Surge in Ascendis headline earnings
Acquisitions bolster profits
LISTED health care group Ascendis Health has said that it had grown its headline earnings 105 percent on a normalised basis to R310 million for the six months to end December.
The group said the Remedica and Scitec acquisitions it made during the period contributed to its profitability.
Chief executive Karsten Wellner said the success gained on the acquisitions enabled the group to set aside some capital for further acquisitions.
Wellner said the group would continue to seek valueenhancing acquisitions locally and offshore.
“Funds of approximately R750 million are available for acquisitions in the next 12 months, without the group needing to raise further equity,” Wellner said. “We are currently evaluating potential acquisitions of platform and bolt-on businesses in Europe and emerging markets, as well as South Africa.”
Remedica and Scitec contributed R940m revenue, pushing the group’s foreign revenue up 270 percent to R1.3 billion and accounted for 43 percent of total sales, providing a natural hedge against rand volatility.
Acquisitions The group acquired Cyprusbased pharmaceutical manufacturer, Remedica Holdings, and leading European sports nutrition business Scitec International, for a combined 430m (R5.9bn) in August last year.
Wellner said the two European acquisitions formed part of the group’s strategy to internationalise by buying platform businesses in offshore markets and extracting synergies from these businesses. “Our strategy ensures diversity across products, channels, geographies and currencies,” added Wellner. Yesterday, the group also announced its first acquisition in Eastern Europe with the purchase of Sunwave Pharma, the leading OTC nutrition and food supplements brand business in Romania for
42.5m; with a maximum deferred payment of 23m over three years based on financial targets, and will be accretive from May 2017.
“Sunwave provides an attractive platform for Ascendis to enter the high growth Romanian and eastern European OTC markets. The business has a strong sales and profit track record based on a unique distribution model of marketing complementary medicines directly to doctors through a sales force of 290,” Wellner pointed out. Revenue up Ascendis revenue increased 66 percent to R3.1bn during the period while normalised earnings before interest, tax, depreciation and amortisation (Ebitda) grew by 89 percent to R541m, and normalised headline earnings a share shot up 34 percent to 74.9 cents a share.
The interim dividend was increased by 16 percent to 11 cents a share. Shmuel Simpson, an analyst at 36ONE Asset Management, said the primary driver of growth was the inclusion of Remedica and Scitec for five months of this period.
“Excluding those acquisitions growth was relatively subdued with the South African brands segment coming under particular pressure, and Ascendis will need to start showing strong organic growth going forward. Considering the economic situation the overall result was relatively fine,” said Simpson.
Ascendis shares dropped 0.9 percent to close at R20.81