audlt, or od|erwise appears to be materhlly misstated. However, due to tJre disclaimer of opinion in terms of the Intemational Standard on Auditing IISA) 705 (Rwised), Modlfrcations to the Opinion in the hdependent Audito/s Roport, we arc unable to repott furfi€r on this other infurmauon.

Responsibilides of the darectors for the Financial Statemcnts The directors are responsible for the preparation and falr presentation of the financial statements ln accotdance wisr International Finandal Reportng Standard and the requirem€nB of t,le Companies AGt of South Africa, and fur such internal control as the dlrectors determine ls nec€sary to enable- the preparagon of annual financial statements that are free ftom material misstatement, whetier due to fiaud or eror.

tn preparlng tte financial statements, the directors are responslble for asseslng the compaq/s abilivto

coriUnle as a going concem, disclosing, as applicable, matters related to going @ncem and uslng the going corrcern bails of accounting unless the directors elther lntend to liquidate the company 0r t0 cease operations, or have no realistic ahernative but to do so'

Auditor's Responsibltides for the Audit of tlre Financial Statements

b conduct an audit of the financial statemenE ln accordance with Intemational Sbndards on Audiung andto issue an audibfs report, However, because of the matbts desc[ib€d in the Basls for Disdaimerif Opinion section of our report, we were not able to obtain suffcient apptopriate audit evldene Our responsibility is

provide a basis fior an audit opinion on these anancial statements.

We are lndependent of Louis pasteur Hospjtal Holdlngs Ltd in accordance wiBr the Independent Regulatory Board for Au'ditors @de of Pro@ionat Conduct for RqbbredAuditors (IRil @de)aadaffter. independence reguirements applicable to performing audits of financial statemenE in South Aftica. We have fulfilled our other edrical #ponsibilities in accordance with the IRBA Code and in accordane with otler ethical

requirements apitigabte to performlng audlts in South Africa. The IRBA Code is conslstent with the Intemational eUrib StanOarUi Board foiAccountants Codeof Ehia for hofssionalAccounbnE(PatB Aand B).

?mrw *

fr,,

ffi

Nexia SAB&T

}ttfr

AnnexureMlFinancialstatementsof LPHHfor3lDec2016signedbyFirstRespondent -Page6of43

fr.

233 g3

Louis Pasteur Hospital Holding$ (Pty) Ltd (Registration numbe r 1992t001 696107) Annual Financial Statements for the year ended 31 Decernber 2016

These annual financlal statsments have been audited in compliance vvith the applicable requirements of the Companies Act 71 of2008,

Published 12 November 2018

N^ I+

23tr

AnnexureMlFinancial StatementsofLPHHfor3lDec2016signedbyFirstRespondent -Page7of43

Loui* Pasteur Hospital Holdinss {pty} Ltd

{ReEistration number 1 99U001 696/07} Annual Financial $tatements for the ysar ended 31 December 201S

General lnformation Cnuntry of incorpomtion and dornlclle Hnturu

rf hu*insss

nnd prlnclpel activitiss

Directorc

$outh Afica Ths ffirapffny canie$ on the business of a private hcspitnl and clinic Y $uliman M Adam D Daka AS Akoob

A$ Hlrnrno AJ tr{oorrnahrmed MA Ramasia GJ Van frnrnenis MY Adarn

AE Prakke JJ Jansen

Reglstered office

374 Franric Baard $treet Louis Pastsur Madical Centre Pretoria 0001

Buriness addnesg

374 Francis Baard Street Louls Pasteur ltdedical Gentre Fretoria 0001

Postal address

PO Box 11S76 Tha Tramshed Pretoria 012S

Holdlng company

Louis P*steur Medical lnvestments Limited incorporated in $oufr Afica

Bankere

Nedbank Limitad Finst National Bank

Auditsr:r

Nexia SAB&T

$ecrotery

$ Moosa

Corn peny raglstratlon nurnbar

1ss2l001sgsl07

Tax referance nurnber

s381312S43

,/\,r

r,"+

z:fir

AnnexureMLFinancial Statementsof LPHHfor3lDec2016signedbyFirstRespondent -Page8of43

Louis Pasteur Hospital Holdinss {pty} Ltd

n umbe r 1 9921O0 1 696/07) Annunl Financial $taternenB for the year ended 31 DecEmber 2016

(Reg istration

lndex Paga

Directorx' Renponsibilities and Approval

4**

Directors' fteport ndep*ndent Audito/s Report

6-8

Ststement of Financial Position

$tatsment of Profit or Loss and Other Cornprehensiva lncom*

$tatument of Changes in Equlty

Statement of Cash Flows

Accounting Policias

13-21

Notes to the Annual Financial Statemenb

22-40

F,t

^{d

AnnexureMLFinancialstatementsofLPHHfor3lDec2016signedbyFirstRespondent -Page9of43

zffi

Louis Pasteur Hospital Holdings (Pty) Ltd (Registration nurnber 1 992001 696/07) Annual Financial Statements forthe yaarended 31 December2016

Directols' Responsibilities and Approval The diredorc are required in terms of the Gompanies Ac* 71 olz@tg to maintain adequate accounting recods and are responsible for the content and integrity of the annual financial statemenb and related financial iniormation lnduded in lhis report lt is their responsibility to ensure that the annual financial statemsnls fairly present the statE of affairs of the company as at the end of the finaocial year and the resulB of its operations and cash fiorc frcr the period then ended. in conformity with lntemdional Financlal Reporting Standards. The extemal auditorc are engaged to express an independent opinion on the. annual financial statemenb. The annualfnancial statements are prepared in accordance wih lntemational Financial Reporting Standards and are based upon appropriate accounting policies consistenUy applied and supported by reasonable and prudent judgements and estimates. The directors adoowledge that they are ultimately responsible br the system of internal financlal controtâ&#x201A;ŹBtablished by the company and place considerable importanoe on maintaining a strong control environment. To enablo the diroctors to meet these responslbilities, the board of direc'tors sets standards for intemal confol aimEd at raducing the n'sk of enor or loss in a cosl efiective manner. The standards indude the proper delegation of responsibililies within a clearly defined fiamework. effective accounting prooedures and adequate segregation of duties to ensure an acceptable level of risk. These controts are monitored throughout the company aM all employees arâ&#x201A;Ź raquirad to malntain fte hQhest ehical standards in ensuring tlre companfs businEss is conducted in a manner lhat in all reasonable circumstances B above reproach. The focus of risk management in the company is on identifying, assessing, managing and monitoring all knorn forms of risk across the company. While operating risk cannot be fully etiminated, tte company endeavours b minimise it by ensuring that appropriate inftasbucfure, controls, systems and ethical behaviour are applied and managed wihin predetermined prooedures gnd constrainB. The direcfiors are of the opinion, based on the infurmation and explanations given by management that the systom of intemal control provides reasonabte essuranoe that the financial reords may be ralied on for the preperaUon of tre annual f nancial statements. Honrever, any system of internal financial control can provide only reasonable, and not absolute, assuranoe against material misstatement or loss. The directors have reviewed the company's cash frontr forecast in light of this revi6r, and the cunent financial position, they are satisfied that the company has or had aooess to adequate resources to continue in operational existence for the foreseeabla future.

The Business Rescue Practitioner was not in ciarge of the company during the 2016 fnancial year and cannot take responsibility for all transac'tions passed in the financial records of the mmpany by the financial accountant and dircctors of lhe company. The Business Rescue Praditioner will sign off on tho Annual Financial Statements provided the Creditors apprcve

tfiis at the creditors meeting on 29 November 2018. Meetings will also be held with $e Board of Directors and an Annual Shareholdars Meeting to give them the opportunity to approve the Annual Financial Statements. The extemal auditors are responsible for independently auditing and reporting on the oompant's annual financial statomenB. The annual financial statements have been examined by the company's extemal auditors and their report is presented on pages 6 to E. The annual fnancial statements set out on pages 4-5 and 9 to 40, which have been prapared on the going conoern basis, were 12 Novernber 2018 and were signed on their behalf by: approved by the board of

Approval of

2*l

AnnexureMlFinancialstatementsof LPHHfor3IDec2016signedbyFirstRespondent -Pagel0of43

Louis Fasteur Hospital Holdings {Pty} Ltd

(Regi$tration number 1 992/OOl 696/07) Annual Financial $taternents for the year ended 31 Decsrnher 2016

Directors' Report The directors have pteasure in submittlng treir report on the annualfinancial statements of Louis Pasteur Hospital Holdings (Pty) Lld forthe year ended 31 December2016.

Haln buslnass and operatlons

The company canies on the business of a private hospital and operates principally in South Aftica. Ttre operating resutE and state of afhirs of lhe company are fulty set out in he attached financia! statremenb and do not in our opinion raquine any furthercomment There haw been no material changes to the nature of 0re company's buslness from the prior year.

Review of finrncial results and

actvites

The annual financial statements have been prepared in accodance with lnternalional Financial Reporting Standards and th9 requirements of the Gompanies Act 71 ol2AO8. The accounting policies harre been applied consistently compared to the prior year. Full details of the financia! position, resuhB of operalions and cash flou,8 of the company are set out in these annual financial statements.

Holding company

The company's holding company is Louis PasteurMsdical lnwsttents Limited wtrich holds 74Yo (2O15:74%) of the company's eguity. Louis Pasteur Medical ln\â&#x201A;Źsfnents Umlted is incorporated in South Aftica-

Evente after the raportng Porlod

The hospital was placed under business rEscue from 8 June 2018. Please refur to note

I of the Directors' Report for more

information.'

The compant's appeal against the ctaim instituted by Bonitas relating to their insurance claim was unsucoessful and the company was ordered to pay Bonitas an amount of R88 490 721 on 31 May 2018.

A court case in respect of a claim for negligence to the amount of R1.3 million has been instituted against the company.during February 2017.

tni

aaim is around negtigenca regarding medication that was given to a patient and not attered when tha

patienfjmedicalcondition worsened. Rni1omey tras been appointed and is currenty investigating the merils of the liabili$. A court case in respect of a claim fur negligence to ftB amount of R1.5 million has been instituted against the oompany during Ocilober 2017. The claim involves tne parene of a baby who was not timeously inbrmed about the death of their baby. An attomay has been appointed and is currenfly investigating the merits of $e liability.

Going concern

Dudng the financial year ended 3't December 2016, managements use of the going gon_cqm basis of accou$ing is appropdate in the-circumstanei, hoilever oBrtain instances of material uncertainty exisG. The principle evenb or conditions that may cast significant doubt on the entity's ability to continue as a going ooncem are oplai4edfrllel?{ in note 8 of the directo,'s report. Tf,e financial rasults indicatethat thd entity incuned a net loss for the year of R159 797 412, and $e cunent liabilities excseded the cunent asseb by R126 040430 at year end. These conditions indicate ftat a matedal uncertainty exist that may cast a signifioant doubt on the entiily's abllity to continue as a going conoem.

The directors belierie that the compary has adequate finanoial resources to continue in operation for the foreseeable future ano accorUingly the annual financial siatements have been prepared on a golng conoBrn basis. The direotors aro not ah,are of any n6y'/ material changes that may adversely impact the company.

14,

Annexure M1 Financial Statements of LPHH for

Dec 2016 signed by First Respondent

- Page 11 of 43

23s

Louis Pasteur Hospital Holdinge tPty) Ltd (Rsgisbation number I 992100 1 696/07) Annual Financial Statements for the year ended 31 Dscamber 2016

Directons' Report

Litigationatatement

The company becomes inro6od from time to time in various claims and lawsuits incidentalto the ordinary ooul66 of business' is not cunen0y involved in any such claims or lawsuits, whicfr individually or in the aggrcgate, are elgeded to have a mabrial adverss eftct on the business or its assets.

fne combani

The compant's appaal against the claim instituted by Bonita-s rela$nq to-their insurance daim was unsuccessful aM the company wai ordered to pay Bonitas an amount of R88 490 721 on 31 May 2018'

Audltonr

Nexia SAB&T continued in office as auditors for &re company for 2010-

BusinessRescue

The business rescue prooeedings commeneed on 8 June 2018. Etienne Naude was appointed as the business rescue practitioner. The company was erperiencing severa cash flow diffculties and was unable to meet its payment obligalions to its creditors as anO wtren suth paymbnts bll due. The company also had a long standing dispute between the_two main shareholders of the company vytricn'fraa resulted in litigation wtridr nas had a harmful effec-t on the oomgany afterthe.company losttre appea! and was'ord6red to pay Bonitas an amount of R88 490 721 . The dispute has elso led to lad< of financial support by fnancial institrtions who t|/â&#x201A;Źre awaiting the outcome of the litigation. As a result of inter alia the dispute, the Bankers of he company has reduced the overdraft facilities leading to cash iorr constaints. The going concem of the entity is dependant on the approval Postal

address:

Business address:

the business rescue plan.

PO Box 92082 Mooikloof 0059

739 Btesbok $treet Riatfontein Agricultural Holdinge Mooikloof Fretoria East

Annexure

Financial Statements of LPHH for 31 Dec 2016 signed by First Respondent - Page 12 of 43

Louis Pasteur Hospital Holdings (Pty) Ltd (Registration number 1 992/001696/07) Annual Financial Statements brthe yearended 31 December 2016

$tatement of Financial Poeition as at 3'l December 20{E Note(s)

2016

?015

Arsetr Hon-Curront Assets Froperty, plant and equipmsnt lntangible asset$ Loans tn group companies Deferred tff( Othsr financial assets

30,427,107

e8,4S7,535 15,3S0

26,434,878 2,424,W4 47,933,056

10 11

30,{27,107 Cument Attets lnventory Trade and other reeivables Other financial assets Cash and cash equivalents

10S,20S,04S

12 13

574,U5 u,674,946

36,000,147

15,691,686 24,866

3,969,562

510,S11 I

50,965,943 81,392,950

Total Assets

40,4E0 324

146,686,009

Equtty and Liabllltles

Equlty 1S

Share capital Retained lncoma / (Accumulated loss)

2,000,074

15,393,720)

#,403,695

(113,393,648)

46,403,769

Liabilities

Non{urrcnt Llablllties Loans from group companies Loans from shareholdsrs Ofiar fi nancial liabilitie* Finance lease liabilities Defarmd tax Other long-term employee benafik

6 16

13,131 ,068

3,041,417 1,607,838

5,756,S46 13,229,802

3,690,$29 4,Sg?,S12

e8s,328

17,780,323

27,8{8,$16

s0,883,098 gsg,343

60,551,337 89,$26,166 2,097,77fi

10,204,S79

4,01 9,272

Current Llabill$ss Trade and other payables Other fi nancial liabilities Finance lease liabilities Operating lease liability Current til( payable Bank overdraft

'14

3,897,7U

3,579,522

10,728,581

9,509,317

177,006,273 71,4:15,724 I9t1,786,596 99,282,240 91,392,950 145,6E6,009

Total Llabilltls*

Totrl Equlty and Llabllftlee

14,fr t.

Annexure

z4ul

Financial Statements of LPHH for 31 Dec 2016 signed by First Respondent - Page 13 of 43

Louis Pasteur Hospital Holdings (Pty) Ltd (Registration number I 992001696/07) Annirai Financial StabmentE for the year ended 31 Decembar 2016

$tatement of Profit or Loss and Other Comprehensive lncome

Nob(s) 20

Revenue Cost of sales

2016

201 S

2SS,413,538 (57,671 ,413)

275,161,387

(sg,o3g,g77t

2111747,1?18

zos,lIr #10

Other operating income Other operating axpon$es

5,034,363 (323,908,033)

2,177,5$8 (210,868,484)

Operrting {lost} profit lnwsffiient income

('107,1s,l,s4s}

Finanpe cosB

6,754,815 (55,388,008)

Grcss proflt

({55,764,738}

(Lotsl profit before taxation 27

Taxation

(Lottl proflt for tfie year

(4,032,6771

{u,$Es,s{ s}

6,I98,923 {7

,116,545}

(3,$87,I381 (1,534,598I

(159,797,415)

(4,921,7361

(159,797,415)

11,921,736)

Other com prehensive income

Total cornprchensive (lost) lncome for the yeer

Annexure

zffi

Financial Statements of LPHH for 31 Dec 2016 signed by First Respondent - Page 14 of 43

Louis Pasteur Hospital Holdings {Pty} Ltd (Regirtration number 1 992/001 696ru7) Annual Financial $tatements forthe year ended 31 December 2016

Statsment of Changes in Equity $lrare

capital

$hare prernium

Total share capltal

{00

Balenre et 01 Januaty 3015 "_*tt0

t r

Retained

{,9s9,074 2,000,074 4g,Izs,{31

Loss for the year Otrer comprehensive incorne

Bnlnnce at 01 January 2016 Loss for the year

100

Other com prehansive income

ffi

_' rr'

-l

{00

sr,s26,606

(4,921,73S)

(4,921'736)

(4,921,7361

{4,921,736}

2,000,0?4 44,403,695 :

Total comprehensive Loss for tha yoar Belance at 31 December 2016

Tutal comprehenelre Loct for ths ycf,r

Total equtty

lncome I (Accumulatnd loss)

l,$9s,s?4 2,$00,074

4S,{03,?SS

(159,797,415)

(15S,FS7,41S1

(159,797,415)

(158,797,118I

(11s,393,720)

(113,393,6461

ffi i

Note(s)

d..'urP /\

AnnexureMlFinancial Statementsof LPHHfor3lDec201-6signedbyFirstRespondent

zrt?

-Page15of43

Louis Pasteur Hospital Holdings (Pty) Ltd (Registration number 1 99?O01 696/07) Annual Financial Statements for the year ended 31 December 2016

$tatement of Cash Flows Note(s)

2016

201S

Cnrh flounn from oparating activifioa Cash reueipts from custornens Gash paid to suppliers and ernployees 2B

f,ash generated from operations lntsrcst incorne

270,738,?Sg

279,355,54F

t260,990,748)

(257,501,733) 21,8$3,S14

9,747,991

2,929,171 (10,s14,1S9)

Financa costs

1,761

Nst cnrh from operatlng acfivltles

tfi,1 08,741)

,993

t$,74S,073

Cnsh flow* from invesflng activitles 3

Purcfiase of property, plant and equiprnent Loans to group companies rePaid

(5,773,554)

(3,036,746)

10,743 ,192

4,969,538

Het cash ufilised in investing activitias

(3,036,746)

Ca*h flows from financlng activltles Decrease in other financial liabilities Decrease in other longr,term employee benefits Procwds frorn shareholders loan Finance lease payrnents Loans frorn group companies repaid

tl*t

(3,624,4261 (280,328)

(243,14l\

(2,233,891) (5,756,946)

6,007,481 (2,428,61 1) (8,484,357)

164,382

(11,895,591)

Eash utllised ln ffnanclng activltiet

(5,163,960) (5,539,755)

Total cath movoment for tha YGar Cash at the beginning of the year 14

Total caah at end of the year

t4,384,249I

7,7U,078 (13,263,833)

(10,703,7161

(5,539,7551

''2

rf)

4.$

Annexure

Financial Statements of LPHH for 31 Dec 2016 signed by First Respondent - Page 16 of 43

24S

Louit Pasteur Hospital Holdings {Pty} Ltd

r 1992100 1 696/07) Annual Financial $tatements for the year ended (Reg istration nurnbe

3t Derember 2016

Accounting Policies

Significant accountlng pollclee

The pdncipal accounting policies appllsd in the preparation of lhese annual financial statemenb aro set out below'

1,1

Bacls of preparatlon

ThE annual fnancial statements have been prepared on the going concem basis in accordance wifi, and in compllanoe with, lntemational Financiat Reporting Standards (IFRS') and Intemational Flnancial Reporting lnterpretations Committee flfRlC') interpretations issued and effecthe at the time of preparing these annual financial statâ&#x201A;ŹmenB and ths , and 0te Companies Act of Souflr Africa of South Africa, as amended.

The annua!financial stataments have been prcpared on the historicalcost basis, unless othenvise stratd in the accounting policies which bllor and inoorponatathe priircipal acoounting policies set out below. They are presented in Rands, which is the company's fu nc{ional cunency. These accounting policies are consistent with the previous period. 'l

Signllicant JudgemenE and aources of estlmaton uneertalnty

The preparation of annual financial statomenb in conformity with lfRS requires management from time to time, to make iudgim6nts, estirnates and assumptions that affect the applicalion of policies and rcported amounts of assets, liabilities, income and expenses. These estimates and associated assumplions ane based on experience and various other fa6:tors that are believed to be reasonable under thE circumstances. Acttral results may difier trom these estimates. The estimates and underlying assumptions ara revierrnd on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimates are revised and in any trtura periods affuded. CrlUcal ludgementa ln applylng accountlng pollcler Tha critical iudgements made by management in applying accounting policios, apartfttm those invoMngestimations, that have he m6st iignifcant elfect on the amounts recognised in thE financial etalements, are ouUined as follows:

Falrvalue estmation The fair value of financial instruments traded in aclive markeb (such as trading and availabl+.fur-sale securites) is based on quoted martet pricas at the end of lfie reporting pedod. The quoted market prie used br financial assets heH by the company is the current bid Pdce. The fair value of financial instruments that are not baded in an active market is determined by using valuation techniques. The company uses a variety of methods and makes assumptions that are basad on ma*et conditions existing attre end of each reportn! period. Quotdd market prices or deabr quotes br sirnilar instruments are used for longterm debt' Oher techniques, srjdt as-eitimated discounted calsh florrs, are used to debrmine fair value br the remaining financial instrumentE. The fair valua of fonnrard foreign exchange aontrac.ts is determined using quobd fonrard exchange rates at the end of the reporting period. The carrying value less impairment provision of trade receivaHes and payables arc assumed to approximate lhelr fair values. The hir valie of finansial liabitiUes for disclosure purposes is estimated by discounling the future contractual cash frows at the cunent market interest rate that is arrailable to tre company fur similar financial inslrumenb.

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Annexure

24tr

Financial Statements of LPHH for 31 Dec 2016 signed by First Respondent - Page 17 of 43

Louis Pasteur Hospital Holdings (Pty) Ltd (Rsgistration nurnber 1 992/001 696/07) Annual Financial Statements for the year ended 31 December 2016

Accounting Policies 1.2

Signlflcantjudgemante and sourtet of esffmation uncaltalnty (contlnued)

lmpalmenttesting The recoverable amounb of cashgenerating unib and individual aesets harre been determined based on the higher of. value-in+rse calculations and falr ialue less-cose !o sell. Theso calculations require the use of estimates and assumptions. lt is rEasonably possible thatthe assumption may c*range wlrich may then impad our estimations and may then rEquirc a material adjustment to the carrying value. The company rEviews and tests the carrying value of assek when ewnb or changes in circumstances suggest &at the carrying imount may not be recoverable. Assets are grouped at the lowest lerrel forwhich identifiabla cash ffowe are largely inAepenOEnt of cash ilows of othEr assets and liabili[es. lf thare are indications that impalrment may have occunad, estimateg are irepared of expecled futura cash flows for aach group of assets. Expected future cash fows used to determine tha value in use'of tangibte assets are inherently uncertain and could materially change over lime. They are significanfly af{ected by a number of factors.

Useful llves and rcoldual valuet The useful lirres and residual values of property, plant and equipment as well as the useful lives of the intangibles are reviewed at eadr reporting date, The useful lives are estimated by management, baced on historic analysis and other available informatioir. The residual values are estimated based on useful lives as wEll as other availabh information.,

Provlclont and conUngent liabllltlec Various estimaps and assumptions havâ&#x201A;Ź been applied by management in ariving at the carrying mlue of provisions that are recognised in terms of the relevant accounting policy. Management further relies on input frorn the comparyrs hwyers is assesslng the probability of items of a contingent nature.

Loant and rccelvables The company assesses its toans and recoivables for impairment at the end of eadl reporting period. ln determinlng whether an impairment liss should be recorded in profit or loss, the company makes judgemen! as to whether there ls observable data indicating a measurable decrease in the astimabd future cash flows ftom a financial asset. The impairment for loans and receivables is calculabd on a portfolio basis, based on hlstorical loss ratios and other indicators present at the reporting date that conelate with defaulb on the portfolio.

