INTERNATIONAL HEALTHCARE TECHNOLOGY NETWORK LIMITED PROSPECTUS

Transcription

1 INTERNATIONAL HEALTHCARE TECHNOLOGY NETWORK LIMITED (Incorporated in the Republic of South Africa) (Registration number 97/02721/06) ( IHTN Ltd ) PROSPECTUS relating to - an offer for sale by way of a Preferential Offer of Ordinary Shares of 1 (one) cent each in the ordinary share capital of IHTN Ltd at a purchase price of 1 (one) cent per Ordinary Share; - an offer for sale by way of Private Placing of Ordinary Shares of 1 (one) cent each in the ordinary share capital of IHTN Ltd at a purchase price of 100 (one hundred) cents per Share; - an offer for subscription by way of Private Placing of unsecured, subordinated, variable-rate Debentures at an issue price of 900 (nine hundred) cents per Debenture. It is a condition of the sale of the Shares offered in terms of the Private Placing that no Shares may be purchased unless an equal number of Debentures offered in terms of the Private Placing are simultaneously subscribed for, and similarly no Debentures may be subscribed for unless an equal number of Shares are simultaneously purchased. Offer opens at 08h00 on 25 July 1997 Offer closes at 13h00 on 20 October 1997 At the closing of the Offer, the share capital of IHTN Ltd will comprise authorised Ordinary Shares and issued Ordinary Shares of 1 (one) cent each. The directors, whose names are given in paragraph 4.1 of this Prospectus, collectively and individually accept full responsibility for the accuracy of the information given in this Prospectus and certify that, to the best of their knowledge and belief, there are no other facts, the omission of which would make any statement false or misleading and that they have made all reasonable enquiries to ascertain such facts and that the Prospectus contains all information required by law. The Registrar of Companies has scrutinised the information disclosed in this Prospectus. The information disclosed complies with statutory requirements. The Registrar of Companies does not express a view on the risk for investors or the price of the Shares. However, the attention of the public is drawn to the fact that the Shares on offer are unlisted and should be considered as a risk investment. Investors themselves are therefore on risk as unlisted Shares are not readily marketable and should the Company fail, this may result in the loss of the investment to the investor. An English copy of this Prospectus, accompanied by the documents referred to in paragraph 15 of this Prospectus, was registered by the South African Registrar of Companies on 25 July 1997 in terms of section 155(1) of the Companies Act, 1973 (Act 61 of 1973), as amended. Ernst & Young, Chartered Accountants (South Africa) whose reports are included in this Prospectus, have given and have not, prior to registration, withdrawn their written consent to the inclusion of their reports in the form and context in which they appear. Date of issue : 25 July

2 CORPORATE INFORMATION [1(a), 3, 4 and 5] Name and registered office [1(a)] International Healthcare Technology Network Limited (Registration number 97/02721/06) 81 Chapel Street PIETERMARITZBURG 3201 (P O Box 3461, PIETERMARITZBURG, 3200) Company Secretary [5] Phillip Guy McLaughlin Pansegrouw B.Com B.Compt (Hons) H. Dip Tax Law CA (SA) 81 Chapel Street PIETERMARITZBURG 3201 (P O Box 3461, PIETERMARITZBURG, 3200) Attorneys [4] Webber Wentzel Bowens 60 Main Street JOHANNESBURG (P O Box 61771, MARSHALLTOWN, 2107) Reporting Accountants and Auditors [3] Ernst & Young 163 Loop Street PIETERMARITZBURG 3201 (P O Box 574, PIETERMARITZBURG, 3200) Commercial Bank [4] Boland Bank PKS Limited 183 Church Street PIETERMARITZBURG 3201 (P O Box 1280, PIETERMARITZBURG, 3200) Transfer Secretary [5] Mercantile Registrars Ltd 6th Floor Mercantile Building 94 President Street JOHANNESBURG 2

3 CONTENTS PAGE Corporate information... Opposite Contents...3 Salient features...4 Prospectus Definitions Incorporation and history Nature of business and prospects Directors and management Profit forecast and dividend policy Assets, liabilities and other financial information Share and Debenture capital Options or preferential rights in respect of Ordinary Shares to be sold Material contracts Purposes of the Offer Particulars of the Offer Other information Directors responsibility Copies of the Prospectus Documents available for inspection...29 Appendix (A) - Appointment, remuneration and borrowing powers of directors...30 Appendix (B) - Independent reporting accountants report on IHTN Ltd...31 Appendix (C) - Projected balance sheet and notes thereto...32 Appendix (D) - Cash flow projection, 1997; Appendix (E) - Summarised and Detailed Income Statement projection...38 Appendix (F) - Reporting Accountants confirmation that the issue complies with Notice No of Government Gazette, No Appendix (G) - The Sellers...43 Appendix (H) - Letter of quotation from Mercantile Registrars Limited...44 Application Forms... Attached 3

