Description
MAC 3702
ASSIGNMENT 2 – SEMESTER 2
QUESTION 1 (30 Marks)
Ubuntu Health Technologies Ltd (“Ubuntu Health”) is a South African investment company that holds
investments in technology-enabled healthcare and life-sciences businesses. Ubuntu Health has a
30 June financial year-end.
Ubuntu Health’s portfolio includes businesses aligned with health studies/medicine and natural
sciences/biotechnological studies.
BioSense Digital Health (Pty) Ltd (“BioSense”) is an unlisted Tanzanian health-technology company that
develops remote patient-monitoring devices and a cloud-based digital platform. Its technology enables
healthcare providers to monitor patients remotely and access health information through a secure digital
platform. BioSense serves clinics and community health programmes and has established an
independent management team with experience in the health-technology sector.
Possible discontinuation of the existing business
Ubuntu Health is considering discontinuing a small legacy medical-device assembly operation because
its manufacturing costs have increased. The group is exploring the acquisition of a 70% equity stake in
BioSense as part of a strategy to expand its health-technology and digitalisation portfolio.
The acquisition will require appropriate approvals and due diligence, including competition, tax,
regulatory, intellectual-property, data-protection and employment considerations. BioSense is a
Tanzanian company and currently has an independent management team.
For the 2026 financial year, if the legacy operation continues, the expected operating cash loss, excluding
non-cash items, is R1,2 million.
Proposal to acquire 70% equity stake in BioSense
If Ubuntu Health acquires the 70% equity stake in BioSense, the following information will apply:
Information extracted from BioSense’s audited financial statements:
Details
Notes
2026
2025
2024
2023
R’000
R’000
R’000
R’000
Net profit before tax
(i)
10 000
8 500
8 000
9 000
Dividends paid
(ii)
1 000
850
800
900
Notes relating to the above financial information:
1. Included in the net profit after tax for 2026 and 2025 are R3 million and R5 million respectively
(pre-tax) for penalties and remediation costs arising from historical regulatory and quality-control
failures. The corporate income tax rate applicable to BioSense is 25%.
2. BioSense’s dividend payout ratio is expected to remain broadly stable into the future.
3. BioSense’s year-end is 30 June.
4. The average price-earnings multiple of South African listed health-technology and biotechnology
companies used by Ubuntu Health is 12.
5. Unlisted shares in comparable South African businesses are estimated, for this case, to trade at
a 10% discount to comparable listed shares.
6. Ubuntu Health will table a R15 million cash offer for the 70% equity stake in BioSense on
1 September 2026.
7. BioSense’s management team has been with the business since its establishment and is
expected to remain after the acquisition.
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