Taxation Judgement is required in determining the proMsion for income taxes due to the complexity of leg_lslation. There arB many traniactions and calculations for whiih the ultimate tax determination is uncertain during the ordinary courss of business. The company recognises liabilities for anticipated tax audit issues based on eslimatee of whather additional taxes will be due'

Whire tlre nnal tax outcome of these matters is difierenl kom the amounts that were initially recorded. such differences will impact the income tax and debned tax provisions in the period in whicft such determination is made.

The company recognises the net future tax benefit related to dehened income tax assets to the extent that it is probable that the deductibb temporary diffurences will re\rerse in the breseeable future. Assessing the reooverability of de{ened income tax asseb requires thd company to mak6 signifcant estirnatss related to expeclations of future taxable income. Estimates of future taxable income are based on forecast cash flols lrom operations and the application of existing tax laws in each jurisdiction. To the exlent that future cash fons and taxable incorng differsignificanily ftom estimates, the ability of the company lo realise the net defened tax assets recorded at the end of the reporting period could ba impaded.

1.3

Proper{r, plant and equlpmGnt

Propeny, plant and equipment arB tangible asseB which the company hoHs for iB own use or fur rental to others and which are expec'ted to be used for more than one year,

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AnnexureMlFinancialstatementsof LPHHfor3lDec2016signedbyFirstRespondent -Page18of43

Louis Fasteur Hospital Holdingt (Pty) Ltd Registration nurnber 1 99?001 696/07) Annual Financial $tatemsnts for the year ended 31 Decernber 2016 (

Accounting Policies {.3

Propsrty, plant and equipment (con{nued)

An item of property, plant and equipment is recognised as an aeset when lt ls probable lhat future emnomic benefits associated with the lbm will 0or to tha company" and lhe cost of tha item can be maasured reliably. The

ost

of an item of pmperty, plant and eguipment is recognised ag an asset when:

- it is probable that future economic benefts associated w3h the item will frow to the company; and - the mst of the itorn can be measured reliably. Property, plant and equipment is initially measured at cosl Cost indudes all of the ereenditure whlch is direcffy attibutable to the acguisition or consbuction of the asset, including lhe capitalisation of borrovtring costs on qualiging assâ&#x201A;Ź& and adjustnents in respect of hedge accounling, where appropriate. The initial estimate of tlre costs of dismantling and remoMng an item and restoring fie site on whidt I is located is also induded in the cost of property, plant and aquipment, where the company is obligated to incur such expenditure. and where the obligation arises as a resuJt of aquiring the asset or using it fur purposes other than the production of inventories.

Major inspeclion costs which are a condition of continuing use of an item of propefi, plant and eguipment and whicft meet the recognition criteria are induded as a replacement in the cost of the item of proporty, planl and eguipmenL Any ramaining inspedion costs from the previous inspection ara derecognised. Depreciation of an asset commences when the asset is available for use as intended by management Depreciation is charged to ,inite ofi the assets carrying amount over its estimabd useful liE to its estimated residual value, using a method that best reflecb tha pattem in which the assefs economic benefib are consumod by the company. Leased asseb are depreciated in a consisbnt manner orrer lhe shorter of their axpected useful lives and the leasa term. Depraciation is not charged to an asset if ib estimated residual value exceeds or is equal to its carrying amount Depreciation of an asset oeases at the earlier of the date that the asset is classified as held for sale or derecognised. The useful lives of items of properry, planl and equipment have been assessed as bllotttrs:

mcthod

Averago useful llfe

Item

Oapruclatlon

Plant and machinery Furniturts and fixtures Motor vehides Offics equiprnant IT aquipment Leasehold lm provernsntg Linen and blankets

$traight line $traight line

&15 years &10 years

$faight line

5 years 5 years 3-7 years period of lease 4 years

$traight lina

$raight line $traight line $traight line

The residual value, useful life and depraciatlon method of eadr asset arc rcvieured at the end of each reporting year. lf the expec{ations differ from previous estimates, the change ls amounted for prospec-tively as a cfiange in accounting estimate.

Eadr part of an itern of proparty, ptant and equipment with a cost that is signifcant in relalion to the total cost of the item is depreciated separately. The depreciation charge for each year is recognlsed in profit or loss unless it is induded in he carrying amounl of another asset,

An item of property, plant and equipment is derccognised upon disposal orwhen no frrture Economic benefits are expected fom its continired-uie or disposal. Any gain or loss arising ftom the derecognition of an item of property, plant and equipment, determined as the diffarenoE between the net disposal proceeds, if any, and tre carrying amount of the item, is included in profit or

1.4

les

when the itrrm is derecognised.

lntanglble aseetg

An intangible asset is recognised when:

. .

it is probable ttrit ttre expected future economic benefits that are attributable to the asset will flow to the entiU; and

the cost of the asset can be measured reliably.

lntangible assets are initially recognised at cosl 1S

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Annexure

4rc

Financial Statements of LPHH for 31 Dec 201-6 signed by First Respondent - Page 19 of 43

Louis Pasteur Hospital Holdings tPty) Ltd

(Registration number 1 992/001 698/07) Annual Financial Staternents for ths year ended 31 Desember 2016

Accounting Policies 1,4

lntangible assob (contlnued)

lnlangible asseh ars carried at cost less any accumulatad amortisation and any lmpairmenl losses. The amortisalion period and the amortisalion mehod for intangible asseb are Pviewed erory period'end' Amortisation is provided to write down fire intangible asseb, on a sfaight line basis, to their residual values as fullows:

Computer

l.5

Uaeful llfe

softlare

2 Years

Flnanclal ln$ruments

Clasclf,catlon The company dassifies financialassets aM financial llabillties into the bllowing categorias: Loans and reeivables Financial liabilities measured at amortised cost

. .

Clas*ification depends on the purpose brwlrich the fnancial instruments were obtainei / anounsd and takes placa at initial . ir"ognltion. Classification is re-assessed on an annual baeis, exoept br derivaWes and financial assets desBnated as at fair vahi through profit or loss, wtrictr shall not dassified out of the fair value hrough profit or loss categoty.

lnl0al rccognltlon and msagurement Financial instruments are recognised lnitially wtren the company becomes a partl to the conhactual proMsions of the instrumenB. The company ctassifies financial instrumente, or fieir component p_arts, on initial recognition as a financial asset, a ftnancial liability oi an-equity insbument in accordancE with lhe substance of the contrastual anangement. Financial instruments are measured initially at fair value, exoept for equrty invsstments fur which a f;air value is not detenninable, which are measurâ&#x201A;Źd at cost and are classified as available-for+ale fnancial assets. For financial anstruments which are not at fair value through profit or loss, transac,lion costs aro included in the initial measrrement of the instrument.

Subsequent moa8ulBmant Loans and receivabtes are subsequenty measured at amortised cost, using the efiecUve interest method, less accumulated impairment losses. Financial liabilities at amortised cost are subsequenty measured at amortised cost, using the effecti\E interest method.

Loans to (from) group comPanies These include loans to and frrom holding companies, fellow subsidiaries, subsidisries, joint venlures and associateg and are recognised initially at fair value plus dired transaction costs. Loans to group companies are classified as loans and receivables. Loans Fom group companies are classified as financial liabiliUes measured at amortised cost

Loans to eharchotderr, dlrectotS, manrgora and employoee The loans are recognised initially at fair value plus diract transadion costs and subsequenlly at amortised cost. These financial assets are classified as loans and receivables.

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Annexure

zry

Financial Statements of LPHH for 31 Dec 2016 signed by First Respondent - Page 20 of 43

Louis Pasteur Hospital Holdings tFtyl Ltd

(Regi$tration number 1 ggZo01 696/07) Annual Financial Staternants for tlre year ended 31 Decsrnber 2016

Accounting Policies

Financial instruments (contnued)

Tnde and other rcceivebleo Trada rcceivables are measured at initial reognition at fair value, and are subsaquenUy measured at amortised cost using the effec,tiw intercst rate method. AppropriaE allowances ficr estimated inecoverable amounte are recognised ln profit or loss when tlrere io objedive evidenei *rai ttre asset is impaired. $ignificant financial difficulties of the debtor, probabihty thal the debtorwill enterbankruptcy or financial reorganisation, and default or dellnguency in paymenB are considercd indicators that the trade rocgivable is impiireO. The allowance recognlsed is measured as the difierence between the asset's carrying. amount and the present value of 6stimated future cash {lows discounted at the eftc{i\â&#x201A;Ź inbrest rate compubd at initial ecognition.

The canying amount ol the asset is reduced through the use of an allovuance account and lhe amount of the loEs is recognisad in profit ir loss witrin operating expensâ&#x201A;Źs. When a tade receivabte is uncollectable, it is writbn off against the allorrance actount br tade receivables. Subiequent recowriss of arnounts prevlously written off are credited against operating expenses in profit or loss. Trade and other reoeivabes

lre

classified as loans and rEcaivables.

Trrde and other payablea Trade payables are initially measursd at fair value, and are subsequenfiy measured at amortised cost, using the effecfive interest rate mathod.

Garh and cash equlvalents Cash and cash equivalents compriso cash on hand and demand deposits, and othershod-term highly liquid invastnenb.{at.

are readity conrertible to a known amount of cash and arc subject to an insignificant risk of changes in value. These are initially recorded at fiair vralue and subsequently at amortisad cosl

Ba:rI overdraft and borowhgs Bank overdrafis and borrowlngs are initially meagured at fair value, and are subsequenUy measured at arnortised mst, using the efiective interest rate method. Any dlffirence batween the proceeds (net of transaction cosB) and the settlement or

redemption of bonowlngs is recognised over the brm of the bonowings in accordance with the company's aooounting policy for bonorving costs.

1.6

Tax

Cuflrnt tax atsets and liabllitles Cunent tax for cunent and prior periods is, to the extent unpaid, reqognised as a liability. lf the amount akeady pald in respect

of cunent and prior periods exceeds the amount due for those periods, the excess is recognised as an asset

Cunent tax liabitities (assets) for the cunent and pdor pariods are measured at the amount expected to be paid to (recovered from) lhe tax authorifiLs, using the tax rates (and tax laws) that have been enacGd or sub$tantively enacted by the end of the rcporting period.

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Annexure

Financial Statements of LPHH for 31 Dec 2016 signed by First Respondent - Page

24IB

of 43

Louis Fasteur Hospital Holdings tPtyl Ltd

(Regisfation number 1 992/001 696/07)

Annual Financial $tatements for the year ended 31 December 2016

Accounting Policies 1.6

Tax (continued)

Defened tax ateets and llablll{ea A dafenert tax liability is recognised for all lo<able temporary difierencas, except to the extent lhat tha dehned tax liability arises fiom the iniliaf ocognifron of an asset or liability in a fansaction which at frre time of the transaotion, alfecls neither accounling profit nor taxabla profit (tax loss).

A debned tax asset is recognised for all deductible temporary d:ftrencas to the extent that it is probable that taxable profit will be availaUle against whidr fre deduc{ible temporary diffbren& can be utilised. A debnad bx asset is not recognised when_it ariees hp;fi the initial recognition of an assel dr tiaOitity in a tansadion at the time of the transaction, afhcts neither accounting pmfit nortaxable profit (tax loss). A da6ned tax asset is recognised for lhe carry foruard ol unusad tax losses and unused STC credits to the extent that it is ilbtd1,tnigt re-t"x"uf"lrontwin be availible againstwhich the unused tax lossos and unused STC credits can be utilised,

Debned tax assets and tiabilities are measured at the tax rdes that ere expected to apply to the period when the asset is relfired oi tte liabillty ls seftled, based on tax ratee (and tax laws) that haw bean enacted or substantively enaded by the end of the reporting Period.

Tax expenses Cunent ard deferred taxes are recognised as incomE or an Bxpense and induded in profit or loss for the period, exoept to the extent that the tax arises frorn: a transaction or event which is recognised, in lhe same or a diftrent pâ&#x201A;Źtiod, to other comprehensive income. or a business combination.

. .

Cunent tax and deferred taxes are charged or credit:d to other comprphensirre income if ttre tax relates to items that ara credited or charged, in the sams or a difbrent period, to other comprehensive income. Cunent tax and deferred traxos are ctrarged or credited diredly to equrty lf the ta:r relates to items that are credited or charged, in lhe same or a difierent period, direc{y in equity.

1.7

Leases

A lease is classified as a finance lease if it transbrs substantially all the dsks and rewards incidental to ournership. A lease ciassified as an operating lease if it does not tansEr subetantialty all the risks and rsurards incidental to ownership. Finance leases

lessao

Finanoe leases are ramgnisgd as ass66 and liabilities in the statement of financial position at amounts eqqa! to tha. fair valus of the leased property oriif lo*,"., the pnesent valuE of ths minimum lease payments. The corresponding liabillty to the lessor is included in thi stbtement of financial position as a finance lease obligation. The lease paymenb are apportioned between. the finanoe charge and reduciion of the outstanding liabiliU.The finance_cfiarge is allocatei t6 each period turing the lease teirn so as to produ-ce a constant periodic rate on the remaining balance of the liabiliU.

Operatlng leagec - legsor Opera$ng lease incorre is recognised as an income on a straight-line basis over the lea$e term.

lnitial direct costs incuned in negotiating and ananging operating leasEs are added to the carrying arnount of the leasad asset and recognised as an expense over the lease term on the same basis as the lease income. lncome for leases is disclosad under revenue in proft or loss.

18 t

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Annexure M1 Financial Statements of LPHH for 31 Dec 2016 signed by First Respondent - Page 22 of 43

Louis Pasteur Hospital Holdings (Fty) Ltd {Registration numbe r 19921001 696/07} Annual Financial Statements for the.year ended 31 0ecember 2016

Accounting Policies 1.7

Leases (conffnuad)

Oparaffng leases

leseoe

Operating tease payments are recognised as an expense on a sraigtrt{ine basis overthe lease brm. The diffErence behrcen

g.,6imqinS r=,rfiilEeU as an exp,jnse and the confaaud payments are recagnised as an operating lease asset This liability is not discounted. Any contingpnt rents are expensed in the period they arc incuned.

t.i

lnventory

lnventory are measured at the lower of cost and nat realisable value. Net realisabte value is the estimatEd salling price in fre ordinary courso of business less the estimabd cosb of completion and the estimabd costs necessary to make the sale. The coat of inrâ&#x201A;Źntory comprises of all costs of purcfiasa, cosb of conversion and olher costs incuned in bringing the inventory

to thelr present location and condifion. The cost of inventory of items thal ara not ordinarily interchangeable and goods or seMoes produced and segregated specific projects is assigned using specific identification of the indiudua! costs.

When inventory are sold, the carrying amount of lhose lnventory are reognised as an_ exPensa.in the period in which the related revenui is recognised. ThL imount of any writedown oi inventories to net realisable value and all losses of inventories are recognised as an elpense in the pariod Ure drtte-oown or loss occurs. The amount of any reversal of any wdtadowlr of inventorilrs, arising kom an increase in net realisable value, ara recognised as a redudion in the amount of inventories recognised as an expense in the period in whictt the rerrercal occurs.

1.9

lmpalrment of asset3

The company assesses at each end of the reporting period whether there is any indication that an asset may be impaired. any suctr indicalion exists, the company estimates thE recoverable amount of the assel

tf there is any indication that an asset may be impaired, the recoverable amount is estimatrEd br tha individual assot lf it is not possiOf" to eitimate the recoverable amoirnt of the individual asssl, tho recoverable amount of the casttgenerating unit to which the assat belongs is determimdTha recoverable amount of an ass6t or a cash-generating unit is the hlgher of its fair value less costs to sell and iE value ln use. tf the recoverable amount of an asset is less than its carrying amount, the carrying amount of the asset is reduced t'o iB recovorable amount That reduction is an impairment loss. An impairment loss of assets canied at cost less any accumulated depreciation or amortisation is recognised immediately in profi't or loss.

An impalrment loss is reeognised for cash4enerating unite if tha recoverable amount of the unit is less lhan the carrying amouirt of the units. The iripairment loss iiallocated to reduce the carrying amount of the assets of lhe unit in the bllotving order:

. .

first, to reduce ths carrying amount of any castrgenerating unit and then. to lhe other asseG dtttre unil pro rata on tha basie of the carrying amount of each asset in the unit

prior periods An entity assesses at each raporting date whether there is any indication that an lmpairment loss recognised in may no iong"r exist or may hive de-creased. lf any such indlcation exists, the recoverablB amounb of those assets are estimated. an aBset atbibutable to a rsversal of an impairmg$ l99s does.not exceed the carrying The increased carrying -haveamount of been determined had no imPairment loss been recognised for the asset in prior periods. amount that would

A reversal of an impairment loss of assets canied at cost less accumulated depreciafion or amortisation is raeagnised immediately in Proftt or loss. 1g

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Annexure

23U

Financial Statements of LPHH for 31 Dec 2016 signed by First Respondent - Page 23 of 43

Louis Pasteur Hospital Holdingr (pty) Ltd {Registration number I 992/001 696/07} Annusl Finencial Statements for the year *nded 31 Decernber 2016

Accounting Policies t.lO Sharc capltal and equitY Rn equity inshument is any contlact that evidences a residual interest in the assets of an entity afur dedusting all of its liabilities.

1.11 Employee benefib

Short term employee benefits The cost of short-term employee benefits, (those payable wisrin 12 months after the servioe is rendercd, Eudt as paid vacation leave and sick leave, Uonusei, and non+nonetaryi binefits such as medical care), are recognisd in the period in which the service is rendered and are not discounted. The expecbd oost of compensated absences is recognised as ail expense as the employaes render servies that increase their entitbment or, in the case of non-accumulating absancas, when the absence occurs. The expected cost of profit sharing and bonus payments lu recognised as an oxpense when there is a legnl or construc{ive obligation to make such payrnents as a result of past perbrmance.

Ileflned con0lbutlon plans paymenb to defined contribution rBtirem6nt benefit plans ars cfiarged as an expense as they tall duE' payments rnade to industy-managed (or state plans) retirement benefit schemes are deah with as defined contribution plana Ure schehes is equivalent to those arising in a defined contribution retirement be nefit plan.

wnlre the company's obli,gation uiaer 1.12 Provlslons and contngencles

Provisions are recognised when: the company has a present obligation as a result of a past event it is prodaUl6 that ai outfrow of iesources embodying economic benefits will be required to set0e he obligation; and a reliable estimate can be made of the obligation'

. . .

The amount ol a provision is tha present value of the expenditure expected to be required to settle the obligation. IAlhere some or atl of he expenditure requlred to settle a provision is expeoted to be reimbursed by another pa$r reimbursement shall be rec6gnised whed, ard only when, it is virtually certain that reimbursernent will be raceived if the antity J.Ue= the obligation. The rei-mbursement shall be-fieated as a separate asset. The amqunt recognised for the rcimbursement shall not exceed he amount of the provision.

Provisions are not recognised for future operating losses.

lf an entity has a contracl that is onerous, lhe present obligation under the contrac{ shall be racognised and measured as a provisionContingent assets and contingent liabilities are not recognised. Contingencies arc disdosed in note 29-

1.13 Revenue Revenue from the sale of goods is recognised when Ell the bllowing conditions have been satisfied: the company has hanstsned to the buyerthe significant risks and rewards of ownerchip of the goods: the combany retains neither continuing managerial involvement to the degree usually associated with ownership nor effective contol over the goods sotd; the amount of revenue can be measured rellablyl it is probable trat the economic beneftb associated with the transacfion will florr to the company; and the iosts incuned orto be incuned in respect of the tansadion can bs measured reliably'

. . . . .

When the outcome of a tansac{ion involving the rendering of services can be estimated reliably, revenue associated with the transastion is recognised by rebrence to the stage of mmpletion of the transaciion at the end of the reporting period. The outcome of a trans-astion c6n be estimated reliably when all the bllowirrg conditions are satisfed: the amount of revenue Gan be measured reliably;

Annexure

Financial Statements of LPHH for

Dec 2016 signed by First Respondent

zsll

- Page 24 of 43

Louis Pastsur Hospital Holdings (Pty) Ltd (Registration number 1 992/001 696/07) Annual Financial $tatements for the year ended 31 December 2016

Accounting Policies 1.1

3 Revenue {continued}

.' '

it is probable lhet the economic benefits associabd with the bansac'tion will four to the company; lhe stage of complelion of the transaction atthe end of the reporting period can be measured reliably; and ttâ&#x201A;Ź cosb incuned forhe transaction and lhe coEts to complete the transaction can bE measursd reliably.

\Alhen fie outcome of the kansac{ion involMng the rendering of services cannot be eslimated rctiabty, revenue shallbe recognisad only to tlre extent of the expens6$ recognised that ars recoverable.

Service rewnue is recognised by referene to the stage of complelion of the transac{ion at Ure end of the rcporting pedod. Stage of compleUon is determined by. Revenuo is measured at the fair value of lhe consideralion received or receivabh and represenb the amounts receivable for goods and services provided in the normal ooun$e of business, net of trade disoounts and volume rebales. and rralue added

tart lnterest ls recognised, in profit or loes, using the effaciive inlenest rate method, DividendE are recognised, in profit or loss, when the company's dght to raceive payment has been estabtishEd.

Servics bes included in the price of the produd are recognised as revenue over he period during whicfi the service is performed.

1J4 Costofgales When inventories are sold, the carrying amount of those inventories is recognised as an sxpense in the period in wtrich the related revenue is racognised. The amount of any writedown of lnrrentohes to net realisabte value and dI losses of inrrentories are recognised as an $<pense in the period tha writedown or loss occurs. The amount of any reversal of any write-down of inventories, arising from an increase in net realisable valuo, is recognised as a reduction in the amount of inventories recognlsed as an axpâ&#x201A;Źnse in the period in which the reversa! oocurs. The related cost of providing services recognised as revenue in lhe cunent period is induded in cost of sales.

1.!5 Statementof Gash Flom

fie

Statement of Cash Flows is prepared amording to tho Direct Method.

Annexure

zffi,

Financial Statements of LPHH for 31 Dec 201-6 signed by First Respondent - Page 25 of 43

Louis Pasteur Hospital Holdings (Pty) Ltd {Registration number 1992100 1 696/07} Annual Financial $tatemenB fur the year ended 31 Decernber 2016

Note* to the Annual Finansial $taterngnts 201 5 R

201 6

R -.i

ilewStandardeandlnlerpretefione

2.1

Sbndarde snd lntorpretations effectlva and adopiad ln the cunant year

ln the cunent year, the company has adoptred the following standards and interpretatio$ that ale effective for the curont fi'nancial year and that are relevant to its operations:

Amendmentto IFRS ?: Flnanclal lnstrument$i Dleclosures: Annual lmprovementa pmlect The amendment provides additional guidance regarding transfers with contnuing invokEment Specifically, it provides that cash ffows exdudes cash collec,ted which must be remitted to a tansferee. lt also provides ttrat wtten an entity transfers a fnancial asset but retains the right to service tre asset fur a he, that the entity should appty the exlsling guidance to consider whalher it has continuing involvement in the assst The eftc{ive date of the oompany is for years beginning on orafter0l January 2016.

2.2

Standards and lnterprctatlons not yet effective

The company has chosen not to early adopt tha folloring standards and interpretations, whiclt have been published and are mandatory f6r the company's accounting periods beginning on or after 01 January 2017 or later periods:

IAS

'12

Uncedalnty ovar lncome Tax Treahents

The interpretation clarifies how to apply the recognition and mEasurement requirements in IAS 12 when there ls uncertainty over income ta< Eeatments. Specificaliy, if it is probable that fte tax authoritias will accept the uncertain tax treatment, then all tax related items are measured according to tha planned tax trEatnEnl lf it is not probable that the tax audrorities will accept the uncertsin tax treatnen( then the tax related items are measurcd on the basis of pmbabilities to refed he uncertainty' Changes in fac{s and circumstances are requircd to bs Seatâ&#x201A;Źd as changes in estimatss and applied prospeciivaly. Tha efiec{ive date of the interpretatlon is for years beginning on or after 01 January 20'19. The company expects to adopt tha interpretation for the first time in the 2019 annual financial statements. It is unliltely trat the interpretation will have a material impact on the oompant's annual financial staternents.