4 SALIENT FEATURES The summary contains the salient features of the Offer, as more fully detailed in this Prospectus, which should be read in its entirety for a full appreciation thereof. The definitions in this Prospectus also apply mutatis mutandis to these salient features. 1. NATURE OF BUSINESS IHTN Ltd is a company which has been born out of the crisis currently being experienced in the healthcare financing industry. IHTN Ltd s existence emerges from the urgent need to find a collaborative solution which involves all of the Role-Players. The healthcare industry is presently divided, with Medical and Allied Professionals being substantially excluded from the financial decision-making process. Such Medical and Allied Professionals have a vital role in ensuring that the healthcare rand is apportioned and utilised correctly and is preserved for its intended use i.e. patient care. This initiative, for the first time, will allow the Medical and Allied Professionals to regain control of their own industry. IHTN Ltd intends to develop and ultimately utilise one of the largest information technology networks in Africa. IBM has entered into a contract with IHTN Ltd in terms of which, inter alia, it will develop the Hippocrates Software and install the Intranet by September The System aims to electronically facilitate the following functions : confirmation that a patient is a member of a medical aid scheme confirmation that the patient is a paid-up member of a medical aid scheme confirmation of benefits (degree of medical cover) submission of claims payment of claims within 120 hours, provided that the medical aid scheme concerned has the necessary funds confirmation of payment automatic bank and medical aid scheme payment reconciliations the generation of data which will be used for peer review IHTN Ltd intends to electronically link all participating medical aid schemes to the System, which will facilitate the electronic scoring, assessing and processing of claims. It is anticipated that the System will also be capable of delivering claims electronically on an EDI basis, from Suppliers of Service to non-participating medical aid schemes. Should such schemes be unable to accept such claims electronically, IHTN Ltd shall deliver the printed-out copies of such claims to them. 2. PARTICULARS OF THE OFFER 2.1 The total funds to be raised from the Offer are expected to be R , of which R will accrue to IHTN Ltd, being the amount raised in respect of the Debentures offered for subscription in terms of the Private Placing. The balance of the amount raised will accrue to the Sellers of the Shares offered for sale in terms of the Private Placing and the Shares offered for sale in terms of the Preferential Offer. The Sellers have agreed to advance such balance as and when they receive it to n-able Holdings (Pty) Ltd on loan account. n-able Holdings (Pty) Ltd, as and when it receives it from the Sellers, will forthwith advance such balance to IHTN Ltd on loan account. 2.2 Preferential Offer Offer price per Ordinary Share 1 cent Number of Ordinary Shares offered for sale Total capital to be raised by Preferential Offer R Private Placing Sale of Shares Offer price per Ordinary Share 100 cents Number of Ordinary Shares offered for sale

5 2.3.2 Subscription for Debentures Offer price per Debenture 900 cents Number of Debentures offered for subscription Total capital to be raised by Private Placing Total capital to be raised by offer PURPOSES OF THE OFFER The main purposes of the Offer are : to raise the capital required to facilitate the financing of computer hardware and the development of the Hippocrates Software, approximately R of which capital will be required within the first two years in which the Company is operational; to enable Suppliers of Service to acquire substantial ownership of the organisation and its valuable data base; to afford Medical and Allied Professionals the opportunity to participate in the growth of IHTN Ltd; to create opportunities for the generation of revenue from alternative sources (such as sales of statistical and other data); to enhance investor and general public awareness of the existence of the System and its benefits; to create an effective support structure for the various professional bodies which regulate Medical and Allied Professionals by way of peer review procedures, in an effort to eradicate undesirable practices. The proceeds of the Offer will be utilised to partially repay contract borrowings (including the amounts owing to IBM) of approximately R and to fund initial working capital of approximately R The balance of the proceeds, if any, will be utilised to provide resources for the ongoing expansion and development of the System. 4. PREFERENTIAL OFFEREES/PRIVATE PLACEES Ordinary Shares will be offered to n-able Holdings (Pty) Ltd at their par value of 1 (one) cent each Ordinary Shares will be offered to the IPAs/PNOs at their par value of 1 (one) cent each Ordinary Shares will be offered to Medical and Allied Professionals at an offer price of 100 (one hundred) cents each, together with unsecured, subordinated, variable-rate Debentures at an offer price of 900 (nine hundred) cents each. 4.4 It is a condition of the sale of the Shares offered in terms of the Private Placing that no Shares may be purchased from the Sellers unless an equal number of Debentures are simultaneously subscribed for, and similarly no Debentures may be subscribed for unless an equal number of Shares are simultaneously purchased from the Sellers. 5. KEY FINANCIAL INFORMATION 5.1 Estimated Earnings Earnings per Ordinary Share 22 cents Earnings yield on subscription price 22 % 5.2 Estimated Dividends Dividends per Ordinary Share 7 cents Dividend yield on subscription price 7 % Dividend cover (times) 3 6. IMPORTANT DATES AND TIMES Offer opens at 08h00 on 25 July 1997 Offer closes at 13h00 on 20 October 1997 Unless election has been made on the relevant application form to collect Share and Debenture certificates, Share and Debenture certificates will be mailed to the successful applicants on or about 27 October

6 INTERNATIONAL HEALTHCARE TECHNOLOGY NETWORK LIMITED (Incorporated in the Republic of South Africa) (Registration number 97/02721/06) ( IHTN Ltd ) PROSPECTUS relating to - an offer for sale by way of a Preferential Offer of Ordinary Shares of 1 (one) cent each in the ordinary share capital of IHTN Ltd at a purchase price of 1 (one) cent per Ordinary Share; - an offer for sale by way of Private Placing of Ordinary Shares of 1 (one) cent each in the ordinary share capital of IHTN Ltd at a purchase price of 100 cents per Share - an offer for subscription by way of Private Placing of unsecured, subordinated, variable-rate Debentures at an issue price of 900 (nine hundred) cents per Debenture. It is a condition of the sale of the Shares offered in terms of the Private Placing that no Shares may be purchased unless an equal number of Debentures offered in terms of the Private Placing are simultaneously subscribed for, and similarly no Debentures may be subscribed for unless an equal number of Shares are simultaneously purchased. This Prospectus is issued in compliance with sections 145(1) and 148(1)(a) of the Act. The relevant number of each applicable section of Schedule 3 to the Act is given in parentheses after the appropriate heading or sub-heading of the Prospectus. 6

