Despite its results being impacted by offshore acquisitions and its headline earnings per share (HEPS) dropping 30% to 56c in the year ended June 30, health and care company Ascendis Health still reported a 41% increase to R613-million in normalised earnings before interest, taxes, depreciation and amortisation (Ebitda).
Excluding the acquisitions, Ascendis’s normalised HEPS rose 30% to 121c apiece, while it also declared a 13% increase in dividends to 21.5c apiece.
As part of its strategy to complement organic growth, Ascendis increasingly focused on international growth during the year, completing its first offshore acquisition in July last year, with the purchase of an initial 49% stake in Spanish pharma business Farmalider.
At a presentation of the company’s results in Johannesburg, CEO Dr Karsten Wellner said the acquisitions are further expected to add 2% to its Ebitda margins in the next financial year.
Shortly after the reporting period, Ascendis, which listed on the JSE in 2014, finalised the acquisition of Remedica Holdings, a pharmaceutical manufacturer in Cyprus, and Scitec International, a European sports nutrition business, for €430-million.
Group revenue increased by 39% to R3.9-billion, driven by organic growth of 9% and supported by growth of 30% from the acquisitions.
Foreign revenue increased by 233% to R864-million, accounting for 22% of the group's total sales. This includes export sales from local operations of R376-million, which were predominantly sold to other African countries and Europe.
The Pharma-med division increased revenue by 31% to R1.8-billion, while consumer brands revenue declined by 3% to R922-million owing to the impact of the Department of Health’s complementary regulations on Solal, the restructuring of the sports nutrition business and the poor consumer environment in Nigeria, which affected the direct selling business.
Wellner commented that he expected consumer brands’ revenue to improve, stating that he was “not happy” with the 3% decline. “It should have been at least an 8% increase,” he noted.
Phyto-vet increased revenue by 13% to R701-million, despite the impact of the drought in Southern Africa, which limited sales of pesticides, insecticides and fertilisers to about R75-million. This impact was negated by two bolt-on acquisitions in the second half of the year.
The international segment generated sales of R487-million.
“The integration of Remedica and Scitec present significant synergy opportunities in shared services, cross-licensing of pharmaceutical dossiers, product manufacturing and new routes to market in Europe and in developing markets,” the company said in a statement.
Wellner added that these companies, with a market cap of R12-billion, was set “to change the face of the [Ascendis] business”.
To mitigate the impact of adding these European brands to its portfolio and to even out the rand/euro discrepancies, Wellner explained that Ascendis would look to increase its cost of goods. “As we have market-leading brands, we are able to dictate prices to improve our margin . . . and pass on the volatility of imported products,” he pointed out.
Ascendis further saw organic growth in the form of its Afrikelp product expanding to Europe, while it also deployed a business development manager to Australi and set up an agent in Denmark for its Nimue brand.