IFRS 16 Lsases IFRS 16 Leases is a new standard whicfi replaces IAS 17 Leases, and inEoduees a single lessee accounting model. The main changes adsing from the issue of IFRS 16 wfrich are likely to impacil the comPany are as tullops: Company as lessee:

. .

. . . . .

Lessees are required to recognise a right-of-use asset and a lease liability br all leases, except short term leases or leases whero the underlying isset hasa lo,v value, whiuh are expensed on a straight line or other systematic basis. The cost of the right+f-use asset includes, whers appropdate, the initial amount of ltra lease liability; lease payrnenb made friorto commen@ment of the lease less incentives reejved: initial direct costs of the lessee: and an-estimate for any provision for dismanding, restoration and removal related to the underlying asset. The leaso liab:lity takes into consideration, where appropriate, fixed and variable lease payments; residualvalue guarantees to be made by the lessee: exercise price of purchase options; and payments of penalties br terminating

the lease. The right-of-use asset is subsequenfiy moasured on the cost model at cost less accumulated depreciation and impaiinent and adJusted for any re{leasurement of the lease liability. However, right-of-use assets are rneasured at iair value wten they meet the definition of investnent property and all other inveshent property is accounted fur on the fair value model. lf a right of-use asset relates to a dass of properU, plant and equiprnent which is measured on the revaluatisn model. then thal right-of-use asset may be measured on the revaluation model. The lease tiability is subsequently increasad by interest reduced by lease payments and re-measured br reassessments or rnodifications. Re-measurements of lease liabilities are affeded against right+f-use assets, unless lhe assets have been reduced to nil, in which case further adiustments are recognised in profit or loss. The lease liability is re.measured by discounting ravised payments at a revlsed rate when there is a change in the leaso term or a change in the assessment of an option to purchase the undarlying assEt. 22

[^'n

Annexure

Financial Statements of LPHH for

Dec 2016 signed by First Respondent

25&

- Page 26 of 43

Louis Paeteur Hospital Holdings {Pty} Ltd

(Ragictration number 1 992/001 696107) Annual Finaneial $tatements for the year ended 31 Decomber 2016

il*otes to the Annual Financial $taternents

New Stendarde and lntetpretations (confaued) The lease liability is rs'measured by discounting revisad lease payments at the originaldiscount rate when there is a change in the amounts expected to be paid in a residual value guarantee or when there is a drange in ftrture paymenB because of a change in indax or rate usEd b detormine those payments. Certain lease modifications are accounted for as separate lEases. When leaso modifications which decrcase the scope of the lease arc not required to be accounted for as separate lease$, then the lessee re-measures the lease lhbility by deaeasing the carrying amount of the right of lease asset to refiec1 lhe tull or partial termination of the lease. Any gain or loss rehting to the full or partial termination of the lease is recognised in proit or loss, For all othEr lease modifications whidr arc not required to be accounted fur as separde leases, the lessae re-measurss the lease liability by making a conesponding adjustnent io the dghtof-use assst Right-of-use assets and leasa liabilities should bE presented separately from other aesets and liabilities. lf not, then the line item in whlch they are induded must be disdosed. Thls does not apply to right-of-use asseb meeting tha defnition of investrent property which must bs presented within investnent property. IFRS 10 contains different disdosure requiremenb compamd to IAS 17leases.

. .

The Efiective date of the standard is for years beglnning on or after

January 2019.

The company epects to adopt the standard for the firet time in the 2019 annual financialstatamenb. The company is unable to reliably estimate the impact of the standard on the annua!financial statements.

Amendmenb to IFRS 15: Clarificatlons to IFRS 15 Rayenue from Contmcts with Guetomers The amendment provldes clarification and further guidance regading certain issuas in IFRS 15. These ltems include guidance in assessing whether promises to transfur goods or services are separately identifiable; guidance rcgarding agent versus principal considerations; and guidance regarding licenses and royallies. The eftciirae date of the amendment is for years beginning on or afier 01 January 2018. The company expects to adopt the amendrnent for the fint time in the 2018 annual financial stabments. The company is unable to reliably estimate the impact of the amendment on the annual financial statements. IFRS 9 Flnanclal lnstruments IFRS

IFRS

I issued in November 2009 introduced new requiremenb for the classification and measurements of financial a$ets. I was subsequenty amended in Oclober 2010 to includa requiremenls fior the classification and measurament of

fnancial liabilities and br derecognition, and in November 2013 to include lhe new requiremenb for general hedge accounting. Another revised version of IFRS 9 was issued in July 2014 mainly to include a)impairment requirements for financial assets and b) limited emendments to the classification and measurement requlrements by intsoducing a "fair value through other comprehensive incomen (FVTOCI) measurement caEgory for cErtain simple debt instumenb. Key equirements of IFRS 9: All recognised financial assels that are within he scope of !A$ 39 Financial lnsturnents: Recogn'rtion and Measurement are required to be subsequenty measured at amortlsed cost or fiair value. Spacificalty, debt inrrestnents that are held wlthin a business model whose oblec,tive is to collsct the contactual cash flows, and that have contradual cash flows that are solaly payments of principal and interest on the outstanding pdncipal are generally measured at amortised cost at the end of subsequent reporting periods. Debt inslrumenb that are held within a business modelwhoso objective is achieved by both collecting confractual cash flows and selling financial assets, and that have contractual terms ofthe financial assst give rise on specifed dates to cash iows that are solely payments of principal and interest on oubtanding principal, are measured at FVTOCI. Allother debt ard equi$ investmenb ale measured at fair value at he end of subsequent reporting pefiods. ln addition, under IFRS 9, entities may make an irrevocable electisn to present subsequent changes in the fair value ol an equity investment (that is not held for trading) in other comprehensive income with only dividend incoma ganerally remgnised in profit or loss. With regard to the measurement of finandal liabilities designated as at fair value thmugh profit or loss, IFRS requires that the amount of change in the fair value of the financial liability that is attibutable to cianges in the credit risk of the liability is presented in other comprehensive income, unless the recognition of lhe effuc{ of the changes of the liability's credit risk ln other comprehensive income would creatâ&#x201A;Ź or enlarge an accounting mismatch in profit or loss. Under IAS 39, the entire amount of the dtange in fair value of a financial liability designated as at fair value through profit or loss is presented in profil or loss.

f\ \*

^40

Annexure

Financial Statements of LPHH for 31 Dec 2016 signed by First Respondent - Page 27 of 43

25rS

Louis Pasteur Hospital Holdinga (Pty) Ltd (Registratinn number 1 992/001 696/07) Annual Financial $tratements forthe year ended 31 Decernber 2016

Hotes to the Annual Financial $tatements

NewStandards and tnterplutatlons (contnued)

ln relation to he impairmont of financial assets. IFRS I requires an expeded credit loss model, as opposed to an incuned cradit loss modet under IAS 39. The expected credit loss model requires an enlity to account for expected credit lossos and changes in those etpected credit losses d each reporting date to reflec-t changes in credit risk sinoe initial recognition, lt is thErefore no longer neoessary ior a oedit event to have occuned before credit los$es are recognised. The new general hedge accounting requirements ratain the three $pes of hadge accounting mechanisrns flryenUy available in IAS 39. Under IFRS 9, greater f,exibility has been introduced to the type$ of hansaclionu eligible for hedge accountng, specifically broadening lhe types of instrumenb that qualify for hedging instrumenb andthe typel of dsk comlonents of non-financial ltems that are eligible for hedge accounfing. ln addition, he efiectiveness 63t tras been replacod wi0r the principal of afi "economic relationship". Retrospective assessmsnt of hedge efiec{iveness is also no longer reguired. Enhanced dlsclosure requirements about an entity's risk management activities have also been intoduoed.

The efiective date of the standard is for years beginning on or afrer 01 January 2018. The company expects to adopt the etandard for the ftrst time in the 201E annual ftnancial statements, The company is unable to reliabty estimate the lmpac't of the standard on frie annual financial statemenb.

Amendments to IAS t2: Recognltlon of Deiprmd Tax Assetr for Unroallsed Los$cs ln terms of IAS 12 tncorne Taxes, debned tax asseb are recognised only when it is probable that taxable profib will be available against which the deduc.tible temporary difrrenes can be utitised. The folloring amendments harre been made, which may harre an impact on the company:

ipe, a dedudlble temporary difierene is assessed in combination only with other deductibte temporary difrrences of the appropriata type.

lf tax law restricts tha utilisation of losses to deductions against income of a specific

Addilional guidetines were prescribed for evaluating whether the cortpany will have sufficient taxable profit in future periods. The company is required to compara the daduciible tBtnporary differences with fttture taxable profit that excludes tax deduclioirs risultin6 from the reversal of those deductible temporary diftrences. This comparison shows he extent to which the ftrtura taxabb plofit is sufficient forthe entity to deduct ttre amounls resulting from the reversal of those deductible tomporary difierences. The amendment also provides that the estimate of probable trUre taxable pmfit may indude the recovery of some of an entity's assets for mora than their carrylng amount if Orcre io sufficient evidence that it is probable fiat the entity will achieve this. The efiective date of lhe amendment is for years bEginning on or after 01 January 2017. The company expect to adopt the amendment for thE first tim6 in the 2017 annual financial statements. !t is unlikely that the amendment will have a material lmpad on the compant's annual financial stiatements.

w0 {'

zIfi

Annexure M1 Financial Statements of LPHH for 31 Dec 2016 signed by First Respondent - Page 28 of 43

Louis Pasteur Hospital Holdings (Pty) Ltd (Regisfratian number 1 992001 696/07) Annual Financial Statements for the year ended $1 Oecember 2016

Hotes to the Annual Financial Statement$ 2016

201 S

1,,.'

Froporty, plant and oquipmant 201 5

zff1S

Cort or

Accumulatnd Carrylng value

ravaluation

rrvaluation

depraclaton (3.S,879,293)

Cost or

6$ 3,614,010

s6,498,299

Accumulabd Garrying value deprcciation (33,211,283) (5,044,896)

23,287,016 1,600,355 753,010 147,275 355,045 2,004,600 350,234

Plant and machinery Furni&re and fixtunes Motor trehicles Sffice equipment lT equiprnent Leasahold improvements Linen and blankets

$9,018,45S 9,299,232 1,755,669

Total

78,269,982 147,U2,8761 t0,427,107 72,a96A29 (43,99E,894) 2EA97,535

t5,ss5,2?21 {8$S,34S}

1,584,531

(1,414,873)

3,538,505 2,277,955 795,634

(3,3S3,820)

t334,108)

(32I,e14)

23,1 SS,1

g0e-324

169,658 184,685 1,943,947 473,42fr

6,645,251 1,475,769 1,518,S81 3,479,540

(722,759')

(1,371,406) (3,124,495) (273,355) (250,700)

2,277,955 600,934

Reconclllation of property, plant and aqulpment'2016 Openlng balance 23.287,016 1,600,s5s 753,010 147,275

Flant and rnachinery Fumiture and ftxtures Motor vehicles Office equipment IT equiprnent Leasehold irn provem ents Linen and blankets

35S,045

Addiffons Depreclafron (2,668,01 1) (o40,326) (130,586) (43,468)

2,520,158 2,653,981

279,900 65,851 59,965

2,004,600 350,234

28,{97,S3S

194,699

Total 23,139,163

3,614,010 9o2,324

(229,32s)

169,658 184,685

(60,753) (71,513)

1,943,W7 473,420

5,773,554 (3,843,982)

30,427,{ 07

Recnnclllation of FrofertY, plant and equipment . 3015 Openlng helance 20,826,049

Plant snd rnachinery Furniture and fixtures Motol'vehicles Offica equipment lT *quipment Leasehold improvemenB Linen and blankets

Additlons

Depreciation

5,209,092

(2,748,125'tr

23,287,016

(307,807)

1,600,355

1,210,447 105,515

ggl ,715 666,672

(19, 1771

114,016 461,340 2,0s7,600 290,574

69,095

(34,836) (255,667) (60,461) (1 19,563)

149,372

27,#1 179,223

IS,051,ffl 6,991,630

Total

753,010 147,275

355,M5 2,004,600 350,234

(3,345,6361 28,497,535

Net carrying amounts of leased aasett 8,2S1,869 82S,708

Plant and rnachinery Motor rchicles Medical equipment

9,120,577

&43,631

666,672 8,212,357 9,522,660

Detalls of properff, plant and equlpment

A register containing fre information required by paragraph 22(3) of Schedule 4 of the Companies Ac{ is available for inspectlon at the registered office of the company.

/x -(-\

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Annexure

23â&#x201A;Ź

Financial Statements of LPHH for 31 Dec 2016 signed by First Respondent - Page 29 of 43

Louis Pasteur Hospital Holding$ (Ptyl Ltd (Registration nurnber 1 992001 696/07) Annual Financial $taternents for the year ended 31 Dscnrnber 2016

Notes to the Annual Financial $tatements

2016

201 5

lntanglble as*et* rot s

'-.'' Computar softuare

Cost I Valuatlon

201 5

Aceumulated Carrying value amortination

Sost I Veluaffon

Accumulated Carrying valuo

amorllsatlon

39.620 124.24Q|

15,380

Roconciliaffon of lntanglble assoh - I016 Oponing balance 15,390

Cornputer sofivvare

Amortltatlon

Total

(15,390)

Reconciliation of inhnglble assots - 301$ Opening

Amortigation

Total

balance 30,760

Cornputer softrare

(15,380)

15,380

Loans to (from) group companlea 26,4U,878

First Clinic Properties One Limited The loan is unsecured, bears interest at 9,75% per annum and has no fixed terms of repayrnenL Gudran Emma Er:asmus (PU) Ltd The loan is unsecured, interest free and has no fixsd terms of repayment

(5,756,946) 20,677,932 26,434,878 (5,756,946)

Non-curent assets

Nontunent liabilifies

20,677,932

Credit quality of loans to group companlet The credit quality of loans to group companies that are neither past due nor impaired oan be assessed by rehrenca to historical information about counterpafl default rates:

Credlt ratlng 26,434,878

Hish

Fair value of loans to and from group companles 26,434,878

Loans to group companies Loans from group sompsnies

(5,756,946)

Lotns to group companles pa*t dus but not lmpaired The loans to group companies is considered to be neither past due nor impaired and subsequenUy no provision was created for the inecoverability of any portion (or the whole) of the loans. The terms of the loans that were fully performing during the year, have not been ie-negotiated during the year. The companies maximum Bxposurc to credit risk with regards to the loans are limited to the carrying value of the loans.

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Annexure

Financial Statements of LPHH for 31 Dec 2016 signed by First Respondent - Page 30 of 43

Lauis Pasteur Hospital Holdings (Pty) Ltd (Regisbation number I 99?J00 1 690107) Annual Finansial $taternents for the year ended 31 Denember 2016

Hotes to the Annual Financifrl $tatem*nts

2016

201 5

Loant to (from) ahareholdonr

Louis Pasteur Medical lnvesttents Limited Bonitas Medical Fund

(1,131,222j

(1,139,951)

(11,999,846)

{12,081,850)

(13,{ t1,0S8}

113,fr?;0,8011

The loans are unseoured, interest fnee and no portion of the loans are repayable within tre next 12 months. Any repayment of the loans is subjeci to approval by the board of diredors taking account of the worting capital requirements of the company from time to time.

Fair valua of loans to and from shatcholdens The carrying rraluss of loans from shareholders approximates their iair value due to the short tarm nafure thereof.

Otterfinanclalacgeta

Loans and rcceivablee First Clinic Properties One Limited The loan is unsecured, bears interest at 9.7$Yr par annum and hns no fixed terms of repaymenl

15,691,686

Currcnt assets 15,691,6E6

Loans and receivables

Fair values of loans and receivablee The canying values of loans and raceivables approximates tfreir (air values due to the short Erm nature thereof.

Operatlng lease llabillty

Non+unent liabilities Cunent

liabilitieE

(10,204,679)

(4,019,2721

(10,204,679)

(4,019,2721

Flnanclal ac$ets bycategory

The accounting poticies for financial instlrments have been applied to the line items below; 2016

Loanr and

Total

rccaiveblsu Trade and other receimbles Other financial assets Cash and cash eguivalenB

34,674,946 15,691,690 24,9S6

34,674,946 15,691,686

s{},391,498

60,391,498

24,866

I\./v'R

25&

AnnexureM1Financial Statementsof LPHHfor3lDec2016signedbyFirstRespondent -Page31 of43

Louis Pasteur Hospital Holdings tptyl Ltd

(Registration number 1 992/001 696/07) Annual Financial $tatements for the year ended 31 Deaember 2016

Nutes to the Annual Financial $tat*m*nts I01

2016 R

Flnanciel e*set* by category {continued}

201 $

Total

Loanu end

rocalvablet Lsans to group cornpanies Trade and other receivables Othnr financial assets Cash and ca*h equivalenB

2S,434,878 34,858,639

26,434,S78

fi,858,639

47,833,056

47,833,0SS 3,S69,562 ,t ,l

3,098,{

3,969,562 113,098,135

10, Defemod tax Defenud tax asseU(liability) comprieea

Calculated ta,x loss Dismunting trade rece ivables Dlscounting trade payables Provision br bad debts Properly, plant and equiprnent and lntangible asset$ - capital allouvanCIes Operating lease liability Provision for leave pay Finance lease Prcpaid insurance premium

(518,093) (7,653) 2,958,843 44,098 (14,532) 766,1 90

(3,265,4241

(2,W2,638)

2,857,310 883,71'l (1,362,055) (335,327)

1,125,396 954,298 (601,881)

Total defarred tax liability

(t,607,838)

2,421,W0

(386,053)

Loan discounting

Annual have discounting

1279,199)

The deEned tax assets and the debned tax liability relate to income tax in the same jurisdiction, and the law allows net settlement Therefore, they have been ofbet in fte statement of financial position aE follows:

DeEned tax

asset/(liability)

(1,607,E38)

2,4?4,U0

2,424,&40 132,039 7,S53 (2,S58,843)

2,195,769 {'1s6,976} 5,405

Raconciliaton of dafarred tax asset / (liability) At beginning of year Loan discounting Annual leava discounting Calculated tax loss Discounting trade recaivables Discounting trade payables Provision for bad debts Property, plant and equipment and lntangible asseh - capital allowances Operating lease liability Provision for leave pay

2,958,843 1,242

(44,099)

3,155

14,fi37^

292,379

(7S6,190) (1,2S2,7S5) 1,731,914 (70,587)

(1,659,065) (808,769)

27,008

(780,174)

Finanm lease Prepaid insuranm premium

(382,099) (32,051)

(56,139)

(1,607,838) Recognl0on of defered tax

2A24,Uo

isset, (llabllity)

Due to the company being placed under business rescue on not raised.

I June 2018, tho debrred tax asset on the calculated

tax loss was

Zfi

fh '\^ a

Annexure

23H

Financial Statements of LPHH for 31 Dec 2016 signed by First Respondent - Page 32 of 43

Louin Pasteur Hospital Holdings {pty} Ltd

(Registration number 1 992/001 696/07) Annual Financial $taternents for the yâ&#x201A;Źar ended 31 Decamber 201S

ffiotes to the Annual Financial $taterments

2016

2015 R

1,l,

Othsr financlel e*sets 47,833,056

51,$SS,700 (51,SS9,700)

DebsnturE$

lrnpainnent

{7,833,o$fi dddFEfi#.Wwrr{n

iffiffie}r

On 31 December 2012 Louis Pasteur Hospital Hotdings (Pty) Ld invested in Louis Pasteur Holdings debenrures for R 38 000 000. The debentrres wena unsacurcd, transErable and cumulative and eamed a retum of 8% QYo ancome and 6Yo capital) gronfi per annum. The debentures were impaired during the cunent year as no income has been neceived since the inrlestnant date and management could not dotermine the recoverability of the debentures.

12.

lnvelrtory

574,U5

Marcfiandise 13,

510,611

Trade and other neceivablos 32,970,813

Tnade receivables

37,962,612

(3,648,525)

Provision for impairment of receivables Prepayments Deposits Staff loans Other receivables

97,596 266,7E0

29,083 210,674

34,674,906

1,141,508 266,780 1 5,1 00

262,672 36,000,1{7

Creditquali{ of trade and other rcceivablsc Ttre oedit qualig of trade and other receivables that are neither past nor due nor impaired can be assessed by reErence to historical rpbayment trends of the individual debtoa, tharefolo a qadit rating has been ascdbed as folloua to these debtors:

Trade recelvables Cradit rating of tmde recoivables Cunent - 30 days ' High - Medium 30 - 60 days - Medium 0\161 90 days

24,478,563 2,635,473 6,256,777

32,$70,813

U,314.087

,569,604 2,582.197 10,162,286

Falrvalue oftrade and other receivables The carrying value of trade and other receivabtes approximatas fair values due to the short term nature thereof.

Trade and other receivablea past due but not impalred Trade and olher receiyables which are less than 3 months past due are not considEred to be irnpailed. At 31 December 2015, R 6,256,?77 (2015: R 11,671,873) were past due but not impained.

The ageing of amounts past due but not impaied is as follows: 90

6'256,777

days

11'671,873

4''A

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AnnexureMlFinancial Statementsof LPHHfor3LDec2016signedbyFirstRespondent

26U

-Page33of43

Louir Pasteur Hospital Holdinge (Fty) Ltd (Regietmtion number 1 992/001 696/07) Annual Financlal $tatuments forthe year ended 31 0emrnber 2016

llotes to the Annual Financial $tatemsnts 201

201S R

13"

Trads and otfier recaivablee tsontinuedl

Reconclllatlon of provislon for lmpalrmsnt of trade and otfier receXveblet (3,048,52S)

Opening balanca Provision for impainnent Arnounts written off as unfrollsstable

(2,303,867) (1,919,527) 474,969

3,648,525

t3,648,525)

1{.

Cash and cash equivalents

Cash and cash equivalents consist oft 1,376

Cash on hand Bank balances Bank overdraft

1,376 3,968,186

23,490

(9,509,31n

(10,728,581)

(I0,703,7{

Cunent assets Current liabilities

(5,539,755}

24,866 {1O,728,581)

3,969,562 (9,509,317)

(10,703,715)

(5,539,755)

The company has secured direct overdraft faciliUes which have been reducsd to R4 500 000 with Nedbank. These facilities are secured by a cession by the Louis Pasteur Hospital Holdings (Pty) Ltd, any and all ib rights in and to its debtors and of unlimited Suretyships and Guarantees from Louis Pasleur Medical lnvestnents Umited and Louis Pastaur lnvâ&#x201A;Źstsnents Limited. Securities include amounts of R10 000 000 tom Dr M Adam and R15 000 000 from First Clinic Properties One Limited.

Credlt quallty of cash at bank and short term deposlts, excludlng cath on hand The credit quality of cash at bank and short tenn deposits, excluding cash on hand that are neither past due nor impaircd can be assessed by rebrance to historical information about counterparty default rates, None of the financial institutions with whlch bank balances are held defaulted in prior periods and as e result a credit rating of high are ascribed to the financial institutions. The company's maximum exposure to credit risk as a result of the bank balances hekl is limited to the carrying value of thase balances as detailed above. All bank balances are held with two banking institutions increasing the related concentration risk. However, to mitigate he risk of loss, the company only transacts wlh highly reputable fnancial instiMions.

Falr value of cash and cash equlvalents The carrying value of cash and cash equivalents approximates its fair value.

fA M,â&#x201A;Ź

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AnnexureMl-Financial Statementsof LPHHfor3lDec2016signedbyFirstRespondent -Page34of43

Louis Pasteur Hospital Holdings (Pty) Ltd Regietration numbe r 19921O0 1 S96/07} Annual Financial $taternents for the year ended 31 December 201S {

ftfiotes to the A,nnual Financial $tatements 201 5 R

201 6

t5.