7 1. DEFINITIONS In this Prospectus and the appendices hereto, unless the context indicates otherwise, reference to the singular shall include the plural and vice versa, words denoting one gender include others, expressions denoting natural persons include juristic persons and associations of persons, and the words in the first column have the meanings stated opposite them in the second column, as follows : the Act Boland Bank PKS Limited Debenture EDI Hippocrates Software the Companies Act, 1973 (Act 61 of 1973), as amended; Boland Bank PKS Limited (Registration number 51/00847/06), which is a public company listed on the JSE; unsecured, subordinated, variable-rate Debenture to be issued by IHTN Ltd at 900 cents per Debenture; electronic data interchange; computer program which will electronically facilitate communication between all Suppliers, medical aid schemes and employers; IBM IBM South Africa (Pty) Limited (Registration number 52/00308/07); IHTN Ltd or the Company IPA or PNO Medical and Allied Professionals or Suppliers of Service or Suppliers n-able the Network or Intranet the Offer Ordinary Shares or Shares the Preferential Offer International Healthcare Technology Network Limited (Registration number 97/02721/06); Independent Practitioner Association or Professional Network Organisation - discipline-specific associations or organisations, the members of which are Medical and Allied Professionals, as determined by the directors in their sole and absolute discretion; all persons involved in and associated with the provision of healthcare including, inter alia, persons who are registered with a recognised professional body including doctors, dentists, pharmacists, paramedics, private hospitals, homeopaths and chiropractors, as determined by the directors in their sole and absolute discretion; n-able Holdings (Pty) Limited (Registration number 97/05456/07) - the company representing the persons responsible for the design and implementation of the Network; the technology intended to be utilised by IHTN Ltd to electronically facilitate the linkage of Medical and Allied Professionals, medical aid schemes and employers; collectively, the Preferential Offer and the Private Placing; Ordinary Shares of 1 cent each in the share capital of IHTN Ltd; the Offer to n-able Holdings (Pty) Ltd and the IPAs and/or PNOs to purchase Ordinary Shares at an issue price of 1 cent per Share; the Private Placing the Offer to Medical and Allied Professionals to purchase Ordinary Shares at an issue price of 100 cents per Share, together with the linked obligation to subscribe for Debentures at an issue price of 900 cents per Debenture; the Prime Rate Prospectus Role-Players the Sellers the System the publicly quoted basic rate per annum, ruling from time to time, at which Boland Bank PKS Limited lends on overdraft; this Prospectus, the appendices and the application forms enclosed herewith; Medical and Allied Professionals; medical aid schemes; employers and patients; the persons set out in Appendix (G) of this Prospectus who collectively own Ordinary Shares of 1 (one) cent each, being the entire issued share capital of IHTN Ltd, represented by IHTN Ltd; the Hippocrates Software operating through the Intranet. 7

8 2. INCORPORATION AND HISTORY [1(a); 6(a)(i) and 6(a)(iv)] 2.1 Incorporation IHTN Ltd was incorporated in the Republic of South Africa on 26 February 1997 under the name Tradefirst 47 (Proprietary) Limited The name of the Company was changed to International Healthcare Technology Network Limited on 3 April IHTN Ltd was converted into a public company on 3 April History IHTN Ltd is a company which was born out of the crisis currently being experienced in the healthcare financing industry. IHTN Ltd s existence emerges from an intention to find a collaborative solution to such crisis which involves all of the Role-Players. The healthcare industry is presently divided, with Medical and Allied Professionals being substantially excluded from the financial decision making process. Such Medical and Allied Professionals have a vital role in ensuring that the healthcare rand is apportioned and utilised correctly, and is preserved for its intended use i.e. patient care. This initiative, for the first time, is intended to allow the Medical and Allied Professionals to regain control of their own industry. In addition, the stated expectation and policy of the new South African Central Government is that all employed persons should receive employer-sponsored healthcare. It is estimated that less than half of employed persons in South Africa presently enjoy medical cover, and employers will need to consider the most affordable way of fulfilling this requirement. An increasing number of employers are therefore being forced to seek the support of Medical and Allied Professionals, who are then being compelled to consider both their own economic interests and their responsibilities to their patients. If one considers : the metamorphosis and changing dynamics experienced in healthcare generally; the financial crisis in which the industry currently finds itself; the interest and entry of large life assurers and other commercial organisations into the market; the conglomeration of powerful employer/patient clusters; and the legislative changes being contemplated by government; it is clear that significant opportunity exists for the provision of a comprehensive service which will address each of these developments, as well as enhance the efficiency and financial credibility of the industry as a whole. IHTN Ltd is committed to the transformation of a failing industry into a highly profitable and efficient one by restoring control thereof to Medical and Allied Professionals. 8

