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Smaller, leaner Ascendis Health starts to move ahead after cutting debt by R7.7 billion

Ascendis Health, the ailing wellness group whose shareholders voted in a new board, says its recapitalisation was largely complete and debt had reduced by R7.7 billion. Photo: Supplied

Ascendis Health, the ailing wellness group whose shareholders voted in a new board, says its recapitalisation was largely complete and debt had reduced by R7.7 billion. Photo: Supplied

Published Feb 21, 2022

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ASCENDIS Health, the ailing wellness group whose shareholders voted in a new board, says its recapitalisation was largely complete and debt had reduced by R7.7 billion.

Meanwhile, at an operational-level, the normalised headline loss strengthened 23 percent to a loss of R438 million, including recapitalisation finance costs of R366m in the six months to December 31, the results showed on Friday.

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The normalised headline loss per share improved 23 percent to 91 cents. Head office costs reduced by 30 percent to R46m. With the recapitalisation concluded in October 2021, the disposals of Animal Health and Respiratory Care Africa (RCA), were completed shortly thereafter.

Remedica and Sunwave were included in the results until the close date of their disposal of October 21, 2021; Farmalider's close date was July 7, RCA's disposal close date was October 31, while the close date of the Animal Health disposal was November 30, 2021.

Post this recapitalisation, the group comprised the Medical Devices, Pharma and Consumer Brands businesses.

However, in terms of another recapitalisation plan signed on January 31, 2022 Ascendis Health SA Holdings, subsidiary of Ascendis Health, would dispose of the businesses: “Ascendis Pharma”, “Nimue Skin” and “Ascendis Medical”.

Ascendis directors said the board would now focus on rebuilding the group through a sustainable growth strategy supported by stringent capital allocation metrics.

They said the remaining Consumer Brands business presented a “compelling base” for the group's growth prospects.

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The Consumer Brands portfolio comprises seven key vitamin, mineral and supplement brands − it is one of the largest such suppliers in South Africa with brands such as Solal, Vitaforce, Menacal, Bettaway and Junglevite, among the most established.

The directors said that post-lockdown there had been a resurgence in elective surgery and trauma cases that had resulted in improved performances by Surgical Innovations and Ortho-Xact within Medical Devices.

The Scientific Group had underperformed as it had been impacted by the reallocation of donor funding in the rest of Africa to Covid-19 vaccine procurement and distribution, and away from diagnostic testing.

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Pharma delivered strong sales growth following a market recovery to preCovid-19 levels and market share gains in key brands such as Reuterina, Sinuend and Sinucon.

Consumer Brands encountered headwinds in contract manufacturing and the slower than expected reopening of beauty salons, with some going out of business. Port strikes and global supply chain challenges also impacted the strategic procurement business, Chempure. Cost optimisation, however, saw its contribution to group earnings improve.

Group operating expenses fell by 69 percent, excluding once-off transaction and restructuring costs of R61m (2021: R118m). The “once-off” included professional and advisory fees associated with lender agreements and disposal projects.

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Net finance costs fell by 21 percent to R391m due to the reduced debt, and improved financing terms post the group recapitalisation. The share price was unchanged at 70 cents on Friday morning.

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BUSINESS REPORT ONLINE

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