Shars capital

Authorised 10 000 Ordinary shares of R0.10 each

1,000

9,000 unissued ordinary shales ane under the control of the directors ln terms of a rasolution of members passed at the last annualgeneralmeeting. This authorlty remains in furco untilthe next annualgenenalmeeting.

lstued 1 000 Ordinary shares of R0.10 sach Share premium

100

1,ggg,974

1,999,974

2,0wr074

2,0001074

Louis Pasbur Holdings (Pty) Ltd sold its 100% shareholding in Louis Pasteur Medical lnvestnenb Limibd to Firstchoice Healthcare (Pty) Ltd as at 31 DecEmber 2015. During 2016 Firstcfroie Healthcare (Pty) Ltd disposed of ib shareholding in Louis Pasteur Medical lnvestnenE Umlted to various new sharaholders.

16.

Othar financlal liabilities

Bonitas Medical Fund The liability is unsecured, bears interest at 15.S?6 p.a. and has no fixed ternr of repayment. The company was ordered to pay Bonitas Medical Fund the promeds of the ceded policies in the arnount of R88,490,721 wtrich includes capital and interest Judgement in the cass vra$ made on 3t May 2018" Louis Pasteur Holdings (Pty) Ltd The loan is unsacured, bears interest at 8% per annurn and has no fixed terms

88,490,721

3,690,528

of repayment lnsurance - Premium Finance Payable in advance in monthly instalmenb of R241,2fi7 (3015: R227,S3gl until 30 June 2O17. Efrctive interest rate of 5. |lYo (2015: 4.6%) per annurn.

1,035,445

89,526,t66 N

on-c

969,343

4,659,971

rrent llab lllties

At amortised cost

3,690,529

Current liabllltier At arnortised cost

89,526,16S

89,526,16S Fair valus of the ffnanclal llablllties carried et emofii*sd lnsuranca - Premiurn Finance Bonitas Medical Fund

969,343 4,659,971

rost 1,035,445

969,343

88,490,721 89,526,166

969,343

The minimum paymenb due and present value of minimurn paymenb due witnin the next 12 months are Rl,035,445. The carrying values of other financial liabilities appmximetes their fair Value due to he short term nature thereof.

4.'f,

l.l'f\

Annexure

fri

Financial Statements of LPHH for 31 Dec 2016 signed by First Respondent - Page 35 of 43

Louis Fasteur Hospital Holdings {pty} Ltd

(Registration nurnber 1 992/001 696/07) Annual Financial $tatements far the year ended 31 Oecember 201C

Notes to the Annual Financial $tatements

17.

t01fi

201 5

Finance leasa llabilitiee

liinlmum payments due * wi$rin one year

- in second to fiflfi year inclusiva

2.572,403 3,404,995

s,CI59,511

lnss: future finance charges

5,977,398 (838,205)

E358^856 (1,485,7721

Frssant valuo of mlnimum laase paymente

5,139,193

3,199,345

7,373,084

Present value of minirnum leese pf,yrflents due - within one year - in second to fiflfi year inclusive

2,097,776

N on-cu nent liabilities Current liabilities

3,041 ,417

2,475,172 4,897,912

5,139,193

7,373,081

3,U1,417

4,997,912

2,497,776

2,475,172

5,139,193

7,373,094

tt is company policy to lease certain motor vehides and equipment under finance leases. The average lease term was 3-5 years and the average efiec{ive bonowing rate was 12o/o 12015: 12o/ol. lnterest rates are linked to prime at the contract date. All leases have fixed repaymenls and no arangements have been entEred into for contingent rent. The compan/s obligations under finance leases are secured by &e lesso/s charge orrer the leased asseb. Refer note 3. The terms of the finance lease agreements which indudes the interest rat6s are market related, therefore the carrying value approximates the fuir value thereof.

18. Financial llabllites

by catogory

The accounting policies brfinancial insbuments have been applied to the line :tems below:

2016 Financial llablllUes at amortlsod

Totaf

coSt Loans ffom shareholders Other fi nancial liabilities Trade and other payables Bank overdraft Finance lease liabilities

13,131,069 99,526,166 60,551,336 10,728,581

I 3,1 31 ,069

89,526,166 60,551,336 10,729,591 5,1 39,1 93

5, 1 39,1 93

179,076,344

r,1'

264

Annexure Ml- Financial Statements of LPHH for 31 Dec 2016 signed by First Respondgnt - Page 36 of 43

Louis Pasteur Hospital Holdings (Pty) Ltd (Regisration number 1 992/00 1 696/07) Annual Financial $tatements for the year ended 31 December 2016

Notes to the Annual Financial $tatements

18. Financial liabilities

201 S

2015

by category (contlnuedl

20{5 Flnancial

Total

liahilitles at amortlssd coet

Loans from group companies Loans from sharehoHers Other fi nancial liabilities Trade and other payables Bank overdraft Finance lease liabilities

5,756,946

5,756,946 13,22A,802 4,659,871 18,694,469 9,509,317

13,220,902 4,059,971

18,694,469 9,509,317 7,373,094

7,373,084

59,214,{gg

59,214,499

19. Trade and othar payablar Trade payables Value Added Tax Accrued leavt pay Payroll expenses

15,109,776

13,799,135

22,A4A,S05 3,156,111

18,507 ,404

20,2l,0,145

15,486,012

60,551,337

50,993,099

3,100,547

Fair vatua of trade and other payabler The fair value of the trade and other payables approximates carrylng value due to tha short tsrm nature thereof.

20, Revsnue Rendering of

21,

services

269,413,538

275,161,387

51 ,819,667

63,969,833

Gost of sales

Cost of drugs Rendering of services

5,851 ,746

97,w1,413 22.

5,070,1M 69,039 ,977

Other oporating income

Rental income Recoveries Other lncorns

669,1gg 283,446 4,091 ,729

1,400,170

s,034,363

2,177,559

575,1 54

202.234

1\. A

AAa

Annexure

26#

Financial Statements of LPHH for 31 Dec 2016 signed by First Respondent - Page 37 of 43

Louis Pasteur Hospital Holdings (Pty) Ltd (Registration nurnbsr 1 992/001 696/07) Annual Financial $tatements fur the year ended 31 December 2016

Notes to the Annual Financial $tatemonts

23.

2016

201 5

Opendng profit{losc}

Operating (loss) profit for the year is staled after darging the tullorving, amongst others: Employee cogts $alaries, wages. bonuses and other bgnefits Other short term cosb

13,246 ,337

107,571,495

74,47

119,246,337

Total employea costs

107,6{5,942

ffi

Leasss

Operating leaee sharges Premises

Equipment

55,768,572 328,134

42,961 ,277

50,096,706

4$,t87,331

406,054

Other Audit fees Management bes

372,910

24,577J42

500,000 21,385 ,487

3,843,982

3,545,636

15,379

Depreciatlon, amortieation and impalmsnt losaee

The follonting items are induded within depreciation, amortisation and impainnent losses:

Depreclatlon Propefty, plant and equipment

Amortlsrtlon lntangibla assets

lmpairmont lotsas Other financlal assets

51,659,700

Tohl depreclatlon, amortlsatlon and lmpalrmont 3,M3,992

Depreciation Amortisation lmpairrnent losses

15,379 5'l ,659,700 55,519,0S{

3,545,636 15,379 3,561 ,015

DebenEres with a carrying amount of R51,659,700 were impaired during the year since no income has been recelved since the invesbnent date.

28.

lnvestrnent lncome

lnterest income From lnvestments ln financlal assets: Other financial assets Net discounting of debtors Frorn loans to group and other rclated perties: Group companies

6,597,323 157,492

520,345

Total lnterest lncoms

6,7S{,915

8,298,923

5,778,579

4f rtr

AnnexureMlFinancialStatementsof

26H

LPHHfor3lDec2016signedbyFirstRespondent -Page38of43

Louie Pasteur Hospital Holdings (Pty) Ltd (Reg istration number I 992/00 1 696/07)

Annual Financial $tatements for the year ended 31 Decemher 2016

Notes to the Annual Financial $tatements

26,

201 6

2015

Finance costs

Shareholder - Bonitlas Trade and other payables Bank overdraft Tax auftorities Finance hases

44,245,361 1,135,756 1,837,741

Total flnance coats

55,388,008

7,397,600 771,550

273,372 1,014,952 1,948,700

2,222,035 '1,057,486

7,116,545

27. Taxatlon Hafor components of the tex oxpenso

Curent Local incorne tax - recognised in cunent tax fur prior periods

1,763,668

Deferrod Origi nating and reversing tern po raty

dift rences

4.032,677 4,032,677

ffiq'9191 {,s34,598

Roconslllatlan of the tax expangs Reconciliation between accounting profit and tax expense. (155,764,739)

Accounting loss

(43,61 4,1271

Tax at the applicabh tax rate of 28o/o (201 5: 28o/ol

Tax sffect of adjustments on taxabls income Assessed tax losses brought fonrard

(948,399)

2,958,843

2,072,227

Fines and penaltiea Learnership allowancs Tax recognlsed this year for prior years Temporary difbrencâ&#x201A;Źs Defened tax asset on assessed loss not recognised

28.

(3,387,138)

12,700)

907 ,157 (306,600)

1,763,668 3,704,967 39,023,567

118,772

4,032,677

1,634,599

Cash gsnoretod ffom opsratlonr (155,7&4,738)

Loss bafore taxation

(3,387,138)

Adfustnants for: 3,859,361 (6,754,815) 55,388,008 51 ,659,700 6,185,407 44,245.362 4,675,897

Depreciation and amortisatio n lnterest income Finance cosB lmpainnent losses and revarsals Movements in operating lease assets and accruals Bonitas clairn expense accrual Bad debts written off

Changes ln working capltal: (63,734) (3,350,696) 9,668,239

lnventory Trade and other receivables Trade and other payables

9,747,991

3,561 ,015

(6,298,923) 7,116,545 !

(2,888,461)

(6,891) 5,&44,197 18,1 13,470

21,853,814

4 *0 \

AnnexureMlFinancialStatementsof

286

LPHHfor3lDec2016signedbyFirstRespondeht -Page39of43

Louis Pasteur Hospital Holdings (Ptyl Ltd (Regisfation number 1 992/001 696107) Annual Financial $tatements for the year ended 31 Demmber 2016

hlotes to the Annual Financial Statements

29.

2016

2015

Gontlngencler

lnsurance Claim

A court case in respect of a daim for negligence to the amount of R1.3 million has been instituted against the company during February 2017. The claim is around negligence regarding medication thatwas givan to a patient and notaltered when the patients medicalcondition worsened. An attomey has been appointed and is cunenfly investigaUng the merits of the liabllity. lnsurance Glaim

A court case in respec,t of a claim for negligence to the amount of R1,5 million has baen instiUted against the company during Oc-tober 2017. The claim involves the parents of a baby who was not timeously informed about

he death

of their baby. An

attomey has been appointed and is cunenty investigating the merits of the liability.

30.

Related pades

Relatlonshlp*

Louis Pasteur Medical lnwshents Limited Bonitas Medicat Fund, Louis Pasteur Medical

Holding company Shareholder

lnveshrenk Limited Gudran Ernma Erasmus (Pty) Ltd, Louis Pasteur Holding$ (Fty) Ltd, Firstclinic Properties One Ltd Y Suliman, M Adam, D Daka, AS Akoob, AS Nkomo, A"J Noonnahomed, MA Ramasia, GJ van Emmenis, MY Adam, AE Prakke, JJ Jansen

Related companies Members of key management

Related party balanees Loan accounts - O,wing (to) by related partes (3,690,878) (5,756,946)

Louis Pasteur Holdings (Pty) Ltd Gudran Emma Erasmus (Pty) Ltd Bonitas Medical Fund

(100,490,569)

(12,081,850) ,'l38,952)

Louis Pasteur Medical lnvestments Lirnited

(1 ,1 31 ,2221

Firstclinic Properties One Lirn ited

15,691,686

26,43l,879

s M/p-

Annexure

Financial Statements of LPHH for 31 Dec 2016 signed by First Respondent - Page 40 of 43

Louis Pasteur Hospital Holdings (Pty) Ltd (Registration number 1 992/001 696/07) Annual Financlal Statements for the year ended 31 Demmber 2016

Notes to the Annual Financial $tatements

S0. Related

2016

201 5

partlee (continued)

Related party tra nsactions

lntercrt pald to (recelved from) related parties Firstclinic Properties One Limited

(2,770,679)

Bonitas Medical Fund Louis Pasteur Holdings (Pty) Ltd Louis Pasteur Holdings (Pty) Ltd

44,245,361

(3,826,644)

(2,232,722',)

(3,545,856)

273,372

Rent paid to (recelyed from) related partles Louis Pasteur Holdings (Pty) Ltd Gudran Emma Erasmus (Pty) Ltd

AdminirtraUon feos peid to {rccelved from! relatod paille* Louis Pasteur Holdings (Pty) Ltd

trrkeUng feeg pald to (rccelved from) related parths Louis Pasteur Holdings (Pty)

Gudran Emma Erasmus (Pty)

41,209,005 (140,443)

12,A73,569

21,395,497

4,202,714

Lts

Purchase of Druga

47,851,5M (162,093)

Ltd

61,041,632

Compeneaton to key manegement

benefits

Short-term amployea Post-employment benefits - Pension - Delined contribution

plan

4,277,097

62,858,275

4,411,324 560.924

31, Rhk management Capltal rlck management The companfs objectives wfien managing capitalars to eabguard the company's abilityto continuE as a going concem in orderto provide retums for shareholders and benefits for other stakeholders and to maintain an opfimal capita! strudure to reduce the cost of capital.

Flnanclal riek managerment The company's ac{ivities expose it to a variety of finandal dsks: market risk (including culr6nc} risk, fairvalue interest rate risk, cash flotrr inter6st rate risk and prica risk), credit risk and liquidity risk. The company's overall risk management program focuses on the unpredictability ol financial markets and seeks to minimise potential adverss effacts on the company's financial performanoe. Risk management is canied out under policies apprcved by the board of dirccton, Company treasury identifies, evaluates and hedges financial risks in dose co-operation with the company's operating units. The board of directors provides principles for overall risk managemont, as well as policies covering specific areas, such as interest rate risk and credit risk.

f-4,

zffi

Annexure M1 Financial Statements of LPHH for 31 Dec 2016 signed by First Respondent - Page 41 of 43

Louis Pasteur Hospital Holdings {Pty} Ltd

(Regintration number 1 992/001 696/07) Annual Financial Staternents for the year ended 31 December 2016

Hotes to the Annual Financial Statements 2016

2015 R

3{.

Rlak management (continued}

Llquidity fiek Prudent liquidity dsk management implies maintaining sufficient cash and marketable sacurities, the availability of funding through an adequate amount of committed cradit facilities and tha ability to c{ose out market positions. Due to the dynamic naturâ&#x201A;Ź of the tndarlying businesses, compeny beasury maintains flexibility in tunding by maintaining availabtlity untier committed cred it lines. The company's risk to liquidity is a result of the funds available to cover future commitnenB. The company mansgas liquidity risk through an ongoing raview of future commitmenb and credit fac{lities. Cash frow forecasts are prcparcd and adequate utilised bonoring Pacilities are monitored. The table belor analyses the company's financial liabilllbs into relevant mahrrity groupings based on lhe remaining period at the statement of financial position to the contractual maturity date. The amounts disdosed in the table are the contradual cash

fiors. At

31 December 2016

Less than

Between 1 and 5 yrans-

year Loans frorn shareholders Trade and other payables Finance leases Bank overdrafr Other financial liabilities

(13,131,069) (20,337,678) (2,572,403) (10,729,591) (89.526,166)

At 31 Dscember 2015

Less than year

Loans frorn shareholders Loans frorn group companies Trade and other payables Financa leases Bank overdrafr Other financial liabilities Other long-term employee benefits

(3,404,995)

Betuueen

and 5 years_

(13,220,902) (5,756,946) (18,694,469) (2,475,172) (9,509,317) (969,343)

(4,997,912) (3,690,528) (280,328)

lntereat rato risk The company's interest rate risk arises fom loans to group companies, cash and cash equiralents and bonowings. Loans issued at variable rates expose the group to cash flovv interest nate risk Loans issued at fixed rates ergose tha company to fair value intercst nate risk.

At 31 Decomber 2016, if interest rates on Randdenominated bonourings had been 17o higherllower with all othar variables held constant, post-tax profit for tho yearwould have bEEn R24,371 (2015: R 92,982) lower/higher. mainly as a result of higher/louer interest e)eense on lloating rate bonowings. Deposits and cash balances attrac,t interest at a raE Brat varies with prime. The company policy is to manage intarest rate risk so 0re fluctuations in variable rates do not have material impad on proft and loss.

Cash flow lntetsst rate rlsk Flnanclal lnstrument

Current lnterest rete

Loans receivable 0verdraft facilities used Other fi nancial liabilities Finance leases

9.75 ala 10.50 % 15.50 % 12,40

0/o

Due in less than a yoar

Due ln one to

two yeans

15,691,6E6

(10,729,591) (89,526,166) t2,097,7761

(3,041 ,417)

M.r)-

Annexure

zffi

Financial Statements of LPHH for 31 Dec 2016 signed by First Respondent - Page 42of 43

Louis Pasteur Hospital Holdings (Pty) Ltd (Regisffation numbe r 19921001 696/07) Annual Financial Statements for the year ended 31 Demmber 2016

Notes to the Annual Financial $tatemcnt$

31,

2016

201 5

Rlsk management (continued)

Credit rlsk Gredit risk is managed on a company basis.

Credit risk consists mainly of cash depoSib, oash equivalents and loane and recaivables. The company only deposits cash with wttr high quality credit standing and llmits exposurâ&#x201A;Ź to any one counter-party.

maJor banks

Trade receivables comprise a widespread customer base. Management evaluated credit r'sk relating to ciustomets on an ongoing basis, lf customers are independenfly rated, lhese ratings are used. Otherwise, if fiere is no independent rating, risk coitrol-assesses the credit qualig of the customer, taking into account its financial position, past expedence and other factorc. lndividual risk limi6 are sat based on intemal or exlemal ratings in accordance with limlb sat by the board. Financiat aseets axposed to credit risk at year end uâ&#x201A;Źre as fdlours:

2016 33,477,350 23,49A

Flnanclal lnstrument Trade and other reoeivables Cash and cash equivalents Loans to group cornpanies Other financial assets

72.

201 5 34,858,639 3,969,562 26,434,878

15,691 ,686

Golng concern

We draw attention to th6 fiact that at 31 December 2016, tre company had accumulated losses of R (115,393,720) and that tha company's total liabllities exceed tB assets by R (113,393,O46). During the financial year ended 31 Deoâ&#x201A;Źmber 2016, managements use of the going concem. basis of accounting is appropriate in thelircumstancei, howe,rer certain instancee of material uncertainty did exist. The principle events or condiffons that may cast significant doubt on the entity's ability to continue as a going conoern are explained in detail in note 8 of the Directors' Report.

33.

Eventc after the reportlng period

The hospital was placed under business rBscue from information.

June 2018. PleaBo refisrto notre 8 of the Directors' report for more

The company's appeal against the claim instituted by Bonitas relating to their insuran@ claim was unsucoessful and the company wai ordered to pay Bonitas an amount of R88 490 72'l on 31 May 2018.

34. Reportable lnegularl$ee The bllowing were lssues thatwere identified during the cunentyear and reported to IRBA as reportiable inegularites:

VAT and PAYE The company included the VAT and PAYE balancas pay.able on behalf of Gudran Emma Erasmus (Pty) Ltd in the VAT and PAYE reiumS of Louis Pasteur Hospital Holdings (Pty) Itd'

Flnanclal asslstance

A signed agreement was made available which was not accounted for. lncluded in the agreement was financial assistance to be p-rovidei for whictr no evidence was provided that the board was satisfied immediately after providing the financial assistance, that the company would satisfy tha aolvency and liquidity test in terms of sec{ion 4 of the Companies Act.

.t|

Annexure

FinancialStatements of LPHH for

Dec 2016 signed by First Respondent

27Il

- Page 43 of 43

Louis Pasteur Hospital Holdings (Pty) Ltd (Registration nurnber 1 992/001 696107) Annual Finanrial $tatements for the year ended 31 December 2016

Notes to the Annual Financial Staternents 2016 R

34.

201 5 R

Reportebls lreguladties (continuad)

Share Capltal ln terms of sec'tion 47 of the CompaniEs during the 2016 financial period.

Act

there was no board resolution passed fur the increase in authorised share capital

Social and etft lca commlttae ln terms of section 72 of the Companies Act, the entity is required to have a social and e$ics commitGe of whic*r it does not

illnutee of meatings ln lerms of section 73 of the Companies Act, the entity is required to maintain minutes of meetings of whictr it did not VAT, PAYE and lncome Tax The VAT, PAYE and lncome Tax liabilities were not pald duritp 2016. Late rubmlselon of annual flnanclal statement! The annual financial statements of the company have not as yet been prepared within 6 monhs alter year end tor the 2018 period as requirad by sec*ion 30(10) of the Companies Act

Dlreclors lssued eharas wlthout tfie shareholdere' epproval for lssulng aharer The business rescue practitioner has investigated this matter and has requested the entity to reverse the fansac'tion.

Minutes of shartholder meeflngs not kept There was no record kept as prove that the shareholder meetings were held shareholders for discussion.

the 2016 financial year for matters refening to

A{4

AnnexureMZ Draft Financial Statements of LPHH for 31 Dec 20L7 -PageI of

271

Louis Pasteur Hospital Holdings (Pty) Ltd (Registration numbe r 19921001 696/07) Annual Financial Statements for the year ended 31 December 2017

were prepared by:

These annua! financial

in progress and must not be disclosed to any

Please note that this document is private and confidential third

with the applicable requirements of the Companies Act

These annual financial statements have been 2008.

lssued 30 April 2018

..0N

N/t:P

Annexure M2 Draft Financial Statements of LPHH for 31 Dec 2017 - Page 2 of

272

Louis Pasteur Hospital Holdings (Pty) Ltd (Registration numbe r 19921001 696/07) Annual Financial Statements for the year ended 31 December 2017

General lnformation Country of incorporation and domicile

South Africa

Nature of business and principal activities

The company carries on the business of a private hospital and clinic

Directors M Adam

D Daka

AS Akoob AS Nkomo MA Ramasia GJ Van Emmenis MY Adam FS Mufamadi MB Adam

Registered office

374 Francis Baard Street

Louis Pasteur Medical Centre Tshwane 0001

Business address

374 Francis Baard Street Medical Centre

Postal address

11876

260

Holding company

Louis Pasteur Medical lnvestments Limited incorporated in South Africa

Bankers

Nedbank Limited First National Bank

Auditors

Nexia SAB&T Chartered Accountants (SA) 1

19 Witch Hazel Avenue

Highveld Technopark Centurion 0046 PO Box 10512 Centurion 0046

Secretary

Mr S Moosa

Company registration num ber

1992t001696107

Tax reference number

9381t312t8413

1 - 19 July 2018 - 01.31 PM

A[4P

AnnexureM2 Draft Financial Statements of LPHH for 31 Dec 2017 -Page 3 of

273

Louis Pasteur Hospital Holdings (Pty) Ltd (Registration numbe r 19921001 696/07) Annual Financial Statements for the year ended 31 December 2017

lndex Page

Directors' Responsibilities and Approval Directors' Report

4-5

ndependent Auditor's Report

6-8

Statement of Financial Position

Statement of Profit or Loss and Other Comprehensive lncome

Statement of Changes in Equity

Statement of Cash Flows

Accounting Policies

13-21

Notes to the Annual Financial Statements

22-40

2 - 19 July 2018 - 01.31 PM

AnnexureM2 Draft Financial Statements of LPHH for 31 Dec 2017 -Page 4 of

274

Louis Pasteur Hospital Holdings (Pty) Ltd (Registration number 19921001 696/07) Annual Financial Statements for the year ended 31 December 2017

Directors' Responsibilities and Approval The directors are required in terms of the Companies Act 71 of

2OOB to maintain adequate accounting records and are responsible for the content and integrity of the annual financial statements and related financial information included in this report. lt is their responsibility to ensure that the annual financial statements fairly present the state of affairs of the company as at the end of the financial year and the results of its operations and cash flows for the period then ended, in conformity with lnternational Financial Reporting Standards. The external auditors are engaged to express an independent opinion on the

annual

nancial statements.