9 3. NATURE OF BUSINESS AND PROSPECTS 3.1 Nature of business [6(b)] IHTN Ltd intends to develop and ultimately utilise one of the largest information technology networks in Africa. IBM has entered into a contract with IHTN in terms of which, inter alia, it will develop the Hippocrates Software and install the Intranet by September The System aims to electronically facilitate the following functions : confirmation that a patient is a member of a medical aid scheme confirmation that the patient is a paid up member of a medical aid scheme confirmation of benefits (degree of medical cover) submission of claims payment of the claims within 120 hours, provided that the medical aid scheme concerned has the necessary funds confirmation of payment automatic bank and medical aid scheme payment reconciliations the generation of data which will be used for peer review It is intended that all participating medical aid schemes will be electronically linked to the System, which will facilitate the electronic scoring, assessing and processing of claims. It is anticipated that the System will also be capable of delivering claims electronically on an EDI basis, from Suppliers of Service to non-participating medical aid schemes. Should such schemes be unable to accept such claims electronically, IHTN Ltd shall deliver the printed-out copies of such claims to them. The resultant benefits are anticipated to be : a substantial reduction in Supplier over-servicing and abuse; significant cost savings to medical aid schemes, which will ultimately benefit their members by way of static or even reduced contributions; the regaining by Medical and Allied Professionals of the authority to review, cost and control their professional activities; the assurance to medical aid schemes and patients that all participating Suppliers of Service are accredited. IHTN Ltd also intends to contribute towards the operating costs of professional bodies which regulate Medical and Allied Professionals by way of peer review procedures, in an effort to eradicate undesirable practices. It is envisaged that the 34 existing PNOs will elect one representative association by December 1997, the primary function of which will be to regulate the activities of the medical profession. The name and constitution of such association is yet to be determined. The success of the PNOs and of such association will be enhanced by access to a substantial database capable of supplying information relating to a statistically significant sample group, which will be driven by the use of established codes relevant to each discipline, such as CPT4, ICD10, NAPPI. Practitioners will be able to provide cost-effective service by using outcome analyses prompting the use of acceptable clinical guidelines. In summary, IHTN Ltd, which intends to be owned and driven by Medical and Allied Professionals, aims to effectively bridge the existing gap between : the Supplier of Service and the patient the Supplier of Service and the medical aid scheme the medical aid scheme and the patient the employer and the medical aid scheme IHTN Ltd also aims to provide solutions in respect of the patients needs, including : comprehensive cover affordable costs freedom of choice the Suppliers needs, including : a reasonable tariff simple business processes simple claims submission processes rapid payment of claims (120 hours) assumption of reasonable risk reasonable clinical independence acceptable specific peer review 9

10 the employers needs, including : cost effective healthcare a satisfied work force reasonable cash flow control efficient service from the medical aid scheme, and the medical aid schemes needs, including : electronic claims assessing vastly improved service levels reduction in administrative costs elimination of fraudulent claims vastly improved financial viability significantly improved customer relationships significantly improved service provider relationships improved competitiveness. 3.2 Details of immovable property owned or leased [6(c)] No immovable property is owned by IHTN Ltd Premises, which are being utilised as office accommodation, are being leased by the Company at the following addresses : Redlands Park Estate 1 George MacFarlane Road Wembley PIETERMARITZBURG 3201 The area of this office accommodation is 480 square metres. The lease expires in December Chapel Street, PIETERMARITZBURG Prospects [6(i)] The area of this office accommodation is approximately square metres. This lease expires in May 2001, and provides for an option to renew for a further period of 5 years. There is no doubt that economic, political and social changes will place enormous pressure on healthcare delivery in this country. Government will, in all likelihood, require employer-sponsored healthcare. This will substantially increase medical aid scheme enrolment, as a large percentage of employees currently have little or no healthcare cover. Employers will therefore be seeking both affordable healthcare solutions and a system which promotes efficiency, discourages abuse and provides exceptional service. It is anticipated by the directors of IHTN Ltd that the Hippocrates Software and the Network, being developed by IHTN Ltd in conjunction with IBM, will meet all of these requirements, reduce the costs incurred by Medical and Allied Professionals and increase the coverage of the healthcare rand. 10

11 4. DIRECTORS AND MANAGEMENT 4.1 Directors [2(a)] The full names, nationalities, addresses and occupations of the directors of IHTN Ltd are set out below : Designation Name and Nationality Address Occupation Managing Director Dr Iain Ross Barton (32) South African 3 Laddswood Lodge 5 Winstead Road Hilton 3245 Medical Practitioner Financial Director Phillip Guy McLaughlin Pansegrouw (34) South African 5 Amy Wilson Drive Winterskloof Hilton 3245 Chartered Accountant Financial Director Marketing Director Gregory Bernard Garson (43) South African 14 Avenue Picardie Constantia Cape Town 8001 Healthcare Broker, Medical Aid Administrator Director Operations and General Manager Hospital Product Development Dr Stephen Johan du Toit (47) South African 2 Page Place Winterskloof Hilton 3245 Medical Practitioner Director Human Resources Clive David Couperthwaite (45) South African 8 Dryden Road Hayfields Pietermaritzburg 3201 Counselling and Industrial Psychologist Director Information Technology Marius Jacobs (30) South African 34 Kenneth Road Oak Park Pietermaritzburg 3201 Information Technology Specialist Director Research and Product Development Robert Noel Jansen van Vuuren (44) South African 48 Groenekloof Road Hilton 3245 Healthcare Broker, Medical Aid Administrator The relevant business experience of the above directors is set out in paragraph Management The day-to-day operations of IHTN Ltd will be managed by the following senior executives : Dr Iain Ross Barton M.B.Ch.B. (UCT) D.Obst. (SA) (32) Managing Director Iain Barton graduated from the University of Cape Town in 1988 and after working in the United Kingdom, returned to Somerset Hospital in Cape Town, where he obtained his D.Obst. (SA) qualification in During the 5 years he spent in general practice in Somerset West, from 1992 to 1997, Iain Barton served as Chairman of the Hospital Committee of Hottentots Holland Hospital (1995 to 1997), General Practitioner Representative on the Hospital Committee of Mediclinic, Vergelegen (1996), and Executive of the General Practitioner s Independent Practitioner Association for Somerset West (1995 and 1996). Iain Barton sold his practice in February 1997 and joined IHTN Ltd as Managing Director in March Having been involved in the administrative side of the medical profession, Iain Barton has an intimate knowledge of developments in the medical industry and is ideally suited to lead the organisation. 11

