Ascendis in double-digit growth in six months

By Sandile Mchunu Time of article published Mar 12, 2020

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DURBAN - JSE-listed health and wellness group Ascendis Health reported a double-digit growth in revenue for the six months to end December, boosted by a strong performance from its international operations Remedica and Wave Pharma.

The group’s revenue increased by 12percent to R3.9billion while Remedica and Wave Pharma reported revenue growth of 30percent.

The group’s international revenue increased by 14percent and now accounts for 58percent of the overall group revenue, while the South African business increased its sales by 8percent, impacted by a stagnant economy and subdued consumer spending.

Chief executive Mark Sardi said yesterday the performance for the first half confirmed Ascendis Health was a collection of mainly good businesses with a poor balance sheet.

“The 12percent increase in revenue confirms the franchise value of the underlying businesses, with Remedica in Cyprus and Sun Wave Pharma in Romania the stand-out performers both increasing revenue by 30percent. However, this was partly offset by Scitec in Hungary, growing revenue by only 1percent, and Farmalider in Spain, where revenue declined by 8percent,” Sardi said.

In the domestic market, the group said Pharma business grew its revenue by 7percent, following the recovery from supply challenges, with Medical Devices revenue up 10percent on securing new agency contracts.

But Consumer Health declined by 5percent as a result of supply issues due to port strikes and supplier delivery challenges and revenue in Animal Health was impacted by production challenges.

The group reported a 2percent decline in normalised operating profit to R425million while normalised earnings before interest, tax, depreciation and amortisation increased by 6percent to R611m.

Its headline earnings per share declined by 35percent to 24.5cents a share.

The group reported an impairment loss of R24m for Ascendis Direct Selling, owing to the deterioration in the trading results.

Ascendis reduced its net bank debt to R5bn, down from R5.3bn at the end of June.

Sardi said the group settled bank debt liabilities of R437m, with the sale of the Efekto, Marltons and Afrikelp businesses in the Biosciences division in July 2019, generating net proceeds of R424m.

“We are committed to reducing debt levels by maximising value from the sale of certain businesses in our portfolio. We are also evaluating the exit options for Remedica, our pharmaceutical business in Cyprus, as well as addressing potential exit due diligence issues in other businesses,” Sardi said.

Looking ahead, the group said its short-term priority was to complete the balance sheet restructure.

“The sale of non-core assets is being accelerated and the group is committed to maximising value from the sale of businesses.

"Processes and disciplines are being implemented to evaluate the exit value of Remedica as well as addressing potential exit due diligence issues in other businesses,” Ascendis said.

Ascendis shares ended the day 2.04percent higher at R0.50 on the JSE yesterday.


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