The annual financial statements are prepared in accordance with lnternational Financial Reporting Standards and are based

upon appropriate accounting policies consistently applied and supported by reasonable and prudent judgements and

estimates.

The directors acknowledge that they are ultimately responsible for the system of internal financial control established by the company and place considerable importance on maintaining a strong control environment. To enable the directors to meet these responsibilities, the board of directors sets standards for internal control aimed at reducing the risk of error or loss in a cost effec{ive manner. The standards include the proper delegation of responsibilities within a clearly defined framework, effective accounting procedures and adequate segregation of duties to ensure an acceptable level of risk. These controls are monitored throughout the company and all employees are required to maintain the highest ethical standards in ensuring the company's business is conducted in a manner that in all reasonable circumstances is above reproach. The focus of risk management in the company is on identiffing, assessing, managing and monitoring all known forms of risk across the company. While operating risk cannot be fully eliminated, the company endeavours to minimise it by ensuring that appropriate infrastructure, controls, systems and ethical behaviour are applied and managed within predetermined procedures and constraints.

The directors are of the opinion, based on the information and control provides reasonable assurance that the financial statements. However, any system of internal financial against material misstatement or loss.

only reasonable, and not absolute, assurance year to 31 December 2018 and, in light of this review and

The directors have reviewed the company's cash flow

has or had access to adequate resources to continue

the current financial position, they are satisfied that

operational existence for the foreseeable future. and reporting on the company's annual financial statements. The annual financial statements have been examined by the com pany'S external auditors and their report is presented on page

The external auditors are responsible for independently

s6to8. 9 to 40, which have been prepared on the going concern basis, were approved by the board of directors on 30 April 2018 and were signed on their behalf by:

The annual financial statements set out on pages

Approval of financial statements

Director

3 - 19 July 2018 - 01:31 PM

o<,..4

AnnexureM2 Draft Financial Statements of LPHH for 31 Dec 2017 - Page5 of

275

Louis Pasteur Hospital Holdings (Pty) Ltd (Registration numbe r 19921001 696/07) Annual Financial Statements for the year ended 31 December 2017

Directors' Report The directors have pleasure in submitting their report on the annual financial statements of Louis Pasteur Hospital Holdings (Pty) Ltd for the year ended 31 December 2017.

Nature of business

The Company carries on the business of a private hospital and operates principally in South Africa. The operating result and state of affairs are fully set out in the aftached financial statement and do not in our opinion require any further comment. There have been no material changes to the nature of the company's business from the prior year.

Review of financial results and activities

The annual financial statements have been prepared in accordance with lnternational Financial Reporting Standards and the requirements of the Companies Act 71 of 2OO8. The accounting policies have been applied consistently compared to the prior year.

Full details of the financial position, results of operations and cash flows of the company are set out in these annual financial statements.

Holding company

The company's holding company is Louis Pasteur Medical lnvestments Limited which holds ffrica. equity. Louis Pasteur Medical lnvestments Limited is incorporate$

74o/o

(2016:

74o/o)

of lhe company's

Lloutn

company

\) The company's ultimate holding company is First Crini" norffiid 5. Events afterthe reporting period /^'t* (.) Ultimate holding

The directors are not aware of any material event

whichfui[red

which is incorporated in South Africa.

after the reporting date and up to the date of this report.

Going concern

The directors believe that the company has adequate financial resources to continue in operation for the foreseeable future and accordingly the annual financial statements have been prepared on a going concern basis. The directors have satisfied themselves that the company is in a sound financial position and that it has access to sufficient borrowing facilities to meet its foreseeable cash requirements. The directors are not aware of any new material changes that may adversely impact the company. The directors are also not aware of any material non-compliance with statutory or regulatory requirements or of any pending changes to legislation which may affect the company.

Refer to note 26 of the financial statement with regard to the disclosure on the contingent liability of the company. The company is involved in a significant legal dispute. The directors are of the opinion that the case has no merit as will be evident from the documents on this matter. Any details to be provided will be subject to the signing of a confidentiality agreement.

Litigationstatement

The company becomes involved from time to time in various claims and lawsuits incidental to the ordinary course of business. The company is not currently involved in any such claims or lawsuits, which individually or in the aggregate, are expected to have a material adverse effect on the business or its assets.

Auditors

Nexia SAB&T continued in office as auditors for the company for 2017.

Secretary

The company secretary is Mr Mr S Moosa. Postal

address:

P O Box 11876

'19

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AnnexureM2 Draft Financial Statements of LPHH for 31 Dec 20L7 - Page 6 of

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Louis Pasteur Hospital Holdings (Pty) Ltd (Registration numbe r 19921001 696/07) Annual Financial Statements for the year ended 31 December 2017

Directors' Report The Tramshed Pretoria

0126 Business address.

4th FIoor Louis Pasteur Centre

374 Francis Baard Street Pretoria

10.

Directorate

The directors in office at the date of this report are as follows:

Directors

Nationality

VM Sooboo

South South South South South South South South South South South

M Adam D Daka

AS Akoob AS Nkomo MRE Mamoepa MA Ramasia GJ Van Emmenis MY Adam FS Mufamadi MB Adam

African African African African African African African African African African African

Changes Resigned 28 February 2017

Resign ed 22 July 2017

Appointed 12 October 2017

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ndependent Auditor's Report

To the directors of Louis Pasteur Hospita! Holdings (Pty) Ltd

Opinion

We have audited the annual financial statements of Louis Pasteur Hospital Holdings (Pty) Ltd set out on pages 9 to 40, which comprise the statement of financial position as at 31 December 2017, and the statement of profit or loss and other comprehensive income, statement of changes in equity and statement of cash flows for the year then ended, and notes to the annual financial statements, including a summary of significant accounting policies.

ln our opinion, the annual financial statements present fairly, in all material respects, the financial position of Louis Pasteur Hospital Holdings (Pty) Ltd as at 31 December 20'17, and its financial performance and cash flows for the year then ended in accordance with lnternational Financial Reporting Standards and the requirements of the Companies Act 71 of 2O08.

Basis for opinion We conducted our audit in accordance with lnternational Standards on Auditing. Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the annual financial statements section of our report.

We are independent of the company in accordance with the lndependent Regulatory Board for Auditors Code of Professional Conduct for Registered Auditors (IRBA Code) and other independence requirements applicable to performing audits of annual financial statements in South Africa. We have fulfilled our other ethical responsibilities in accordance with the IRBA Code and in accordance with other ethical requirements applicable to performing audits in South Africa. The IRBA

Code is consistent with the lnternational Ethics Standards Board for Accountants Code

Ethics for Professional

Accountants (Parts A and B). We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Emphasis of mafter We draw attention to Note x to the annual financial statements which indicates that [insert detail]. Our opinion is not modified in respect of this matter.

Other information The directors are responsible for the other information. The other information comprises the Directors' Report as required by the Companies Act 71 of 2008 of South Africa, which we obtained prior to the date of this report. Other information does not include the annual financial statements and our auditot's report thereon. Our opinion on the annual financial statements does not cover the other information and we do not express an audit opinion or any form of assurance conclusion thereon.

ln connection with our audit of the annual financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the annual financial statements or our knowledge obtained in the audit, or othenrrise appears to be materially misstated. lf, based on the work we have performed,

we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

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AnnexureM2 Draft Financial Statements of LPHH for 31 Dec 20L7 -Page 8 of

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ndependent Auditor's Report

Responsibilities of the directors for the Annual Financial Statements The directors are responsible for the preparation and fair presentation of the annual financial statements in accordance with lnternational Financial Reporting Standards and the requirements of the Companies Act 71 of 2008, and for such internal control as the directors determine is necessary to enable the preparation of annual financial statements that are free from material misstatement, whether due to fraud or error. ln preparing the annual financial statements, the directors are responsible for assessing the company's ability to continue as

a going concern,

disclosing, as applicable, matters related to going concern and using the going conoern basis of

accounting unless the directors either intend to liquidate the company or to cease operations, or have no realistic alternative but to do so.

Auditor's responsibilities for the audit of the Annual Financial Statements Our objectives are to obtain reasonable assurance about whether the annual financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an audito/s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with lnternational Standards on Auditing will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these annual financial statements. As part of an audit in accordance with lnternational Standards on Auditing, we exercise professional judgement and maintain professional scepticism throughout the audit. We also: ldentiff and assess the risks of material misstatement of the annual financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the company's internal control. Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors. Conclude on the appropriateness of the directors' use of the going concern basis of accounting and based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast

. .

significant doubt on the company's ability to continue as

a going concern. lf we conclude that a

material

uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the annual financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our audito/s report. However, future events or conditions may cause the company to cease to continue as a going concern. Evaluate the overall presentation, structure and content of the annual financial statements, including the disclosures, and whether the annual financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

We communicate with the directors regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

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AnnexureM2 Draft Financial Statements of LPHH for 31 Dec 2017 -Page9 of

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ndependent Auditor's Report

Nexia SAB&T

A Darmalingam Director

30 April 2018

Pretoria

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Annexure M2 Draft Financial Statements of LPHH for 31 Dec 2017 - Page 10 of 41

280

Louis Pasteur Hospital Holdings (Pty) Ltd (Registration number 1 992/001696/07) Annual Financial Statements for the year ended 31 December 2017

Statement of Financial Position as at 31 December 2017 Note(s)

Figures in Rand

2017

2016

Assets Non-Current Assets Property, plant and equipment lntangible assets Loans to group companies

29,344,297 5,127

5 8

4,745,743

Deferred tax Other financial assets

30,427,107 15,691

726,715,899 760,81

1,066

,68;

674,244,07; 720,362,868

Current Assets lnventories

Trade and other receivables Cash and cash equivalents

731,667 85,283,948

39,746

86,055,361 846,866,427

Total Assets

574,345 36,240,759 24,866 36,839,970 757,202,838

Equity and Liabilities Equity 13

Share capital Accumulated loss

2,000,074 (345,025)

2,000,074 24,128,092

1,655,049

26,128,166

7,270,014

10,620 ,773

13,160,844

13,131,068 622,584,375 3,041 ,417 4,931,271 288,377

Liabilities Non-Current Liabilities Loans from group companies Loans from shareholders Other financial Iiabilities Finance lease Iiabilities Deferred tax Other long term employee benefits

5 6 14 15

718,817,675 1

,373,096

168,984

740,790,613

654,597,281

Current Liabilities Trade and other payables

17 14 15

Other financia! Iiabilities Finance lease liabilities Operating lease liability Current tax payable Bank overdraft

76,391 ,731

2,229,554 14,024,034

53,727,411

1,035,445 2,097,776 8,888,178

4,078,760 12

7,696,686

10,728,581

104,420,765 76,477,391 845,211,378 731,074,672 846,866,427 757,202,838

Total Liabilities Tota! Equity and Liabilities

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Annexure M2 Draft Financial Statements of LPHH for 31 Dec 2011 - Page 11 of 41

281

Louis Pasteur Hospital Holdings (Pty) Ltd (Registration numbe r 19921001 696/07) Annua! Financial Statements for the year ended 31 December 2017

Statement of Profit or Loss and Other Gomprehensive lncome Note(s)

Figures in Rand Revenue Cost of sales

Gross profit

2017

2016

256,789,489 (63,866,353)

269,413,538 (68,292,186)

192,923,136

201,121,352

1,743,746 (225,182,124)

(225,664,507) (19,508 ,7921

5,034,363

Other operating income Other operating expenses

Operating loss

(30,51 5,2421

Investment income Finance costs

22 23

8,075,833 (2,033,708)

6,754,815 (3,745,047)

(24,473,1171

(16,499 ,0241

Loss before taxation

(3,776,588)

Taxation

Loss for the year

(24,473,1171

(20,275,6121

(24,473,1171

(20,275,6121

Other comprehensive income

Total comprehensive loss for the year

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Annexure M2 Draft Financial Statements of LPHH for 3L Dec 2017 - Page 12 of

41.

282

Louis Pasteur Hospital Holdings (Pty) Ltd (Registration numbe r 19921001 696/07) Annual Financial Statements for the year ended 31 December 2017

Statement of Changes in Equity Share

capita!

Share premium

Total share capital

Figures in Rand

Accumulated loss

Total equity

2,000,074 44,403,704

46,403,778

Loss for the year Other comprehensive income

(20,275,612)

Total comprehensive Loss for the year

(20,275,6121

Balance at 01 January 2016

100

Balance at 01 January 2017

100

999,974

1,999,974

2,000,074 24,128,092

26,128,166

Loss for the year Other comprehensive income

(24,473,117)

Total comprehensive Loss for the year

(24,473,1171

Balance at 31 December 2017 Note(s)

1,999,974

100

2,000,074 13

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(345,025)

1,655,049

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Annexure M2 Draft Financial Statements of LPHH for 31 Dec 2017 - Page 13 of 41

Louis Pasteur Hospital Holdings (Pty) Ltd (Registration numbe r 1992100 1 696/07) Annual Financial Statements for the year ended 31 December 2017

Statement of Cash Flows Note(s)

Figures in Rand

2016

2017

Cash flows from operating activities 25

Cash used in operations lnterest income

(41

1 ,515,217) 6,754,815 (3,745,047)

,480,218)

8,075,833 (2,033,708)

Finance costs

(35,438,093)

Net cash from operating activities

(8,505,4491

Cash flows from investing activities 3

Purchase of property, plant and equipment Loans to group companies repaid Purchase of other financial assets

Net cash from investing activities

(52,471,824)

(5,773,555) 15,607,019 (626,411 ,019)

(43,408,705)

(616,577,555)

(3,277,808) 12,340,927

Cash flows from financing activities Loans to group companies Repayment of other financial liabilities Movement in other long term employee benefits Operating lease payments Finance lease payments Loans from group companies

15,500,211

13,081 ,208

79,697,644

605,878,741 8,049 (89,734) (2,233,891)

19,393) 29,776 (1,536,543) (5,099,663) (1

88,472,032

Net cash from financing activities

9,625,234

Total cash movement for the year

(10,703 ,715)

Cash at the beginning of the year 12

Total cash at end of the year

19 July 2018 - 01 :31 PM

,078,481)

,/\,f

4,982,605 621,626,978 (3,456,026) (5,539,755) (8,995,781)

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Annexure M2 Draft Financial Statements of LPHH for 31 Dec 20L7 - Page

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of 4L

284

Louis Pasteur Hospital Holdings (Pty) Ltd (Registration number 19921001 696/07) Annual Financial Statements for the year ended 31 December 2017

Accounting Policies 1.

Significantaccountingpolicies

The principal accounting policies applied in the preparation of these annual financial statements are set out below

1.1

Basis of preparation

The annual financial statements have been prepared on the going concern basis in accordance with, and in compliance with, lnternational Financial Reporting Standards ("lFRS') and lnternational Financial Reporting lnterpretations Committee ('lFRIC) interpretations issued and effective at the time of preparing these annual financial statements and the Companies Act 71 of 2008 of South Africa, as amended. These annual financial statements comply with the requirements of the SAICA Financial Reporting Guides as issued by the Accounting Practices Committee and the Financial Reporting Pronouncements as issued by the Financial Reporting Standards Council.

The annual financial statements have been prepared on the historic cost convention, unless othenrise stated in the accounting policies which follow and incorporate the principal accounting policies set out below. They are presented in Rands, which is the company's functional currency. These accounting policies are consistent with the previous period.

1.2 Significant

judgements and sources of estimation uncertainty

The preparation of annual financial statements in conformity with IFRS requires management, from time to time, to make judgements, estimates and assumptions that affect the of policies and reported amounts of assets, liabilities, based on experience and various other factors that may differ from these estimates. The estimates and to accounting estimates are recognised in the period in

income and expenses. These estimates and associated

are believed to be reasonable under the circumstances. underlying assumptions are reviewed on an ongoing basis which the estimates are revised and in any future periods

Critical judgements in applying accounting The critical judgements made by management

have the most significant effect on the amounts recognised

1.3

the

policies, apart from those involving estimations, that statements, are outlined as follows

Property, plant and equipment

Property, plant and equipment are tangible assets which the mmpany holds for its own use or for rental to others and which are expected to be used for more than one year.

An item of property, plant and equipment is recognised as an asset when it is probable that future economic benefits associated with the item will flow to the company, and the cost of the item can be measured reliably.

Property, plant and equipment is initially measured at cost. Cost includes all of the expenditure which is directly attributable to the acquisition or construction of the asset, including the capitalisation of borrowing costs on qualifying assets and adjustments in respect of hedge accounting, where appropriate.

The initial estimate of the costs of dismantling and removing an item and restoring the site on which it is located is also included in the cost of property, plant and equipment, where the company is obligated to incur such expenditure, and where the obligation arises as a result of acquiring the asset or using it for purposes other than the production of inventories. Expenditure incurred subsequently for major services, additions to or replacements of parts of property, plant and equipment are capitalised if it is probable that future economic benefits associated with the expenditure will flow to the company and the cost can be measured reliably. Day to day servicing costs are included in profit or loss in the year in which they are incurred. Major inspection costs which are a condition of continuing use of an item of property, plant and equipment and which meet the recognition criteria are included as a replacement in the cost of the item of property, plant and equipment. Any remaining inspection costs from the previous inspection are derecognised. Major spare parts and stand by equipment which are expected to be used for more than one year are included in property, plant and equipment.

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Annexure M2 Draft Financial Statements of LPHH for 31 Dec 20L7 - Page 15 of 41

28s

Louis Pasteur Hospital Holdings (Pty) Ltd (Registration numbe r 19921001 696/07) Annual Financial Statements for the year ended 31 December 2017

Accounting Policies 1.3 Propefi, plant and equipment

(continued)

Depreciation of an asset commences when the asset is available for use as intended by management. Depreciation is charged to write off the assets carrying amount over its estimated useful life to its estimated residual value, using a method that best reflects the pattern in which the asset's economic benefits are consumed by the company. Leased assets are depreciated in a consistent manner over the shorter of their expected useful lives and the lease term. Depreciation is not charged to an asset if its estimated residual value exceeds or is equal to its carrying amount. Depreciation of an asset ceases at the earlier of the date that the asset is classified as held for sale or derecognised. The useful lives of items of property, plant and equipment have been assessed as follows: Item

Depreciation

Plant and machinery Furniture and fixtures Motor vehicles Office equipment lT equipment Leasehold improvements Linen and blankets

Straight line Straight !ine Straight line Straight line Straight !ine Straight line Straight line

method

Average useful life 6 - 15 years 6 - 10 years 5 years 5 years 3 - 7 years period of lease 4 years

The residual value, useful life and depreciation method of each asset are reviewed at the end of each reporting year. lf the expectations differ from previous estimates, the change is accounted for prospectively as a change in accounting estimate. Each part of an item of property, plant and equipment with a co^$hat is significant in relation to the total cost of the item is depreciated

separately.

1i}*

The depreciation charge for each year is recognised in asset.

lmpairment tests are performed on property, ptant

nromflsil

anqffifrlnt

unless it is included in the carrying amount of another

when there is an indicator that they may be impaired. When

ar(equifnent is assessed to be higher than the estimated recoverable loss is recognised immediately ilhfrlit or loss to bring the carrying amount in line with the recoverable

the carrying amount of an item of property, plant amount, an impairment amount.

An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected from its continued use or disposal. Any gain or loss arising from the derecognition of an item of property, plant and equipment, determined as the difference between the net disposal proceeds, if any, and the carrying amount of the item, is included in profit or loss when the item is derecognised.

1.4

lntangible assets

An intangible asset is recognised when: it is probable that the expec{ed future economic benefits that are attributable to the asset will flow to the entity; and the cost of the asset can be measured reliably.

. .

lntangible assets are initially recognised at cost. Expenditure on research (or on the research phase of an internal project) is recognised as an expense when it is incurred.

lntangible assets are carried at cost less any accumulated amortisation and any impairment losses. The amortisation period and the amortisation method for intangible assets are reviewed every period-end. Reassessing the useful life of an intangible asset with a finite useful life after it was classified as indefinite is an indicator that the asset may be impaired. As a result the asset is tested for impairment and the remaining carrying amount is amortised over its useful life. Amortisation is provided to write down the intangible assets, on a straight line basis, to their residual values as follows: Item

Useful life

Computer software

2 years 14

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286

Annexure M2 Draft Financial Statements of LPHH for 31 Dec 2017 - Page 16 of 41

Louis Pasteur Hospital Holdings (Pty) Ltd (Registration numbe r 19921001 696/07) Annual Financial Statements for the year ended 31 December 2017

Accounting Policies 1.5

lnvestments in associates

lnvestments in associates are initially recognised at cost and adjusted thereafter to recognise the company's share of the profit or loss and other comprehensive income of the associate .

1.6

Financial instruments

Classification The company classifies financial assets and financial liabilities into the following categories: Loans and receivables Financial liabilities measured at amortised cost

. .

Classification depends on the purpose for which the financial instruments were obtained / incurred and takes place at initial recognition. Classification is re-assessed on an annual basis, except for derivatives and financial assets designated as at fair value through profit or loss, which shall not be classified out of the fair value through profit or loss category.

lnitial recognition and measurement Financial instruments are recognised initially when the company becomes

party to the contractual provisions of the

instruments.

The company classifies financial instruments, or their component parts, on initial recognition as a financial asset, a financial liability or an equity instrument in accordance with the substance of the contractual arrangement.

Financial instruments are measured initially at fair value, determinable, which are measured at cost and are classified as

For financial instruments which are not measurement of the instrument. Su

at fair value

equity investments for which

a fair value is not

financial assets

or loss, transaction costs are included in the

initial

bseq uent measu rement

Financial instruments at fair value through profit or loss are su bsequently measured at fair value, with gains and losses arising from changes in fair value being included in profit or loss for the period. Loans and receivables are subsequently measured at amortised cost, using the effective interest method, less accumulated impairment losses. Financial liabilities at amortised cost are subsequently measured at amortised cost, using the effective interest method.

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287

Louis Pasteur Hospital Holdings (Pty) Ltd (Registration numbe r 19921001 696/07) Annual Financial Statements for the year ended 31 December 2017

Accounting Policies 1.6

Financial instruments (continued)

Loans to (from) group companies These include loans to and from holding companies, fellow subsidiaries, subsidiaries, joint ventures and associates and are recognised initially at fair value plus direct transaction costs. Loans to group companies are classified as loans and receivables. Loans from group companies are classified as financial liabilities measured at amortised cost.

Loans to shareholderc, directors, managers and employees These financial assets are classified as loans and receivables.

Trade and other receivables Trade receivables are measured at initial recognition at fair value, and are subsequently measured at amortised cost using the effective interest rate method. Appropriate allowances for estimated irrecoverable amounts are recognised in profit or loss when there is objective evidence that the asset is impaired. Significant financial difficulties of the debtor, probability that the debtor will enter bankruptcy or financial reorganisation, and default or delinquency in payments (more than 30 days overdue) are considered indicators that the trade receivable is impaired. The allowance recognised is measured as the difference between the asset's carrying amount and the present value of estimated future cash flows discounted at the effective interest rate computed at initial recognition. The carrying amount of the asset is reduced through the use of in profit or loss within operating expenses. When a trade account for trade receivables. Subsequent recoveries of in profit or loss.

account, and the amount of the loss is recognised uncollectable, it is written off against the allowance written off are credited against operating expenses

Trade and other receivables are classified as loans Trade and other payables

Trade payables are initially measured at fair value, and are subsequently measured at amortised cost, using the effective interest rate method.

Cash and cash equivalents Cash and cash equivalents comprise cash on hand and demand deposits, and other short-term highly liquid investments that are readily convertible to a known amount of cash and are subject to an insignificant risk of changes in value. These are initially and subsequently recorded at fair value. Bank overdraft and borrowings Bank overdrafts and borrowings are initially measured at fair value, and are subsequently measured at amortised cost, using

the effective interest rate method. Any difference between the proceeds (net of transaction costs) and the settlement or redemption of borrowings is recognised over the term of the borrowings in accordance with the company's accounting policy for borrowing costs.