12 4.2.2 Phillip Guy McLaughlin Pansegrouw B.Com B.Compt (Hons) H.Dip Tax Law CA (SA) (34) Financial Director After completing his studies on a part-time basis, Guy Pansegrouw qualified as a Chartered Accountant with Deloitte Haskins & Sells in Pietermaritzburg in Guy left the firm in July 1989 to take up a contract with the South African Revenue Service, where he became responsible for the management and control of the general sales tax and company audit inspectorate. He subsequently assumed responsibility for the implementation of value added tax in the province of KwaZulu-Natal early in On expiry of his contract in 1992, he was offered a senior position with Ernst & Young, where he was appointed as a corporate audit partner in April After three successful years in private practice, he resigned from the firm to pursue a career in commerce and industry. He joined Medilife Holdings (Pty) Ltd in April 1997 as Group Financial Director, and is a co-founder member of IHTN Ltd. Based on his experience, Guy Pansegrouw has developed significant forensic accounting, auditing, tax and project management skills, all of which suitably qualify him for the position as Financial Director of the Company Gregory Bernard Garson (43) Marketing Director Greg Garson has accumulated 24 years of experience with Southern Life Association Limited and Liberty Life Association of South Africa Limited in the financial services industry, specifically in the areas of lifeassurance and medical aid scheme administration. Greg Garson is a co-founder member of Medilife Administrators (Pty) Ltd (1991) and was appointed as Marketing Director of this company in the same year. He is also a founder member of the Medilife Holdings (Pty) Ltd Group, and was appointed Deputy Executive Chairman in December Greg Garson was appointed Marketing Director of IHTN Ltd in March Dr Stephen Johan du Toit M.B. Bch.D.O.H. (47) Director Operations and General Manager Hospital Product Development Steve du Toit qualified as a doctor at the University of the Witwatersrand Medical School in He joined the Anglo American Group in Consolidated Diamond Mines, assuming responsibility for the management of occupational health. Steve du Toit transferred to the Rio Tinto Zinc Phalaborwa operation in 1982, where he worked for a period of 12 years. He was appointed Chief Medical Officer at Phalaborwa and served on the Executive Committee of Northern Medical Aid Society. During this period, he was responsible for the investigations into alternative medical aid cover options which resulted in his exposure to the Medilife Medical Scheme product. Steve du Toit joined Medilife Medical Scheme in January 1995 as a Medical Consultant. He was then appointed Principal Officer of such scheme in January He relinquished this post after one year to investigate a new medical aid product, and joined Medilife Holdings (Pty) Ltd in December Steve du Toit is a co-founder member of IHTN Ltd Clive David Couperthwaite M.Sc. (Psych) (45) Director Human Resources Clive Couperthwaite obtained his B.Sc. Degree and graduated from the University of Natal in He completed his Higher Diploma in Education in 1974 (through Unisa) and his B.Ed Degree in 1976 and M.Sc.Degree in 1980 through the University of Natal. Clive Couperthwaite worked in the Natal Education Department at the University of Natal for 7 years, after which he practised as a private practitioner in the fields of counselling and industrial psychology for 8 years. During this period, he consulted on human resource development for a number of national organisations, and gained significant experience in the fields of technology based selection and recruitment systems. Clive Couperthwaite served as a mediator on the Independent Mediation Services South Africa (IMSSA) panel for 5 years, and was involved in more than 60 mediations and relationship-building initiatives. He also served as an executive of the Psychological Association of South Africa for 3 years, and was extensively involved in negotiations with the Representative Association of Medical Schemes on tariffs for psychological services. Clive Couperthwaite joined Medilife Holdings (Pty) Ltd in January 1997 and is a co-founder member of IHTN Ltd. 12

