Ascendis Health, the board of which is considering a JSE delisting, announced on Friday that for the first time since 2013, its balance sheet was unencumbered following the recapitalisation, debt restructuring and other corporate activities that were required.
In its results for the year to June 30, the group said tangible net asset value amounted to 81 cents per share by year-end, which is well up from 62c at the same time a year before.
A consortium led by Ascendis’s current CEO Carl Neethling has expressed interest in the delisting, but Ascendis last week warned shareholders that a large premium from the 69c share price at the time was unlikely in the event of an offer being made to shareholders prior to delisting.
By year-end, the group was in “a strong overall solvency position,” characterised by no external senior debt and surplus net assets of R563 million, which represented a 40% improvement from the previous year.
The group’s liquidity position had stabilised, with available cash reserves at R102m and net working capital in excess of R300m. The market capitalisation of the company on Friday on the JSE was R436.4m.
The share price traded one cent higher at 70c on Friday afternoon.
But while balance sheet strength has been restored, operational and market challenges remain.
The operating loss from continuing operations at year-end was R286m, a figure nevertheless representing a 62% improvement from the R758m operating loss a year before.
Group revenue of R1.54 billion was largely in line with the previous year’s R1.56bn.
The consumer segment was a key detractor with the Consumer Health business revenue declining by 18%.
This the group attributed to certain internal challenges, including overselling in the prior period, delayed responsiveness to changing consumer behaviour and a disruptive restructuring process that included the winding down of Ascendis Supply Chain.
These challenges were compounded by a challenging macroeconomic environment, including international supply chain challenges, with pressure on discretionary spending and the post-Covid hangover impacting demand for the group’s branded products.
“We are pleased to report significant progress has been made in addressing the internal challenges faced within the Consumer Health business and with the wind down of the Ascendis Supply Chain facility, it is increasingly clear that management’s efforts are bearing fruits and the entities are progressing in the right direction,” the group directors said.
Restructuring and intervention in the medical devices and consumer health segments had resulted in “significant operational improvements”, many of which would only bear fruit in the 2024 financial year, they said.
Some important operational actions included the CardaXes and InterV Med businesses, previously divisions within Surgical Innovations, which had been spun out into their own operating companies, with their own management teams, allowing for specific focus on the two businesses.
The Ascendis Supply Chain business had been wound down, resulting in material savings since April 2023.
The Consumer Health business had outsourced its manufacturing function, leaving the business’s management team to focus on its core strengths, namely sales, marketing and product development.
Head office costs had reduced from R95m to R54m, primarily due to lower headcount and advisory costs, and these were expected to reduce further to R35m for the 2024 financial year. Transaction and restructuring-related expenses reduced by R46.2m.