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Annexure M2 Draft Financial Statements of LPHH for 31 Dec 2017 - Page 18 of 41

288

Louis Pasteur Hospital Holdings (Pty) Ltd (Registration numbe r 19921001 696/07) Annual Financial Statements for the year ended 31 December 2017

Accounting Policies 1.7 Tax Current tax assets and liabilities Current tax for current and prior periods is, to the extent unpaid, recognised as a liability. lf the amount already paid in respect of current and prior periods exceeds the amount due for those periods, the excess is recognised as an asset. Current tax liabilities (assets) for the current and prior periods are measured at the amount expected to be paid to (recovered from) the tax authorities, using the tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period. Deferred tax assets and liabilities

A deferred tax liability is recognised for all taxable temporary differences, except to the extent that the deferred tax liability arises from the initial recognition of an asset or liability in a transaction which at the time of the transaction, affects neither accounting profit nor taxable profit (tax loss). A deferred tax asset is recognised for all deductible temporary differences to the elftent that it is probable that taxable profit will be available against which the deductible temporary difference can be utilised. A deferred tax asset is not recognised when it arises from the initial recognition of an asset or liability in a transaction at the time of the transaction, affects neither accounting profit nor taxable profit (tax loss).

A deferred tax asset is recognised for the carry forward of unused tax losses and unused STC credits to the extent that it is probable that future taxable profit will be available against which the unused tax losses and unused STC credits can be utilised.

expected to apply to the period when the asset is been enacted or substantively enacted by the end

Deferred tax assets and liabilities are measured at the tax realised or the liability is settled, based on tax rates (and tax of the reporting period. t

Tax expenses and included in profit or loss for the period, except to the Current and deferred taxes are recognised as extent that the tax arises from: o a transaction or event which is recognised, in the same or a different period, to other comprehensive income, or o a business combination. Current tax and deferred taxes are charged or credited to other comprehensive income if the tax relates to items that are credited or charged, in the same or a different period, to other comprehensive income. Current tax and deferred taxes are charged or credited directly to equity if the tax relates to items that are credited or charged, in the same or a different period, directly in equity.

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289

Annexure M2 Draft Financial Statements of LPHH for 31 Dec 2017 - Page 19 of 41

Louis Pasteur Hospital Holdings (Pty) Ltd (Registration numbe r 19921001 696/07) Annual Financial Statements for the year ended 31 December 2017

Accounting Policies 1.8

Leases

A lease is classified as a finance lease if it transfers substantially all the risks and rewards incidental to ownership. A lease is classified as an operating lease if it does not transfer substantially all the risks and rewards incidental to ownership.

Finance leases

Iessee

Finance leases are recognised as assets and liabilities in the statement of financial position at amounts equal to the fair value propefi or, if lower, the present value of the minimum lease payments. The corresponding liability to the lessor is included in the statement of financial position as a finance lease obligation.

of the leased

The lease payments are apportioned between the finance charge and reduction of the outstanding liability.The finance charge is allocated to each period during the lease term so as to produce a constant periodic rate on the remaining balance of the liability.

Operating Ieases - lessor Operating lease income is recognised as an income on a straight-line basis over the lease term. lnitial direct costs incurred in negotiating and arranging operating leases are added to the carrying amount of the leased asset and recognised as an expense over the lease term on the same basis as the lease income. lncome for leases is disclosed under revenue in profit or loss.

Operating leases

- lessee

Operating lease payments are recognised as an expense on a the amounts recognised as an expense and the contractual is not discounted.

ne basis over the lease term. The difference between recognised as an operating lease asset. This Iiability

Any contingent rents are expensed in the period they

1.9

!nventories

lnventories are measured at the lower of cost and net realisable value. lnventories are measured at the lower of cost and net realisable value on the first-in-first-out basis. Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale.

The cost of inventories comprises of all costs of purchase, costs of conversion and other costs incurred in bringing the inventories to their present location and condition.

The cost of inventories of items that are not ordinarily interchangeable and goods or services produced and segregated for specific projects is assigned using specific identification of the individual costs.

are recognised as an expense in the period the write-down or loss o@urs. The amount of any reversal of any write-down of inventories, arising from an increase in net realisable value, are recognised as a reduction in the amount of inventories recognised as an expense in the period in which the reversal o@urs.

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Annexure M2 Draft Financial Statements of LPHH for 31 Dec 2017 - Page 20 of 4L

290

Louis Pasteur Hospital Holdings (Pty) Ltd (Registration numbe r 19921001 696/07) Annua! Financial Statements for the year ended 31 December 2017

Accounting Policies I .10 lmpairment of assets

The company assesses at each end of the reporting period whether there is any indication that an asset may be impaired. lf any such indication exists, the company estimates the recoverable amount of the asset. lf there is any indication that an asset may be impaired, the recoverable amount is estimated for the individual asset. lf it is not possible to estimate the recoverable amount of the individual asset, the recoverable amount of the cash-generating unit to which the asset belongs is determined.

The recoverable amount of an asset or a cash-generating unit is the higher of its fair value less costs to sell and its value in use.

lf the recoverable amount of an asset is less than its carrying amount, the carrying amount of the asset is reduced to its recoverable amount. That reduction is an impairment loss.

An impairment loss of assets carried at cost less any accumulated depreciation or amortisation is recognised immediately in profit or loss. Any impairment loss of a revalued asset is treated as a revaluation decrease.

An impairment loss is recognised for cash-generating units if the recoverable amount of the unit is less than the carrying amount of the units. The impairment loss is allocated to reduce the carrying amount of the assets of the unit in the following order:

. .

first, to reduce the carrying amount of any goodwill allocated to the cash-generating unit and then, to the other assets of the unit, pro rata on the basis of the carrying amount of each asset in the unit.

An entity assesses at each reporting date whether there is any assets other than goodwil! may no longer exist or may have of those assets are estimated.

that an impairment loss recognised in prior periods for any such indication exists, the recoverable amounts to a reversal of an impairment loss does not exceed rment loss been recognised for the asset in prior periods

The increased carrying amount of an asset other than the carrying amount that would have been determined

A reversal of an impairment loss of assets carried at recognised immediately in profit or loss. Any reversal

accumulated depreciation or amortisation other than goodwill is impairment loss of a revalued asset is treated as a revaluation

increase.

1.11 Share capitaland equity

An equity instrument is any contract that evidences a residual interest in the assets of an entity afier deducting all of its liabilities.

1.12 Employee benefits Short-term employee benefits The cost of short-term employee benefits, (those payable within 12 months after the service is rendered, such as paid vacation leave and sick leave, bonuses, and non-monetary benefits such as medical care), are recognised in the period in which the service is rendered and are not discounted.

The expected cost of compensated absences is recognised as an expense as the employees render services that increase their entitlement or, in the case of non-accumulating absences, when the absence o@urs. The expec{ed cost of profit sharing and bonus payments is recognised as an expense when there is a legal or constructive obligation to make such payments as a result of past performance. Defined contribution plans Payments to defined contribution retirement benefit plans are charged as an expense as they fall due.

Payments made to industry-managed (or state plans) retirement benefit schemes are dealt with as defined contribution plans where the company's obligation under the schemes is equivalent to those arising in a defined contribution retirement benefit plan.

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Annexure M2 Draft Financial Statements of LPHH for 31 Dec 2017 - Page

21.

291

of 4L

Louis Pasteur Hospital Holdings (Pty) Ltd (Registration numbe r 19921001 696/07) Annual Financial Statements for the year ended 31 December 2017

Accounting Policies 1.13 Provisions and contingencies Provisions are recognised when: the company has a present obligation as a result of a past event; it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation; and a reliable estimate can be made of the obligation.

. . .

The amount of a provision is the present value of the expenditure expected to be required to settle the obligation.

a provision is expected to be reimbursed by another party, the reimbursement shall be recognised when, and only when, it is virtually certain that reimbursement will be received if the entity seftles the obligation. The reimbursement shall be treated as a separate asset. The amount recognised for the reimbursement shall not exceed the amount of the provision.

Where some or all of the expenditure required to settle

Provisions are not recognised for future operating losses.

lf an entity has a contract that is onerous, the present obligation under the contract shall be recognised and measured as a provision.

After their initial recognition contingent liabilities recognised in business combinations that are recognised separately are subsequently measured at the higher of: the amount that would be recognised as a provision; and the amount initially recognised less cumulative amortisation.

. .

Contingent assets and contingent liabilities are not recognised

are disclosed in note 26.

1,14 Revenue have been satisfied Revenue from the sale of goods is recognised when all the a and rewards of ownership of the goods; the company has transferred to the buyer the o to the degree usually associated with ownership nor the company retains neither continuing effective control over the goods sold; a the amount of revenue can be measured a it is probable that the economic benefits associated with the transaction will flow to the company; and the costs incurred or to be incurred in respect of the transaction can be measured reliably

When the outcome of a transaction involving the rendering of services can be estimated reliably, revenue associated with the transaction is recognised by reference to the stage of completion of the transaction at the end of the reporting period. The outcome of a transaction can be estimated reliably when all the following conditions are satisfied: the amount of revenue can be measured reliably; it is probable that the economic benefits associated with the transaction will flow to the company; the stage of completion of the transaction at the end of the reporting period can be measured reliably; and the costs incurred for the transaction and the costs to complete the transaction can be measured reliably.

. . . .

When the outcome of the transaction involving the rendering of services cannot be estimated reliably, revenue shall be recognised only to the extent of the expenses recognised that are recoverable. Service revenue is recognised by reference to the stage of completion of the transaction at the end of the reporting period. Stage of completion is determined by . Revenue is measured at the fair value of the consideration received or receivable and represents the amounts receivable for goods and services provided in the normal course of business, net of trade discounts and volume rebates, and value added tax.

lnterest is recognised, in profit or loss, using the effective interest rate method. Dividends are recognised, in profit or loss, when the company's right to receive payment has been established.

Service fees included in the price of the product are recognised as revenue over the period during which the service is performed.

20 - 19 J uly 2018 - 01 :31 PM

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Annexure M2 Draft Financial Statements of LPHH for 31 Dec 2017 - Page 22 of

292

Louis Pasteur Hospital Holdings (Pty) Ltd (Registration numbe r 19921001 696/07) Annual Financial Statements for the year ended 31 December 2017

Accounting Policies 1

.15 Cost of sales

When inventories are sold, the carrying amount of those inventories is recognised as an expense in the period in which the related revenue is recognised. The amount of any write-down of inventories to net realisable value and all losses of inventories

are recognised as an expense in the period the write-down or loss o@urs. The amount of any reversal of any write-down of inventories, arising from an increase in net realisable value, is recognised as a reduction in the amount of inventories recognised as an expense in the period in which the reversal occurs.

The related cost of providing services recognised as revenue in the current period is included in cost of sales.

1.16 Borrowing costs Borrowing costs that are directly attributable to the acquisition, construction or production of a qualifring asset are capitalised as part of the cost of that asset until such time as the asset is ready for its intended use. The amount of borrowing costs eligible for capitalisation is determined as follows: Actual borrowing costs on funds specifically borrowed for the purpose of obtaining a qualiffing asset less any temporary investment of those borrowings. Weighted average of the borrowing costs applicable to the entity on funds generally borrowed for the purpose of obtaining a qualifying asset. The borrowing costs capitalised do not exceed the total borrowing costs incurred.

. .

The capitalisation of borrowing costs commences when: expenditures for the asset have occurred; borrowing costs have been incurred, and activities that are neoessary to prepare the asset for its intended use or sale are in progress

. . .

Capitalisation is suspended during extended periods in which Capitalisation ceases when substantially all the activities are complete.

is interrupted.

prepare the qualifying asset for its intended use or sale in which they are incurred

AII other borrowing costs are recognised as an

1.17 Statement of cash flows A statement of cash flows is prepared according to the direct method.

21 - 19 July 2018 - 01:31 PM

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Annexure M2 Draft Financial Statements of LPHH for 3L Dec 20L7 - Page 23 of

293

Louis Pasteur Hospital Holdings (Pty) Ltd (Registration numbe r 19921001 696/07) Annual Financia! Statements for the year ended 31 December 2017

Notes to the Annual Financial Statements 2017

Figures in Rand

New Standards and lnterpretations

2.1

Standards and interpretations effective and adopted in the current year

2016

ln the current year, the company has adopted the following standards and interpretations that are effective for the current financial year and that are relevant to its operations: Amendments to IAS 7: Disclosure initiative The amendment requires entities to provide additional disclosures for changes in liabilities arising from financing activities. Specifically, entities are now required to provide disclosure of the following changes in liabilities arising from financing activities: changes from financing cash flows; changes arising from obtaining or losing control of subsidiaries or other businesses; the effect of changes in foreign exchanges; changes in fair values; and other changes.

. . . . .

The effective date of the amendment is for years beginning on or after 01 January 2017. The company has adopted the amendment for the first time in the 2017 annual financial statements. The impact of the amendment is set out in note Changes in Accounting Policy.

Amendments to IAS 12: Recognition of Deferred Tax Assets

realised Losses

ln terms of IAS 12 lncome Taxes, deferred tax assets are available against which the deductible temporary which may have an impact on the company:

only when it is probable that taxable profits will be utilised. The following amendments have been made,

lf tax law restricts the utilisation of losses to assessed in combination only with other deductible

of a specific type, a deductible temporary difference is ifferences of the appropriate type.

Additional guidelines were prescribed for evaluating whether the company will have sufficient taxable profit in future periods. The company is required to compare the deductible temporary differences with future taxable profit that excludes tax deductions resulting from the reversal of those deductible temporary differences. This comparison shows the extent to which the future taxable profit is sufficient for the entity to deduct the amounts resulting from the reversal of those deductible temporary differences.

The amendment also provides that the estimate of probable future taxable profit may include the recovery of some of an entity's assets for more than their carrying amount if there is sufficient evidence that it is probable that the entity will achieve this.

The effective date of the amendment is for years beginning on or after 01 January 2017 The company has adopted the amendment for the first time in the 2017 annual financial statements. The impact of the amendment is set out in note Changes in Accounting Policy

22 - 19 July 2018 - 01:31 PM

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Annexure M2 Draft Financial Statements of LPHH for 31 Dec 20L7 - Page 24 of

294

Louis Pasteur Hospital Holdings (Pty) Ltd (Registration numbe r 19921001 696/07) Annua! Financial Statements for the year ended 31 December 2017

Notes to the Annual Financial Statements 2.

New Standards and lnterpretations (continued)

2.2

Standards and interpretations not yet effective

Amendments to IFRS 10 and IAS 28: Sale or Contribution of Assets between an Investor and its Associate or Joint Venture lf a parent loses control of a subsidiary which does not contain a business, as a result of a transaction with an associate or joint venture, then the gain or loss on the loss of control is recognised in the parents' profit or loss only to the extent of the unrelated investors' interest in the associate or joint venture. The remaining gain or loss is eliminated against the carrying amount of the investment in the associate or joint venture. The same treatment is followed for the measurement to fair value of any remaining investment which is itself an associate or joint venture. lf the remaining investment is accounted for in terms of IFRS I, then the measurement to fair value of that interest is recognised in full in the parents' profit or loss. The effective date of the amendment is to be determined by the IASB. It is unlikely that the amendment will have a material impact on the company's annual financial statements.

lnsurance Contracts

The IFRS establishes the principles for the recognition, measurement, presentation and disclosure of insurance contracts issued.

The effective date of the standard is for years beginning on or The company expects to adopt the standard for the first time It is unlikely that the standard will have a material

2021 1 annual financial statements.

annual

nancial statements.

Uncertainty over lncome Tax Treatments The interpretation clarifies how to apply the recognition and measurement requirements in IAS 12 when there is uncertainty over income tax treatments. Specifically, if it is probable that the tax authorities will accept the uncertain tax treatment, then all

tax related items are measured according to the planned tax treatment. lf it is not probable that the tax authorities will accept the uncertain tax treatment, then the tax related items are measured on the basis of probabilities to reflect the uncertainty. Changes in facts and circumstances are required to be treated as changes in estimates and applied prospectively. The effective date of the interpretation is for years beginning on or after 01 January 2019. The company expects to adopt the interpretation for the first time in the 2019 annual financial statements. It is unlikely that the interpretation will have a material impact on the company's annual financial statements.

Amendments to IAS 28: Annual lmprovements to IFRS 2014 - 2016 cycle

An entity such as a venture capital organisation, mutual fund or similar institution may elect to measure investments in associates or joint ventures at fair value through profit or loss in accordance with IFRS 9 rather than by applying the equity method. The amendment to IAS 28 lnvestments in Associates and Joint Ventures now specifies that the election must be made separately per associate or joint venture and at the time of initial recognition of such investment.

Further, if an entity is not an investment entity, but has interests in an associate or joint venture which is an investment entity, then the entity may retain the fair value measurement of the associate or joint venture. The amendment now provides that such election must be made separately for each investment entity associate or joint venture. The effective date of the amendment is for years beginning on or afier 01 January 2018. The company expects to adopt the amendment for the first time in the 2018 annual financial statements. It is unlikely that the amendment will have a material impact on the company's annual financial statements. 23 - 19 J uly 2018 - 01 :31 PM

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Annexure M2 Draft Financial Statements of LPHH for 31 Dec 20L7 - Page 25 of

29s

41.

Louis Pasteur Hospital Holdings (Pty) Ltd (Registration numbe r 1992100 1 696/07) Annual Financia! Statements for the year ended 31 December 2017

Notes to the Annual Financial Statements

New Standards and lnterpretations (continued)

Amendments to IFRS 1: Annual lmprovements to IFRS 2014 - 2016 cycle

The amendment to IFRS 1 First Time Adoption of lnternational Financial Reporting Standards deleted certain short term exemptions concerning disclosures of financial assets, employee benefits and investment entities from IFRS 1.

The effective date of the amendment is for years beginning on or after 01 January 2018. The company expects to adopt the amendment for the first time in the 2018 annual financial statements. It is unlikely that the amendment will have a material impact on the company's annual financial statements.

Transfers of lnvestment Property: Amendments to IAS 40 The amendment deals specifically with circumstances under which property must be transferred to or from investment propefi. The amendment now requires that a change in use of property only occurs when the property first meets, or ceases to meet, the definition of investment property and that there is evidence of a change in use. The amendment specifies that a change in managements intentions for use of the property, do not, in isolation, provide evidence of a change in use. The effective date of the amendment is for years beginning on or after 01 January 2018. The company expects to adopt the amendment for the first time in the 2018 annual financial statements. It is unlikely that the amendment will have a material impact on

Foreign Currency Transactions and Advance Consideration

pany's annual financial statements. L.

paid or received an amount of consideration in advance being recognised. The specific issue addressed by the and in a foreign currency, resulting in a non-monetary the purposes of determining the exchange rate to use on the interpretation is how to determine the date of the the non-monetary asset or liability is derecognised. The initial recognition of the related asset, expense or of determining the exchange rate to apply, is the date on interpretation specifies that the date of the transaction, which the entity initially recognises the non-monetary asset or liability

The interpretation applies to circumstances when an entity

The effective date of the interpretation is for years beginning on or after 01 January 2018. The company expects to adopt the interpretation for the first time in the 2018 annual financial statements. It is unlikely that the interpretation will have a material impact on the company's annual financial statements.

Amendments to IFRS 4: Insurance Contracts The amendment provides a temporary exemption that permits, but does not require, insurers, under specified criteria, to apply IAS 39 Financial lnstruments: Recognition and Measurement, rather than IFRS 9 Financial lnstruments for annual periods beginning before 1 January 2021. The exemption is only available provided the insurer has not previously applied any version of IFRS 9 (with some exceptions) and that the activities are predominantly connected with insurance.

A further exemption has been provided from IAS 28 lnvestments in Associates and Joint Ventures. ln terms of the exemption,

an insurer is exempt from applying uniform accounting policies when applying the equity method, insofar as the IAS 39/IFRS exemption is applied. Thus, the relevant accounting policies of the associate or joint venture are retained if the entity applies the IFRSS/|AS 39 exemption and the associate or joint venture does not apply the exemption, or visa versa. The amendment further permits, but does not require, insurers to apply the "overlay approach" to designated financial assets when it first applies IFRS 9. The overlay approach requires the entity to reclassiff between profit or loss and other comprehensive income, an amount which results in the profit or loss of the designated financial assets at the end of the reporting period being equal to what it would have been had IAS 39 been applied to the designated financial assets. Additional disclosures are required as a result of the amendment. The effective date of the amendment is for years beginning on or after 01 January 2018.

24 - 19 July 2018 - 01 :31 PM

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Annexure M2 Draft Financial Statements of LPHH for 31 Dec 2017 - Page 26 of

296

41.

Louis Pasteur Hospital Holdings (Pty) Ltd (Registration numbe r 19921001 696/07) Annual Financial Statements for the year ended 31 December 2017

Notes to the Annual Financial Statements

New Standards and lnterpretations (continued)

The company expects to adopt the amendment for the first time in the 2018 annual financial statements. It is unlikely that the amendment will have a material impact on the company's annual financial statements.

Amendments to IFRS 4: Applying IFRS 9 Financial Instruments with IFRS 4 lnsurance Contracts

The amendment to IFRS 4 provides a temporary exemption, allowing insurers to apply IAS 39 rather than IFRS 9. The exemption only applies in certain circumstances and only for annual periods beginning before 1 January 2O2'l

The exemption also introduces an "overlay approach" in specific circumstances. This approach requires the insurer to reclassiff an amount between other comprehensive income and profit or loss. This results in the profit or loss for designated financial assets being the same as if the insurer had applied IAS 39 rather than IFRS 9. The effective date of the amendment is for years beginning on or after 01 January 2018. The company expects to adopt the amendment for the first time in the 2017 annual financial statements. It is unlikely that the amendment will have a material impact on the company's annual financial statements.

Amendments to IFRS 2: Classification and Measurement of Share-based Payment Transactions The amendment now specifies the treatment of vesting and non-vesting conditions with regards to cash-settled share-based payment transactions. The treatment is essentially similar to of such conditions for equity-settled share-based payment transactions. That is, non-market vesting conditions into consideration when estimating the number of conditions and other non-vesting conditions are awards which are expected to vest (and which ultimately vest) taken into consideration when determining the fair value of the

The amendment also provides for share-based obligations. Essentially, where the entity is required entity is required to account for the payment to tax exceeds the fair value of the equity instruments it expects to transfer to tax authorities in terms of such tra

payment liability, both initially and subsequently

with a net settlement feature for withholding tax of the equity instruments equal to the tax obligation, the as a reduction in equity, except to the extent that the payment settlement date. The entity should also disclose the amount that

The amendment further provides guidance in terms of modifications which @nvert cash-settled share-based payment transactions to equity -settled share-based payment transactions. For such modifications, the equity-seftled share based payment transaction is measured by reference to the fair value of the equity instruments granted at modification date, to the extent to which goods or services have been received. The liability for cash-seftled share based payment transactions is derecognised on the modification date. Any difference between the two is recognised immediately in profit or loss. The effective date of the amendment is for years beginning on or after 01 January 2018. The company expects to adopt the amendment for the first time in the 2017 annual financial statements. It is unlikely that the amendment will have a material impact on the company's annual financial statements.

Amendments to IFRS 15: Clarifications to IFRS 15 Revenue from Contracts with Customerc The amendment provides clarification and further guidance regarding certain issues in IFRS 15. These items include guidance in assessing whether promises to transfer goods or services are separately identifiable; guidance regarding agent versus principal considerations; and guidance regarding licenses and royalties. The effective date of the amendment is for years beginning on or after 01 January 2018. The company expects to adopt the amendment for the first time in the 2018 annual financial statements. It is unlikely that the amendment will have a material impact on the company's annual financial statements.

25 - 19 July 2018 - 01 :31 PM

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297

Annexure M2 Draft Financial Statements of LPHH for 3L Dec 2017 - Page 27 of 4L

Louis Pasteur Hospita! Holdings (Pty) Ltd (Registration numbe r 19921001 696/07) Annual Financial Statements for the year ended 31 December 2017

Notes to the Annual Financial Statements 2.