13 4.2.6 Marius Jacobs B.Sc. (Q.S.) (30) Director Information Technology Marius Jacobs completed his B.Sc. Degree at the University of Natal in 1990, and worked for the computer services division of the same University for a period of one year. He joined Medilife Administrators (Pty) Ltd in January 1992 as Information Technology Director, and was responsible for the design and development of the Medilife computer system. He was appointed Group Information Technology Director of Medilife Holdings (Pty) Ltd in December 1996, and is a co-founder member of IHTN Ltd Robert Noel Jansen van Vuuren (44) Director Research and Product Development Bob van Vuuren joined the life assurance industry in 1972 and has spent 24 years in the financial services sector of Norwich Life SA Limited and Liberty Life Association of South Africa Limited. He was one of the cofounder members of Medilife Administrators (Pty) Ltd in 1991, and was appointed Managing Director of this company in the same year. He is also a co-founder member of Medilife Holdings (Pty) Ltd and was appointed Executive Chairman of Medilife Holdings (Pty) Ltd in December Bob van Vuuren is a founder member of IHTN Ltd, and based on his vast experience in the industry and his intimate knowledge of the problems currently facing such industry, is eminently qualified to make a significant contribution to the well being of IHTN Ltd Johan Kruger H.D.E. (37) Special Projects and Logistics Manager Jimmy Kruger completed his Higher Diploma in Education at the University of Port Elizabeth in 1981, and taught in East London for 6 years. Jimmy joined the life assurance industry in 1989, and was one of the cofounder members of Medilife Administrators (Pty) Ltd in He was appointed as Financial Director of this company in the same year. Jimmy Kruger is a co-founder member of Medilife Holdings (Pty) Ltd, and was appointed to the board of directors in December He is also a co-founder member of IHTN Ltd. He is responsible for the management and co-ordination of all special projects and logistics and has displayed extraordinary entrepreneurial flair in this regard Hardy John Martin Dip.IS (37) Manager Information Technology Hardy Martin obtained his Information Systems Diploma through Van Zyl & Pritchard in He then worked for Infoplan as a systems engineer until Hardy Martin travelled abroad to the United States and worked as a consultant for Computer Consultancy Services, a Fortune 500 company, in New York. After returning to the Republic in 1991, he joined Q-Data Consulting where he worked until He then joined Medilife Administrators (Pty) Ltd as Marketing Director for the Information Technology division in Hardy Martin subsequently joined Medilife Holdings (Pty) Ltd in December 1996 and is a co-founder member of IHTN Ltd Dr Johannes Augustus Balt M.B.Ch.B; M.F.G.P. (SA) M.Fam.Med (44) Medical Adviser Jannie Balt qualified as a General Practitioner at the University of Orange Free State after obtaining his M.B.Ch.B in In 1993 he obtained his M.F.G.P. (SA) and M.Fam.Med qualifications. In 1981, he was appointed Head of Casualty Department at Northdale Hospital, in Pietermaritzburg. Later in 1981, he decided to go into private general practice, first in Sutherland and then Pietermaritzburg. Jannie Balt was a foundermember and was secretary of Med24 in Pietermaritzburg until He was also a founder-member of the Midlands Emergency and Trauma Forum in Pietermaritzburg, which was formed in October Jannie Balt has obtained the ACLS, ATLS and APLS certificates in emergency medicine. He sold his medical practice in 1997 and joined IHTN Ltd as Medical Adviser in April Appointment, remuneration and borrowing powers of directors [2(b); 2(c) and 2(e)] Extracts from the articles of association of IHTN Ltd relating to : the appointment and terms of office of directors; the remuneration of directors of IHTN Ltd which is set at R2 500 per director for the current year; and the borrowing powers of the directors of IHTN Ltd and the manner in which such borrowing powers may be varied, are set out in Appendix (A) to this Prospectus. 13

14 4.4 Directors Interests [17] At the date of this Prospectus, the directors of IHTN Ltd have the following beneficial interests in the share capital of IHTN Ltd: Name Shareholding Percentage Number of Shares Iain Ross Barton Phillip Guy McLauglin Pansegrouw Gregory Bernard Garson Dr Stephen Johan du Toit Clive David Couperthwaite Marius Jacobs Robert Noel Jansen van Vuuren Total After the Offer, the directors will hold, pro rata to their above shareholding, 58,4% of the Ordinary Shares of IHTN Ltd not accepted in terms of the Offer At the date of this Prospectus, the directors of IHTN Ltd have the following beneficial interests in the share capital of n-able : Name Shareholding Percentage Number of Shares Iain Ross Barton Phillip Guy McLauglin Pansegrouw Gregory Bernard Garson Dr Stephen Johan du Toit Clive David Couperthwaite Marius Jacobs Robert Noel Jansen van Vuuren Total At the close of the Offer, the directors will hold 47,59% of the shares in n-able Holdings (Pty) Ltd At the date of this Prospectus, the directors of IHTN Ltd have the following interests in material contracts: the directors of IHTN Ltd have, in their personal capacities as Sellers, signed an agreement with IHTN Ltd, in terms of which, inter alia, the Company is irrevocably authorised to sell such Shares on behalf of the Sellers, as disclosed in 9.4 below; the directors of IHTN Ltd will, after the Offer, collectively hold 47,59% of the Shares in n-able each in the percentages specified in 4.4.2,, which company shall receive a monthly royalty payment of 2% of the turnover of IHTN Ltd, from IHTN Ltd, in terms of the copyright assignment agreement between IHTN Ltd and n-able, as disclosed in below; the directors have, in their personal capacities, bound themselves to Boland Bank PKS Limited as sureties and co-principal debtors for the repayment of the overdraft facility granted to IHTN Ltd by Boland Bank PKS Limited, as disclosed in 9.8 below; the directors of IHTN Ltd, have in their personal capacities as Sellers, signed an agreement with n-able, in terms of which the directors have agreed to advance the proceeds of the Offer as and when they received such proceeds to n-able on loan account, as disclosed in 9.5 below. n-able has agreed, in terms of the agreement disclosed in 9.6 below, to advance such proceeds to IHTN Ltd on loan account as and when it receives such proceeds from the Sellers Save as provided for in none of the directors have any interest in any of the material contracts referred to in No payment has been made to any director as an inducement to become a director at any time Save as provided for in the directors of IHTN Ltd have and have had no direct or indirect beneficial interest in the promotion of IHTN Ltd nor in any property acquired by IHTN Ltd since its incorporation Save as provided for in the directors of IHTN Ltd have had no material interest in transactions entered into by IHTN Ltd since IHTN Ltd s incorporation and which remain in any respect outstanding or underperformed. 14