New Standards and lnterpretations (continued)

IFRS 9 Financial lnstruments

IFRS

I issued in November 2009 introduced new requirements for the classification and measurements of financial assets. I was subsequently amended in October 2010 to include requirements for the classification and measurement of

financial liabilities and for derecognition, and in November 2013 to include the new requirements for general hedge accounting. Another revised version of IFRS 9 was issued in July 2014 mainly to include a)impairment requirements for financial assets and b) limited amendments to the classification and measurement requirements by introducing a "fair value through other comprehensive income" (FVTOCI) measurement category for certain simple debt instruments. Key requirements of IFRS 9:

All recognised financial assets that are within the scope of IAS 39 Financial lnstruments: Recognition and Measurement are required to be subsequently measured at amortised cost or fair value. Specifically, debt investments that are held within a business model whose objeclive is to collect the contractual cash flows, and that have contractual cash flows that are solely payments of principal and interest on the outstanding principal are generally measured at amortised cost at the end of subsequent reporting periods. Debt instruments that are held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets, and that have contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on outstanding principal, are measured at FWOCI. All other debt and equity investments are measured at fair value at the end of subsequent reporting periods. ln addition, under IFRS 9, entities may make an irrevocable election to present subsequent changes in the fair value of an equity investment (that is not held for trading) in other comprehensive income with only dividend income generally recognised in profit or loss. as at fair value through profit or loss, IFRS I With regard to the measurement of financial liability that is attributable to changes in the credit requires that the amount of change in the fair value unless the recognition of the effect of the changes of risk of the liability is presented in other create or enlarge an accounting mismatch in profit or the liability's credit risk in other comprehensive value of a financial liability designated as at fair value loss. Under IAS 39, the entire amount of the through profit or loss is presented in profit or 9 requires an expected credit loss model, ?s opposed to an !n relation to the impairment of financia! credit loss model requires an entity to account for expected incurred credit loss model under IAS 39. losses at each reporting date to reflect changes in credit risk credit losses and changes in those since initial recognition. lt is therefore no longer necessary for a credit event to have occurred before credit losses are recognised. The new general hedge accounting requirements retain the three types of hedge accounting mechanisms currently available in IAS 39. Under IFRS 9, greater flexibility has been introduced to the types of transactions eligible for hedge accounting, specifically broadening the types of instruments that qualify for hedging instruments and the types of risk components of non-financial items that are eligible for hedge accounting. ln addition, the effectiveness test has been replaced with the principal of an "economic relationship". Retrospective assessment of hedge effectiveness is also no longer required. Enhanced disclosure requirements about an entity's risk management activities have also been introduced.

The effective date of the standard is for years beginning on or after 01 January 2018. The company expects to adopt the standard for the first time in the 2018 annual financial statements. It is unlikely that the standard will have a material impact on the company's annual financial statements

26 - 19 July 2018 - 01 :31 PM

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Annexure M2 Draft Financial Statements of LPHH for 31 Dec 2017 - Page 28 of

298

Louis Pasteur Hospital Holdings (Pty) Ltd (Registration numbe r 19921001 696/07) Annual Financia! Statements for the year ended 31 December 2017

Notes to the Annual Financial Statements

New Standards and lnterpretations (continued)

IFRS 15 Revenue from Contracts with Customers

IFRS 15 supersedes IAS 11 Construction contracts; IAS 18 Revenue; IFRIC 13 Customer Loyalty Programmes; IFRIC 15 Agreements for the construction of Real Estate; IFRIC 18 Transfers of Assets from Customers and SIC 31 Revenue - Barter Transaclions lnvolving Advertising Services. The core principle of IFRS 15 is that an entity recognises revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. An entity recognises revenue in accordance with that core principle by applying the following steps:

. . . . .

ldentifu the contract(s) with a customer ldentify the performance obligations in the contract Determine the transaction price

Allocate the transaction price to the performance obligations in the contract Recognise revenue when (or as) the entity satisfies a performance obligation.

IFRS 15 also includes extensive new disclosure requirements. The effective date of the standard is for years beginning on or

January 2018 financial statements.

The company expects to adopt the standard for the first time in It is unlikely that the standard will have a material impact on

annual

nancial statements.

27 - 19 July 2018 - 01 :31 PM

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Annexure M2 Draft Financial Statements of LPHH for 31 Dec 20L7 - Page 29 of

299

Louis Pasteur Hospital Holdings (Pty) Ltd (Registration numbe r 19921001 696/07) Annual Financial Statements for the year ended 31 December 2017

Notes to the Annual Financial Statements 3.

2016

2017

Figures in Rand

Property, plant and equipment 2016

2017 Cost or revaluation

Plant and machinery Furniture and fixtures Motor vehicles

Office equipment lT equipment Leasehold improvements Linen and blankets

Total

Cost or revaluation

Accumulated Carrying value depreciation

63,764,338

(39,1 01 ,1 00)

24,663,238

(6,033,750) (1 ,034,486) (1 ,487,300) (3,525,385) (394,861) (626,609)

1,009,573 721,1 83 140,478 212,306 1,883,094

714,425

7,043,323 1,755,669 1,627,778

3,737,691 2,277,955 1,341,034

Accumulated Carrying value depreciation (35,879,293)

59,018,456

9,299,232

(5,685,222)

1,755,669 1,584,531 3,538,505

23,139,163 3,614,010

(853,345)

902,324

,414,873)

2,277,955

(3,353,820) (334,108)

169,658 184,685 1,943,847

795,634

(322,214)

473,420

81,547,788 (52,203,4911 29,3U,297 78,269,982 147,842,8751

30,427,107

Reconciliation of property, plant and equipment - 2017 Opening balance 23,139,163 3,614,010

Plant and machinery Furniture and fixtures Motor vehicles

902,324

Office equipment IT equipment Leasehold im provements Linen and blankets

169,658 184,685

Difference Additions Depreciation 2,069,018 (2,211,518) (2,799) 1,418) 3,857

(2,959,653) (468,183)

2,414,710 75,264

(98,327

)

1,009,573 721,1 83 140,478 212,306 1,883,094

(61,008)

43,246 99,187

(175,423)

545,401

(60,753) (206,069)

24,663,238

(178,342) 1

Total

714,425

(251,1971 3,277,808 (4,',109,431) 29,34,297 Reconciliation of property, plant and equipment

Plant and machinery Furniture and fixtures Motor vehicles

Office equipment IT equipment Leasehold improvements Linen and blankets Undefined Difference

Opening balance 23,287,016 1,600,355 753,010 147,275 355,045

2,004,600 350,234

Difference Additions Depreciation (2,930,165)

(2,069,018) 2,211,518

4,851,330 322,809

(520,672)

2,799 11,418

279,900

(133,385) (54,886)

(3,857)

98,327

65,851 58,965

(225,468) (60,753) (169,841) (235,809)

194,700

28,497,535 251,187 5,773,555 (4,095,170)

Total

23,139,163 3,614,010

902,324 169,658 194,685 1,943,847 473,420 30,427,107

Net carrying amounts of leased assets 8,368,592 663,262

Plant and machinery Motor vehicles Leasehold improvements

1,883,094 10,91

4,948

8,291,869 928,708 1,943,847 11

,064

28 - 19 July 2018 - 01.31 PM

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AYP

,424

300

Annexure M2 Draft Financial Statements of LPHH for 31 Dec 2017 -Page 30 of 41

Louis Pasteur Hospita! Holdings (Pty) Ltd (Registration numbe r 19921001 696/07) Annual Financial Statements for the year ended 31 December 2017

Notes to the Annual Financial Statements 4.

2016

2017

Figures in Rand

lntangible assets 2016

2017 Cost / Valuation

Computer software

Accumulated Carrying value amortisation

39,620

(34,493)

5,127

Cost / Valuation

Accumulated Carrying value amortisation

39,620

(39,620)

Reconciliation of intangible assets - 2017 Opening balance

Difference

Amortisation (5,126)

10,253

Computer software, other

Total 5,127

Reconciliation of intangible assets - 2A16 Opening balance 15,380

Computer softrvare, other

Difference

Amortisation

(10,253)

Tota!

(5,127)

Loans to (from) group companies

Associates Rubicon Group (Pty) Ltd The loan is unsecured, interest free and has no fixed terms

(4,783,620)

(10,620 ,773)

(2,486,394)

15,691 ,686

Fellow subsidiaries First Clinic Properties One Limited The loan is unsecured, bears interest at the prime Iending rate and has no fixed term of repayment. Non-current assets

(7,270,014)

Non-current Iiabilities

,270,014)

15,691 ,686 (10,620 ,773)

5,070,913

Gredit quality of loans to group companies The credit quality of loans to group companies that are neither past due nor impaired can be assessed by reference to external credit ratings (if available) or to historical information about counterparty default rates:

Credit rating 16,1

High

24,349

Fair value of loans to and from group companies 16,124,349

Loans to group companies Loans from group companies

(5,521 ,1 10)

(10,620 ,773)

29 - 19 July 2018 - 01 :31 PM

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301

Annexure M2 Draft Financial Statements of LPHH for 31 Dec 2017 - Page 31 of 41

Louis Pasteur Hospital Holdings (Pty) Ltd (Registration numbe r 19921001 696/07) Annual Financial Statements for the year ended 31 December 2017

Notes to the Annual Financial Statements 5.

2016

2017

Figures in Rand Loans to (from) group companies (continued)

Loans to group companies past due but not impaired The loans to group companies is considered to be neither past due nor impaired and subsequently no provision was created for irrecoverability of any portion (or the whole) of the loans. The terms of the loans that were fully performing during the year, have not been re-negotiated during the year. The companies maximum exposure to credit risk with regards to the loans are limited to the carrying value of the loans.

Loans to (from) shareholders (1 ,1 33,787)

Louis Pasteur Medical lnvestment Limited Bonitas Medica! Fund

(1 ,131

,222)

(12,027,057)

(13,160,844)

(13,131,068)

1,999,846)

The loans are unsecured, interest free and no portion of the loan is repayable within the next 12 months. Any repayment of the loans are subject to approval by the board of directors taking into account the working capital requirements of the company.

Financial assets by category

The accounting policies for financial instruments have been

line items below:

2017

Trade and other receivables Other financial assets Cash and cash equivalents

Tota!

Loans and receivables 33,264,695 55,792,477

33,264,695 55,792,477

39,746

99,096,918

89,096,918

2016 Total

Loans and receivables Loans to group companies Trade and other receivables Other financial assets Cash and cash equivalents

16,124,U9

16,124,349 36,240,759

36,240,759

51 ,659,700

51,659,700

24,866

104,049,674 104,049,674

30 - 19 July 2018 - 01:31 PM

M"{a

302

Annexure M2 Draft Financial Statements of LPHH for 31 Dec 2017 - Page 32 of 4L

Louis Pasteur Hospital Holdings (Pty) Ltd (Registration numbe r 19921001 696/07) Annual Financial Statements for the year ended 31 December 2017

Notes to the Annual Financial Statements 8.

2016

2017

Figures in Rand Deferred tax

The deferred tax assets and the deferred tax liability relate to income tax in the same jurisdiction, and the law allows net settlement. Therefore, they have been offset in the statement of financial position as follows:

4,745,743

Deferred tax liability

(4,931,271)

Reconciliation of deferred tax asset / (liability) (4,931,271)

At beginning of year

2,424,840 (180,212)

Loan discounting Annual leave discounting Calculated tax loss Discounting trade receivables Discounting trade payables Provision for bad debts Property, plant and equipment - capital allowances Operating lease Iiability Provision for leave pay Finance lease Prepaid insurance premium

(825) 3,330,614 (44,098)

14,532 (1

13,073)

(1,658,742) 1,685,889 (70,587) (625,490) (17 ,105)

Undefined Difference

9,677,014

(9,677,014)

4,745,743

(4,931 ,2711

Recognition of deferred tax asset Based on the profitability forecasts, the directors have

the deferred tax assets are recoverable.

Other financial assets

The debentures are unsecured, transferable and cumulative and shall earn a return of 8%(2% income and 60/o capita!) growth per annum.

10.

lnventories

Merchandise

11.

731,667

574,345

35,390,621

34,536,626

343,417 49,286,033 52,968 210,909

1,197,596 266,780 29,093

Trade and other receivables

Trade receivables Prepayments (if immaterial) Deposits Staff Loans Other receivable

210,674

85,283,948

31 - 19 July 2018 - 01.31 PM

36,240,759

lr4-A

303

Annexure M2 Draft Financial Statements of LPHH for 31 Dec 2017 - Page 33 of 41

Louis Pasteur Hospital Holdings (Pty) Ltd (Registration numbe r 19921001 696/07) Annual Financial Statements for the year ended 31 December 2017

Notes to the Annual Financial Statements 11.

2016

2017

Figures in Rand Trade and other receivables (continued)

Credit quality of trade and other receivables The credit quality of trade and other receivables that are neither past nor due nor impaired can be assessed by reference to external credit ratings (if available) or to historical information about counterparty default rates: Trade receivables:

Credit rating of trade receivables

Rating

Current - 30 days 30 - 60 days Over 60 days

High Medium Medium

2017 1,311 ,305

23,248,016

11.089.670 35.648.990

2016

24,000,618 2,635,473 11,010.618 37.646.709

Fair value of trade and other receivables The carry value of trade and other receivables approximates fair values due to the short term nature thereof.

12.

Cash and cash equivalents

Cash and cash equivalents consist of: Cash on hand

1,376

Bank balances Bank overdraft

38,370 (7,696,686)

1,376 23,490 (10,728,581)

(7,656,940)

(10,703 ,7151

39,746 (7,696,686)

(10,728,581)

(7,656,940)

(10,703 ,7151

Current assets Current liabilities

24,966

The company has secured direct overdraft facilities of R7 500 000 with Nedbank. These facilities are secured by a cession by the Louis Pasteur Hospital Holdings (Pty) Ltd, any any and all its rights in and to its debtors and of unlimited suretyships and guarantees from Louis Pasteur lnvestments Limited. Securities include amounts of R10 000 000 from Dr M Adam and R25 000 000 from First Clinic Properties One Limited.

Credit quality of cash at bank and short term deposits, excluding cash on hand The credit quality of cash at bank and short term deposits, excluding cash on hand that are neither past due nor impaired can be assessed by reference to external credit ratings (if available) or historical information about counterparty default rates. None of the financial institutions with which bank balances are held defaulted in prior periods and as a result a credit rating of high are ascribed to the financial institutions. The company's maximum exposure to credit risk as a result of the bank balances held is limited to the carrying value of these balances detailed above. All bank balances are held with two banking institutions increasing the related concentrated risk. However, to mitigate the risk of loss, the company only transacts with highly reputable financial institutions. Fair value of cash and cash equivalents The carrying value of cash equivalents approximates it fair value.

32 - 19 July 2018 - 01 :31 PM

/rho

304

Annexure M2 Draft Financial Statements of LPHH for 31 Dec 20L7 - Page 34 of 41

Louis Pasteur Hospital Holdings (Pty) Ltd (Registration numbe r 19921001 696/07) Annual Financial Statements for the year ended 31 December 2017

Notes to the Annua! Financial Statements 2016

2017

Figures in Rand

13. Share capital Authorised 1,000

10 000 Ordinary shares of R0,1 each

1,000

Describe any changes in authorised share capital e.g. Conversion to net present value shares.

9,000 unissued ordinary shares are under the control of the directors in terms of a resolution of members passed at the last annual general meeting. This authority remains in force until the next annual general meeting.

lssued 1000 Ordinary shares of R0.1 each Share premium

100

1,999,974

2,00a,074

2,000,074

Louis Pasteur Holdings (Pty) Ltd sold its 100% shareholding in Louis Pasteur Medical lnvestments Limited to Firstchoice Healthcare (Pty) Ltd as at 31 December 2015.

14.

Other financial liabilities

At fair value through profit (loss)

718,817,675

Other financial liability 2 Terms and conditions

Held at amortised cost lnsurance - Premium Finance

622,584,375

1,035,445

Payable in advance in monthly instalments of interest rate of 5.11o/o per annum. This agreement the 2017 financial year and all insurance premiums

an effective during

paid directly

to the insurer.

on-cu rrent I iabi I ities Fair value through profit or loss N

718,817,675

623,619,820

718,817,675

622,584,375

Current liabilities 1,035,445

At amortised cost 718,817

33 - 19 July 2018 - 01:31 PM

,675

623,619,820

f'4"t

30s

Annexure M2 Draft Financial Statements of LPHH for 31 Dec 2017 -Page 35 of 41

Louis Pasteur Hospital Holdings (Pty) Ltd (Registration numbe r 19921001 696/07) Annual Financial Statements for the year ended 31 December 2017

Notes to the Annual Financial Statements 2017

2016

2,500,879 1,455,752

2,572,403

- in second to fifth year inclusive

5,977,398

less: future finance charges

3,956,631 (353,981)

Present value of minimum lease payments

3,602,650

5,1 39,1 93

Present value of minimum lease payments due - within one year - in second to fifth year inclusive

2,229,554 1,373,096

2,097,776 3,041 ,417

3,602,650

5,1 39,1 93

Figures in Rand

15.

Finance lease Iiabilities

Minimum lease payments due - within one year

Non-current liabilities Current Iiabilities

3,404,995

(838,205)

1,373,096

3,041 ,417

2,229,554

2,097,776

3,602,650

5,1 39,1 93

It is company policy to lease certain [property]motor vehicles and equipment under finance leases.

The average lease term was 3-5 years and the average Interest rates are linked to prime at the contract date. AII

The company's obligations under finance leases are

rate was 12o/o (2016: 12%) repayments

lessor's charge over the leased assets. Refer note

34 - 19 July 2018 - 01:31 PM

/\s No

306

Annexure M2 Draft Financial Statements of LPHH for 3L Dec 2017 - Page 36 of 41

Louis Pasteur Hospital Holdings (Pty) Ltd (Registration numbe r 19921001 696/07) Annual Financial Statements for the year ended 31 December 2017

Notes to the Annual Financial Statements Figures in Rand

16.

2017

2016

Financial Iiabilities at

Total

Financial liabilities by category

The accounting policies for financial instruments have been applied to the line items below: 2017

amortised cost 5,521 ,110

Loans from group companies Loans from shareholders Trade and other payables Bank overdraft

13,265,844 19,460,480 7,696,686

5,521 ,110 13,265,844

19,460,480 7,696,686

45,94/.,120 45,9U,120 2016 Financial

Total

liabilities at amortised cost Loans from group companies Loans from shareholders Other financial liabilities Trade and other payables Bank overdraft

17.

10,620 ,773 13,131 ,068

1,035,445 20,018,907 10,728,581

55,534,774

Trade and other payables 14,776,145 27,646,215

Trade payables VAT

3,206,096 30,763,274

Accrued leave pay Accrued expense Accrued audit fees

76,391

,731

15,108,776 20,055,531

2,837,455 15,725,752 (103) 53,727,411

Fair value of trade and other payables The fair value of trade and other payables approximates carrying value due to the short term nature thereof.

18.

Revenue

Rendering of

19.

services

256,789,489

269,413,538

Cost of sales 61,046,545

Sale of goods Rendering of services

20. Other operating

2,819,808

62,440,440 5,851 ,746

income

Other rental income Other recoveries Other income

35 - 19 July 2018 - 01 :31 PM

669,1 89

644,722 404,987 694,037

283,446 4,081,728

1,743,746

5,034,363

ll 'l

307

Annexure M2 Draft Financial Statements of LPHH for 31, Dec 2017 - Page37 of 4L

Louis Pasteur Hospital Holdings (Pty) Ltd (Registration numbe r 19921001 696/07) Annual Financial Statements for the year ended 31 December 2017

Notes to the Annual Financial Statements 2016

2017

Figures in Rand

21. Operating profit (loss) Operating loss for the year is stated after charging (crediting) the following, amongst others: Employee costs Salaries, wages, bonuses and other benefits Other short term costs

109,343,817 39,000

113,215,057 1,000

Total employee costs

109,382,817

113,216,057

Leases

Operating lease charges 59,109,644

Premises Equipment

54,452,070

328,134

223,350

59,332,994

54,780,204

Depreciation and amortisation Depreciation of property, plant and equipment Amortisation of intangible assets

4,109,431 5,125

Total depreciation and amortisation

4,114,556

22.

3,859,361

5,126

Investment income

lnterest income From investments in financial assets:

Other financial assets

157,492

From loans to group and other related parties: lnterest received - group companies

8,075,833

6,597,323

Total interest income

8,075,833

6,754,815

23.

Finance costs

Trade and other payables

109,450

,135,756

Bank overdraft Finance leases

712,439

1,837,741 771,550

Total finance costs

2,033,708

3,745,047

,211 ,819

24. Taxation Major components of the tax expense Deferred Originating and reversing temporary differences

3,776,588

Reconciliation of the tax expense Reconciliation between accounting profit and tax expense. Accounting loss Tax at the applicable tax rate ol28o/o (20'16:.28o/o)

(24,473,117)

(16,499 ,024)

(6,852,473)

(4,619,727)

No provision has been made for 2017 lax as the company has no taxable income 36 - 19 July 2018 - 01:31 PM

/'4

-fi

Annexure M2 Draft Financial Statements of LPHH for 31 Dec 2017 - Page 38 of 41

308

Louis Pasteur Hospita! Holdings (Pty) Ltd (Registration number 19921001 696/07) Annual Financial Statements for the year ended 31 December 2017

Notes to the Annual Financia! Statements 2017

Figures in Rand

2016

25. Gash used in operations (24,473,117)

Loss before taxation

(16,499 ,024)

Adjustments for: 4,114,556

Depreciation and amortisation lnterest income Finance costs Movements in operating lease assets and accruals Provision for tax Discounting

(8,075,833) 2,033,708 6,891 ,189

4,078,760 1,061 ,840

3,864,487 (6,597,323) 3,745,047

6,185,407 (3,579,522) (238,792)

Changes in working capital: (157,322)

Inventories

(49,043,189) 22,089,190

Trade and other receivables Trade and other payables

(63,734) (210,332) 1,878,569

(41,480,2181 (1 1,51 5,2171 26. Contingencies lnsurance Claim

A court case in respect of a claim for negligence to the amount of R4 million has been instituted against the company. An attorney has been appointed and is currently investigating the merits of the liability. Legal Dispute - Bonitas On 05 September 2012 there was a judgement against the proceeds of ceded policies to the company. The company policies in the amount of R90 million inclusive of interest

favour of Bonitas Medical Fund with regard to the to pay Bonitas Medical Fund the proceeds of the The company has appealed this order and has made The rescission hearing took place on 02 October 2013

was rescinded and set aside. Leave to appeal to the Court was granted on 28 February 2017 and the

to the Court during March 2018.

Suretyships and Guarantees The company has secured direct overdraft facilities of R7,5 million with Nedbank. These facilities are secured by a cession by Louis Pasteur Hospital Holdings (Pty) Ltd and any and all of its right in and to its debtors and unlimited Suretyships and Guarantees from Louis Pasteur Medical lnvestments Limited, Louis Pasteur lnvestments Limited. Securities include amounts of R10 million from Dr M Adam and R25 million from First Clinic Properties One Limited.

37 - 19 July 2018 - 01 :31 PM

/\$ {v'n

309

Annexure M2 Draft Financial Statements of LPHH for 31 Dec 20L7 - Page 39 of 41

Louis Pasteur Hospital Holdings (Pty) Ltd (Registration numbe r 19921001 696/07) Annual Financial Statements for the year ended 31 December 2017

Notes to the Annual Financial Statements 27. Related

2016

2017

Figures in Rand

parties

Relationships Ultimate holding company Holding company Fellow subsidiaries

First Clinic Holdings Limited Louis Pasteur Medical lnvestments Limited First Clinic Properties One Limited Sisenke lnvestments Limited Louis Pasteur lnvestments Limited Bonitas Medical Fund Rubicon Group (Pty) Ltd, Louis Pasteur Holdings (Pty) Ltd Dr M Adam, Dr AS Nkomo, Mr D Daka, Mr Lawrence Chetty

Shareholder Related parties Members of key management

Related party balances Loan accounts - Owing (to) by related parties Rubicon Group (Pty) Ltd Bonitas Medical Fund Louis Pasteur Medical lnvestments Limited First Clinic Properties One Limited Louis Pasteur Holdings (Pty) Ltd Related party transactions

lnterest paid to (received from) related parties First Clinic Properties One Limited Louis Pasteur Holdings (Pty) Ltd

Rent paid to (received from) related parties Louis Pasteur Holdings (Pty) Ltd / Louis Pasteur Sisenke lnvestments (Pty) Ltd Rubicon Group (Pty) Ltd

(641,909) (12,027,057) (1 ,1

(12,999,846)

33,787)

(1 ,131 ,222) 16,1 24,349

(4,879,203) 55,792,477

$ mited

Administration fees paid to (received from) related parties Louis Pasteur Holdings (Pty) Ltd / Louis Pasteur Medical lnvestments Limited Marketing fees paid to (received from) related parties Louis Pasteur Holdings (Pty) Ltd / Louis Pasteur Medical lnvestments Limited Rubicon Group (Pty) Ltd

51,659,700

(425,248) (4,132,776)

(2,770,679)

52,158,181

47,851 ,544

(3,826,644)

1,893,715

(78,109)

(162,093)

19,087,996 3,817,599

Purchase of drugs

28.

(10,620 ,773)

,046,545

12,073,569

4,202,714

,041,632

Risk management

38 - 19 July 2018 - 01:31 PM

/\$

14'p

Annexure M2 Draft Financial Statements of LPHH for 31 Dec 20L7 - Page 40 of 41

Louis Pasteur Hospital Holdings (Pty) Ltd (Registration numbe r 19921001 696/07) Annual Financial Statements for the year ended 31 December 2017

Notes to the Annua! Financial Statements 28.

2016

2017

Figures in Rand

Risk management (continued)

Financia! risk management The company's activities expose it to a variety of financial risks: market risk (including currency risk, fair value interest rate risk, cash flow interest rate risk and price risk), credit risk and liquidity risk.

The company's overall risk management program focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the company's financial performance. The company uses derivative financial instruments to hedge

certain risk exposures. Risk management is carried out by a central treasury department (company treasury) under policies approved by the board of directors. Company treasury identifies, evaluates and hedges financial risks in close co-operation with the company's operating units. The board of directors provides wriften principles for overall risk management, as well as written policies covering specific areas, such as foreign exchange risk, interest rate risk, credit risk, use of derivative financial instruments and non-derivative financial instruments, and investment of excess liquidity.

cover future commitments. The company manages liquidity

are monitored.

derivative financial liabilities into relevant maturity position to the contractual maturity date. The amounts flows. Balances due within 12 months equal their carrying

The table below analyses the company's financial groupings based on the remaining period at the

disclosed in the table are the contractual balances as the impact of discounting is not

year

At 31 December 2017 Loans from shareholders Loans from group companies Trade and other payables

Less than 1

Finance leases Bank overdraft Other fi nancial liabilities Other long-term employee benefits

(2 Oe7 776) (10 728 581) (1 035 445)

At 31 December 2016 Loans from shareholders Loans from group companies Trade and other payables

Less than 1

Finance leases Bank overdraft Other financial Iiabilities Other long-term employee benefits

(2 Oe7 776) (10 728 581) (1 035 445) (288 377)

Between 1 and 5 years

Over 5 years (14 131 068) (10 620 773)

(1e e75 328) (3 041 417)

(288 377)

year

Between 1 and 5 years

Over 5 years (14 131 068) (10 620 773)

(19 e75 328) (3 041 417)

39 - 19 July 2018 - 01 :31 PM

tjY ?

Annexure M2 Draft Financial Statements of LPHH for 31 Dec 2017 - Page

311

Louis Pasteur Hospital Holdings (Pty) Ltd (Registration number 19921001 696/07) Annual Financial Statements for the year ended 31 December 2017

Notes to the Annual Financial Statements 28.

2016

2017

Figures in Rand

Risk management (continued)

At 3't December 2017, if interest rates on Rand-denominated borrowings had been 0.1% higher/lower with all other variables held constant, post-tax profit for the year would have been R 29,'191 (2016: R 40,065) lower/higher, mainly as a result of higherflower interest expense on floating rate borrowings. Deposits and cash balances attrac{ interest at a rate linked to the prime rate. The company policy is to manage interest rate risk so the fluctuations in variable rates do not have material impact on profit or loss.

Cash flow interest rate risk Financia! instrument Loans to group companies Overdraft facilities used Finance Leases Bank balances

Due in less

rate 10.25 % 10.25 % 17.01 %

than a year

10.25 %

-Md w& w %.e

Fair value interest rate risk

to Due after five years years 407,479

Due in one two

(7,696,686) (1

,373,096)

(2,229,554)

39,746

sqP

@" ## #

Financial instrument

Current interest

ffi

Current interest Due after five

rate

8.00

Other financia! assets

years 55,792,477

Credit risk Credit risk is managed on a group basis. Credit risk consists mainly of cash deposits, cash equivalents, derivative financial instruments and trade debtors. The company only deposits cash with major banks with high quality credit standing and limits exposure to any one counter-party.

Trade receivables comprise a widespread customer base. Management evaluated credit risk relating to customers on an ongoing basis. lf customers are independently rated, these ratings are used. Othenrvise, if there is no independent rating, risk control assesses the credit quality of the customer, taking into account its financial position, past experience and other factors. lndividual risk limits are set based on internal or external ratings in accordance with limits set by the board. The utilisation of credit limits is regularly monitored. Sales to retail customers are settled in cash or using major credit cards. Credit guarantee insurance is purchased when deemed appropriate. Financial assets exposed to credit risk at year end were as follows: 2017 33,264,695

Financial instrument Trade and other receivables Cash and cash equivalents Loans to group companies

29.

39,746 407,479

2016 36,240,759

24,866 17,051 ,705

Events after the reporting period

The hospital has approval to construct wards with 84 additional beds. The construction is in progress and the hospital has applied for additional finance to fund this project.

40 - 19 July 2018 - 01 :31 PM

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Annexure M2 Extract from Draft Financial Statements of LPHH for 3L Dec 2017 - Page 1 of

Louis Pasteur Hospital Holdings (Pty) Ltd (Registration number 19921001 696/07) Annual Financial Statements for the year ended 31 December 2017

Notes to the Annual Financial Statements 4.

2016

2017

Figures in Rand

lntangible assets 2016

2017 Cost / Valuation

Computer software

Accumulated Carryingvalue amortisation

39,620

(34,493)

5,127

Cost / Valuation

Accumulated Carrying value amortisation

39,620

(39,620)

Reconciliation of intangible assets - 2017 Opening balance

Difference

Amortisation (5,126)

10,253

Computer softrruare, other

Tota! 5,127

Reconciliation of intangible assets - 2016 Opening balance 15,380

Computer software, other

Difference

Amortisation

(10,253)

Total

(5,127)

Loans to (from) group companies

Associates Rubicon Group (Pty) Ltd The loan is unsecured, interest free and has no fixed terms

(4,783,620)

(10,620 ,773)

(2,486,394)

15,691,686

Fellow subsidiaries First Clinic Properties One Limited The loan is unsecured, bears interest at the prime lending rate and has no fixed term of repayment.

15,691,686

Non-current assets Non-current Iiabilities

(7,270,014) (7

,270,014)

(10,620 ,773)

5,070,913

Credit quality of Ioans to group companies The credit quality of loans to group companies that are neither past due nor impaired can be assessed by reference to external credit ratings (if available) or to historical information about counterparty default rates:

Credit rating High

16,1

24,349

16,1

24,349

Fair value of loans to and from group companies Loans to group companies Loans from group companies

(5,521 ,1 10)

29 - 19 July 2018 - 01 :31 PM

*I-.

(10,620 ,773)

/ \A 11'P

Annexure N - Confirmatory Affidavit - Yaseera Amod - Page 1 of 11

IN THE HIGH COURT OF SOUTH AFRICA

GAUTENG DIVISION, PRETORIA Case No:

ln the matter between:

RUBTCON GROUP (PTY) LTD

Applicant

and

ETIENNE JACQUES NAUDE (Business Rescue Practitioner of Second Respondent)

LOUIS PASTEUR HOSPITAL HOLDINGS (PTY) LTMITED BONITAS MEDICAL FUND SOUTH AFRICAN REVENUE SERVICES

First Respondent

Second Respondent Third Respondent Fourth Respondent

DENOSA

Fifth Respondent

MASTER OF THE HIGH COURT

Sixth Respondent

THE COMPANIES AND INTELLECTUAL PROPERTY COMMI$SION

THE CREDITORS OF THE SECOND RESPONDENT

Seventh Respondent

Eighth Respondent Ninth Respondent

HOSPERSA

CON FI RMATORY AFFI DAVIT

l, the undersigned,

YASEERA AMOD:

Annexure N - Confirmatory Affidavit - Yaseera Amod -

Pag

e 2 of

314 2

do hereby make oath and state as follows

DEPONENT AND AUTHORITY

am a major female administration manager of the applicant that

has its principal place of employment at Louis Pasteur Building, 374 Francis Baard Street, Pretoria.

The facts herein contained are within my own

personal

knowtedge and belief, save where stated otherwise or appears

different from the context hereof, and are 1o the best of my knowledge, both true and conect.

Where I make legal submissions, I do so on the advice of the applicant's legal representatives which I believe to be correct.

I have read and confirm as correct the contents of the draft affidavit of Tendani Muligwe in as far as they relate to me and to

issues within my knowledge.

I have been assured by the

applicants's attorney that should there be any changes to the draft founding affidavit before it is attested to by the deponent thereof my attention will be drawn thereto.

I was employed by the second respondent in 2011 and was transferred to the applicant during 2013. Subsequent to that,

left the employ of the applicant in 2015 and rejoined the second

(\,e

/*il T.

Annexure N - Confirmatory Affidavit - Yaseera Amod - Page 3 of 11

respondent in 2016 and thereafter I was again transferred to the

applicant in 20'!6. I have remained in the employ of the applicant since 2016.

The applicant and the second respondent have shared services comprising of inter alia the following: accounting and financial management, information technology infrastructure, salary and

payroll administration, leave adnrinistration, pension and retirernent benefits adrninistration and staff rneal facilities.

The applicant supplies the second respondent with medical supplies and performs support functions in relation to medical

supplies including in respect of invoicing patients for medical supplies consumed.

The applicant orders medical supplies primarily for consumption by patients of the second respondent with a small portion going

towards consumption by walk

customers. The second

respondent makes payments of the salaries of the employees of

the applicant on the applicant's behalf and performs shared services for the applicant.

Prior to the appointment of the first respondent as a business

rescue practitloner

of the second

respondent,

the second

respondent would invoice patients also for all medical supplies

J\ /-*

,a*

/.{}

f^NY*

Annexure N - Confirmatory Affidavit -Yaseera Amod - Page 4 of LL

consumed while at the hospital

10.

On a monthly basis a report would be compiled of all the supplies

made by the applicant to the wards of the hospital as well as of all the supplies to patients of the second respondent while they

are hospitalised. When a patient is released the patient may order prescribed medicine from the applicant or from another pharmacy. ln so far as the applicant would render medicine to such persons this is not billed to the second respondent but this kind of supply is treated as transactions of the applicant directly with the patients.

11.

All the records in respect of medical supplies consumed by patients of the second respondent are kept electronically by the

second respondent, as part of its performance of the shared services. The second respondent

is at all times aware of

amounts payable to the applicant in respect of medical supplies

as the relevant records are in its possession. The applicant's employees have access to these records.

12.

Prior to the commencement of business rescue the second respondent at all times was responsible to ensure that the applicant has the required cash flow in order to comply with its obligations, especially towards its suppliers.

/r'$ \

n.?

''-{

Annexure N - Confirmatory Affidavit - Yaseera Amod - Page 5 of 11

317 5

13.

The records generated to date indicate that the

second

respondent since rescue commencod has failed to pay all the

amounts payable

in respect of the period from June to

December 2018 for supplies rendered to it, including in respect of patients while in hospital. I have performed calculations which indicate that the total amount outstanding to date is no less than R14 59'l 546.08.

14.

The first respondent cannot say that he was not aware of the arrangement existing between the applicant and the second

respondent

as the second

respondent made substantial

payments in respect of amounts payable to the applicant during

the months of June, July and August 2018. From September 2018 and thereafter there was a drastic reduction in the amounts

paid by the second respondent. Following the removal of the

hospital manager

of the second respondent by the first

respondent he, during September 2018, took charge of the pharmacy, with the support of the pharmacist in charge, Ms

Maria Jacoba Aletta van Rensburg ("Ms Van Rensburg') and excluded me from meetings and decision making activities. I was called into a meeting and informed that Ms Van Rensburg is now in charge and that she will be the link between the applicant and

the second respondent. These instructions were given by Justin Adriaanse who is a member of the first respondent's team.

/.$ T.D 7A

Annexure N - Confirmatory Affidavit - Yaseera Amod - Page 6 of 11

15.

The first respondent thereafter arranged for new credit terms with the suppliers of the applicant UPD and MMED. UPD credit terms were changed from 30 days to 60 days. The applicant had

been procuring medical supplies ftom MMED albeit on a limited

basis. We were instructed to place all orders in respect of surgical supplies with MMED as from 1 September 2418. The first respondent also negotiated an increased credit facility of R

8 million with MMED. I have on several occasions raised the complaint that MMED is more expensive than the other suppliers

to Ms Van Rensburg, but she insisted that, despite that, supplies should be obtained from MMED. The applicant's account with MMED has been blocked with effect from 7 December 2A18 for non-payment. MMED has opened an account for the second respondent and is now supplying directly to it.

During the month of September 2018 the second respondent paid a minimal amount to Rubicon.

17.

MMED soon refused to make further supplies to the applicant

and the practitioner was then forced to allow the applicant to procure from the usual suppliers.

18.

Mr Tendani Muligwe, a director at the pharmacy forwarded a

letter requesting that all medical supplies other than emergency

supplies should be provided to the second respondent only on a

T r /rt

Annexure N - Confirmatory Affidavit - Yaseera Amod -

Pag

31 9

e 7 of LL

cash on delivery basis on 25 October 2018. Notwithstanding, Ms

Van Rensburg continued to order and provide all medical supplies to the second responded on credit. During October and

November 2018 the second respondent was still procuring medication ?om the applicant and paying some of the suppliers

on a cash on delivery basis despite refusal to comply with a similar request from the applicant.

ln December 2018, after Ms Van Rensburg was suspended on

7 December 2A18 by the directors of the applicant, I became aware that she was employed by the practitioner presumably

with the second respondent. I found out that she continued to instruct the suppliers of the applicant to deliver medical supplies

as if she was still in the employ of the applicant. However, she

directed them

make deliveries directly

to the

second

respondent, namely to the eight floor, instead of the pharmacy. I was also informed by one of the drivers that he was informed

by Ms Van Rensburg that the applicant was no longer

operation.

I then arranged for the products to be intercepted and diverted

to the applicant's premises. Ms Van Rensburg then substituted the address and company details of the applicant with that of the

second respondent causing the suppliers to deliver medical

supplies

to the

second respondent directly.

then

sent

,fq {"ra

\ft YA

320

Annexure N - Confirmatory Affidavit - Yaseera Amod - Page B of 11

communication$

to the suppliers informing them of

her

suspension and that she is not authorized to order medical supplies on behalf of the applicant as she has been suspended.

Ms Van Rensburg continues to order medical supplies on the account number of the respondent notwithstanding that she is

no longer employed with the applicant. This has occurred as recently as 20 December 20'18 when we received medical supplies marked for her attention.

22.

The second respondent has stopped providing some of the shared services from end of October 2018 other than the salaries. At the end of November 2018 the first respondent paid salaries to 13 of the 20 employees of the applicant. The second

respondent during and after October 2018 continued to order medicalsupplies on the account of the applicant notwithstanding termination of some of the shared services for the applicant on

the instructions of Ms Van Rensburg who was occupying the most senior position at the pharmacy and, in terms of the practitioner's instructions, took charge of the management of the pharmacy to my exclusion.

I further found out that during November 2018 the practitioner

had approached staff rnembers of the applicant to join a planned

new pharmacy. Rumours came to my knowledge which was to

i'e

321

Annexure N - Confirmatory Affidavit -Yaseera Amod - Page 9 of 11

I the effect that the first respondent was planning to set up a new pharmacy with the assistance of one of his friends who is a pharmacist.

24,

On 7

December 2018

I was mistakenly copied in

correspondence addressed by the first respordent to doctors

making use

of the facilities ol the second

respondent

communicating among others that the second respondent has partnered with a new pharmacy.

The second respondent is currently still ordering medication from the applicant and the applicant is still supplying medication

to the second respondent notwithstanding non'payment on the

part of the second respondent. I have been instructed by the directors of the applicant to allow such deliveries to continue despite that payment is not effected pending the outcome of the

application that the applicant intends to launch against the first and second respondents. Mr Tendani Muligwe said that we have

a moral obligation to continue to provide medical supplies to the Second Respondent.

Following Ms Van Rensburg's resignation another ernployee Marina Schrade walked out to work on the eigth floor with her. Before she walked out, on7 December 2A1B,l instructed Marina

Schrade to prepare the pharmacy'$ ca$h received from retail

|,(B

322

Annexure N - Confirmatory Atridavit - Yaseera Amod - Page 10 of 11

customers

for banking (an amount of

approximately R22

398.20). She was fully aware that since our shared services had

been suspended by the second respondent we were doing our

own banking in the pharmacy. She took the cash to an undisclosed location presumably to the eight floor for the second

respondent to deposit in a separate bank account. She did not inform me of her actions. When I inquired later that day she told me that upon instruction from Ms Van Rensburg she banked the

cash with the hospital banking clerk. I instructed her to get the cash back. She went to the hospital banking clerk and informed that the finance manager said that they cannot return the cash

and the instruclion to send the cash up was given to Ms Van

Rensburg by the first respondent who

is in charge.

The

banking clerk from the hospital then called me on Tuesday

December for me to send someone to collect the cash from

them. I asked her to deposit the cash into the applicant's bank account and provide me with proof thereof. The banking clerk

tells me on 21 December 2018 that she deposited it on the 13 December 2018.1 have still not received the proof of deposit.

27.

Recently one of the remaining 6 pharmacists employed with the

applicant has resigned.

I am not aware what her future

employment arrangements are, but understand that she is going

to Mpumalanga and is not going to join the first repondent's new

,il /...

t'0

323

Annexure N - Confirmatory Affidavit - Yaseera Amod - Page 11 of 11

pharmacy

DEPONENT

! certify that the deponent has acknowledged that s/he knows and understands the contents of this affidavit which was signed and sworn befOre me at \)(!',erx-\nVt

this the'>3, day of December

2018, and that the Regulations contained in Government Notice No. R1258 of 21 July 1972, as amended, and Government Notice No. R1648

of 19 August 1977, as amended, having been complied with.

+ COMMISSIONER OF OATHS

OFFICIAL CAPACITY AREA APPOINTED

Corr<r<==*o \ e

--{\ere-\ot\<?1-\r:

FULL STREET ADDRESS:

S.s.F

.1e\-\r+i -,rsq

f\$c-"'s-1"1

SCUTiJ AT:RICAN POLICE SERVICE KAN i ORO YA DIT LTT LERO

2018 -12- 23 V\./I[:RNABAUG SAPS i;4AP

i{Ont$A A AFR IK& UORilj,-{

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Annexure O - Letter by Applicants Attorneys dated 25 October 2018 - Page L of

324

il:

]\lANoNG PILANE l\z1tl]<oTEr>t I rlc. By Email

Business Rescue Practitioner 739 Blesbok Street Rietfontein NH

Mooikloof Pretoria East e-mail : sarie@enprok.co.za

for the attention of: Etienne Naude 25 October 2OI8

Dear Sir

BUSINESS RESCUE : LOU]S PASTEUR HOSPITAI HOIDIIIGS PROPRIETARY tlMlTED ("1P1{H'l

We refer to the abotrc business rescue and our previous corespondence.

We re'lterate our lnstrucfrons set out in our previous correspondence ln whlch we advlsed you that: 2.1. Rublcon Group Proprietary Limited's ("Rublcon'! obligations to lts suppllens are currently due and payable. The suppliers have suspended supply of medication to Rubicon arising from failure

to pay orrtstanding amounts. 2.2. The practitioner has unduly preferred allthe othertrade creditors in a similar position with Rubicon in making disproportionate and regular payments torards their indebtedness; 2.3.The total amount payable by LPHH to Rublcon as at 24 October 2018 is R 20 429 135 (twen$ million four hundred and trrenty-nine thousand one hundred and twenty-frve Rands) made up as

follows:

2.3.1. An amount of R 4 783 520

(four million seven hundred and elgttty-three six hundred and hrventy Rands) as at 31 December 2017. We note that this amount was not lncluded as part of Rubicorfs claim as the financial records for Rublcon were not

2.3.2.

finalised at the tlme of submlsslon of claims to the practitioner; An amount of R 9 022 764 (nind million twenty-two thousand seven hundred and sixty- four Rands) as at O7 June 2018; and

dncc::Aubreyii.nontu8(U0,T$@t[]ldddlBALll,Ll"i,

Addrur: 164l(.drerlnc Strtlt Plnmlll Frm, Blodt Td : 011 26il 0113/ O156 Fer r 011 252 0411

tT.x)

(Wttrl

Ground Hoor, Sandown,

stndto[

21!15

Em.ll: Utremrnongpllanclncror.

Annexure 0 - Letter by Applicants Attorneys dated 25 October 2018 - PageZ of

2.?.1.

32s

An amount of R 6 622 ZSf (six million six hundred and trrenty-trro thousand seven hundred and fifty-one Randsl in respect of post buslness rescue obllgatlons of LPHH to Rubicon.

Our instructions are to and we hereby demand lmmediate payment of an amount of R 6 62275L lsix mllllon slx hundred and twenty-two thousand seven hundred and fifty-one Rands) representlng amounts payable in respect of post business rescue obligations of LPHH to Rublcon to ensure that

the pharmacy meets its ongoing obligations. To the extent you are not in a position to make payment of the entire amount kindly provlde a plan acceptable to Rubicon on how this amount will be paid. 4.

Future supply of medication and equipment to IPHH is hereby suspended with immedlate effect until the amount of R 5 622751(six million six hundred and twenty-two thousand seven hundred and fiftpone Rands| in respect of post buslness rcscue obllgatlons has been paid. Rubicon will continue to supply emeryency and lntensive care related medication and equipment to LPHH as and when required.

All firture supply of medication and equipment wlll be made on a cash basis to LPHH.

Rubicon requires acceptable security in respect of all outstanding amounts to date.

You are advised to refraln from prwldlng any instructions to the staff or interfering with the management and operations of Rubicon. As a business rescue practitloner of IPHH there ls no lega! basis foryou to interfere in the management and operatlons of Rublcon.

Should you fall to make payment of the amount set out above and to mmply wlth the requests set out in this letter, wE are instructed to make an applicatlon on the grounds set out in Sections 13O and lil9 of the Companies Act.

Your failure to make tlmeous payments to Rubicon will continue to compromise the care provided by I,PHH to its patients. tt ls therefore important that the situation be remedied as soon as possible to avoid any further compromise of the hospital's seMces.

10.

Kindly advise when the Practitioner will be In a posltlon to effect payrnent sf the abore amount

Rublcon.

Yours

Dil,ectml Aubrery Manong LLB (ULr, Tshepang MdoEdl BA,, LLB, LLM tfax) (Wits) Addrcrr: 1Bl Katherine Street, Pinmill Fann, Block F, Ground Floor, Sandown, Sandton, 2196 Tel : OLL2620113 1fJ456

Fax: 0112620439 Ema il : tm@manongp ilaneinc.co.za

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Urgent Application for Removal of Etienne Jacques Naude

Articles inside

Cunning and Corrupt White Lawyer Killing Black Pharmacy

Urgent Application to remove E J Naude as BRP