15 5. PROFIT FORECAST AND DIVIDEND POLICY 5.1 Independent reporting accountants report [25(1)(a), 25(2)(b)] The information set out below should be read in conjunction with the reporting accountants report on the profit forecast of IHTN Ltd, as set out in Appendix (B) The profit forecast is based on the assumptions that : the Offer will be fully subscribed; the initial number of subscribers to the System will be a minimum of 3000 Medical and Allied Professionals, which number will increase at a rate of 500 subscribers per month; the initial number of principal members of any medical aid scheme will be a minimum of principal members, which number will increase to principal members by 31 December 1998; IHTN Ltd will not be adversely affected by any changes in legislation; interest rates will not vary materially; the Rand/Dollar exchange rate will not vary materially; general economic conditions will not deteriorate; the rate of taxation will remain at 35%; the rate of value added tax will remain at 14%; Network equipment and all software related thereto will be depreciated over a period of five years; and computer equipment other than the Network equipment will be depreciated over a period of three years In most cases, estimates of expenditure are considered to be conservative. It is particularly difficult, for instance, to estimate the costs of promoting and marketing the product and service to be offered by IHTN Ltd, and the estimate of the directors of approximately R15 million for this purpose is regarded as more than prudent Cash flow information, for the period ending 31 December 1997 and the year ending 31 December 1998, is set out in Appendix (D). Based on the cash flow forecasts, it is anticipated that the Company will have sufficient cash reserves to cover debt-servicing costs of approximately R per annum, and to pay the anticipated dividend. 5.2 Profit forecast [6(f)] The directors of the Company forecast attributable earnings for the 15 month period ending 31 December 1998 to be R5,433 million, which is equivalent to 22 cents per ordinary share, based on the weighted average of Ordinary Shares in issue for the above period The sizeable increase in attributable profits from the 1997 financial period to the 1998 financial year arises from the fact that numerous set up costs, which will not recur in the 1998 financial year, will be incurred in the 1997 financial period. This is set out in Appendix (E). Furthermore, income will be earned for the entire twelve months of 1998, as opposed to only three months in Taxation South African normal taxation has been calculated using a rate of 35%, after accounting for expenses that are not deductible for tax purposes For the purposes of this calculation, the loss anticipated in the last three months of the 1997 financial period has been set off against the profits generated in the 1998 financial year, which results in an accumulated profit Notwithstanding 5.3.2, due to the tax allowances to which the Company is entitled, it is expected that the Company will derive no taxable income in the period to which the summarised and detailed income statements refer, as set out in Appendix (E), and accordingly no provision has been made for South African normal taxation therein. 15

16 5.4 Dividend Policy It is anticipated that a plough-back ratio of 66,7% will be applied. This means that a dividend amounting to 33,3% of the attributable earnings of IHTN Ltd for the 15 month period ending 31 December 1998 will be declared to shareholders This will amount to a dividend of approximately 7 cents per Share (after adjusting for STC at 12,5%), which constitutes an after-tax return of 7% based on the price paid for each Ordinary Share (100 cents per Share) Shareholders are likely, depending on the attributable earnings of the Company, to have recouped their initial investment on their Shares by way of dividend income in a period of approximately 7 to 10 years, based on a Share price of 100 cents. 5.5 Debentures No Debentures have been issued by the Company prior to registration of this Prospectus, and no Debentures other than those stipulated in this Prospectus are to be issued during the current financial year The Debentures to be issued in terms of this Prospectus are subordinated in favour of other creditors of the Company until the assets of the Company, fairly valued, exceed the liabilities thereof, and are unsecured and variable-rated The Debentures shall be repaid only after 5 years from the date of registration of the Prospectus have lapsed, in 3 equal installments at the end of December each year, the first of which installments shall be payable at the end of December 2002, and subsequent installments at the end of December of each successive year, provided that the Debentures shall be repayable in full, should the Company be liquidated or placed under judicial management The Debentures shall earn interest at a rate of ¼% above the Prime Rate, calculated and payable in arrear at the end of December each year. 5.6 Restrictions on the sale of shares and issue of Debentures offered in terms of the Private Placing Following the closing of the Offer, unless otherwise agreed by the directors of IHTN Ltd, should any shareholder wish to sell : any of his Shares purchased in terms of the Private Placing, he shall be obliged to simultaneously sell that proportion of the Debentures held by him which bears the same proportion to the total number of Debentures held by him, as the number of Shares which the shareholder intends to sell bears to the total number of Shares held by him; any of his Debentures subscribed for in terms of the Private Placing, he shall be obliged to sell that proportion of the Shares held by him which bears the same proportion to the total number of Shares held by him, as the number of Debentures which the shareholder intends to sell bears to the total number of Debentures held by him. 16

17 6. ASSETS, LIABILITIES AND OTHER FINANCIAL INFORMATION 6.1 Balance sheet [25(1)(a), 25(2)(a), 25(2)(b)] The Company has no subsidiary. As the Company was incorporated on 26 February 1997 it is not possible to give information regarding the profits or losses of IHTN Ltd in respect of the five financial years immediately preceding the issue of the Prospectus or in respect of any completed financial year. Similarly, as annual financial statements have never been prepared, it is not possible to give information regarding the assets and liabilities of IHTN Ltd at the last date to which annual financial statements of IHTN Ltd were made out A projected balance sheet and notes thereto are set out in Appendix (C). 6.2 Cash flow statement As the Company has not traded, a cash flow statement has not been provided A cash flow projection for 1997 and 1998 is, however, set out in Appendix (D). 6.3 Capital commitments, lease payments and contingent liabilities [6(e)(ii)] The capital commitments and lease payments of IHTN Ltd are set out in the cash flow projection in Appendix (D) IHTN Ltd has no contingent liabilities. 6.4 Advances, loan capital and borrowings [9] Other than: the Debentures, offered in terms of this Prospectus, which amount to R ; an agreement between n-able and IHTN Ltd in terms of which, inter alia, n-able will loan to IHTN Ltd all such proceeds of the Offer as and when such proceeds are received by it from the Sellers, which loan is unsecured, subordinated in favour of other creditors of IHTN Ltd and subject to interest at a rate of ¼% above the Prime Rate, calculated and payable in arrear at the end of December each year; an overdraft facility of a maximum amount of R granted by Boland Bank PKS Limited to IHTN Ltd, which overdraft facility is secured by the suretyship of each of the directors of IHTN Ltd and subject to interest at the Prime Rate; and an agreement between IHTN Ltd and the Sellers in terms of which, inter alia, the Sellers will loan to IHTN Ltd an amount not exceeding R , which loan is unsecured, subordinated in favour of other creditors and subject to interest at the Prime Rate. IHTN Ltd has neither made nor received any material loans. 6.5 Income Statement A summarised and detailed income statement projection is set out in Appendix (E). 6.6 Adequacy of capital [22] The directors of IHTN Ltd are of the opinion that, after the issue of Debentures at 900 cents per Debenture and receipt of the loan from n-able of such proceeds of the Offer as are received by the Sellers and advanced to n-able on loan account, sufficient capital and working capital will be available to the Company, as a going concern, to meet all anticipated requirements. 17

18 7. SHARE AND DEBENTURE CAPITAL [6(a)(iii); 8(a)] 7.1 Authorised and issued share capital and Debentures The authorised and issued share capital and Debentures of IHTN Ltd before and after the Offer, before payment of the expenses of the Offer will be : Authorised R Ordinary Shares of 1 (one) cent each Issued before the Offer Ordinary Shares of 1 (one) cent each Issued in terms of the Offer Debentures of 900 cents each After the Offer Ordinary Shares of 1 (one) cent each Debentures of 900 cents each Total Unissued shares in reserve after the Offer NIL 7.2 Rights attaching to Ordinary Shares In terms of Section 195 of the Act each member shall be entitled to that proportion of the total votes in the Company which the aggregate amount of the nominal value of the Shares held by him bears to the aggregate amount of the nominal value of all the Shares issued by the Company At any General Meeting of IHTN Ltd, every member present in person, or represented by proxy, shall have one vote on a show of hands, irrespective of the number of Shares he holds or represents, and on a poll, exercise the voting rights determined in accordance with Since the conversion of the Company from a private to a public company on 3 April 1997, Ordinary Shares of 1 (one) cent each, being the entire issued share capital of IHTN Ltd, were issued to and subscribed for by the Sellers, at an issue price of 1 (one) cent per Share. 7.4 None of the advisers set out on page 2 of this Prospectus hold any Shares in or have agreed to acquire any Shares in IHTN Ltd at the date of this Prospectus. 18

19 8. OPTIONS OR PREFERENTIAL RIGHTS IN RESPECT OF ORDINARY SHARES TO BE SOLD[10] Ordinary Shares will be offered to n-able at their par value of 1 (one) cent each Ordinary Shares will be offered to the IPAs or PNOs at their par value of 1 (one) cent each Ordinary Shares will be offered to Medical and Allied Professionals at an offer price of 100 (one hundred) cents each, together with the linked obligation to subscribe for Debentures at an offer price of 900 (nine hundred) cents each. To ensure representivity, and prevent dominance by any particular group, it is intended to allocate Shares and Debentures to Medical and Allied Professionals, as near as may be practical, on the basis set out in the following table : Category Percentage allocation No. of Shares and Debentures Dentists and Dental Specialists Hospitals Allied Professions (Audiometricians/Hearing Aid- Accousticians, Biokineticists, Chiropractors, Private Nurse Practitioners, Homeopaths & Naturopaths) 11% 14% 1% Paramedicals (Optometrists, Physiotherapists, Speech/Hearing Therapists, Dieticians, Orthotists, Podiatrists & Psychologists) Pharmacies General Practitioners Medical Specialists : Anaesthetists ENT Surgeons Gynaecologists Maxillo-Facial Surgeons Neurologists Neuro-Surgeons Ophthalmologists Orthopaedic Surgeons Plastic Surgeons General Surgeons Thoracic Surgeons Cardiac Surgeons Urologists Dermatologists Cardiologists General Physicians Paediatricians Pathologists Psychiatrists Radiologists TOTAL 7% 11% 28% 3,0% 1,0% 2,0% 0,2% 0,2% 0,3% 1,0% 2,0% 0,4% 2,0% 0,5% 0,5% 0,5% 0,3% 0,5% 6,5% 1,0% 2,8% 0,5% 2,8% 100% The directors, however, reserve their right to vary such allocation after the Offer has closed, as they, in their entire discretion, deem fit. 19