Aspen final results June 2018
Revenue for the year increased by 3% to R42.596 billion (2017: R41.213 billion), gross profit rose 9% to R21.605 billion (2017: R19.896 billion), operating profit climbed 11% to R9.237 billion (2017: R8.321 billion), profit for the year attributable to equity holders of the parent was higher at R6.010 billion (2017: R5.128 billion), while headline earnings per share grew 13% to 1 468.8 cents per share (2017: 1 299.5 cents per share).
The board has declared a gross dividend, which is paid from income reserves, of 315 cents per ordinary share to shareholders (or 252 cents net of a 20% dividend withholding tax, where this maximum rate of tax applies) recorded in the share register of the Company at the close of business on 5 October 2018 (2017: dividend of 287 cents per share).
The impending disposal of the Nutritionals Business is another step towards shaping Aspen into an enterprise that is absolutely focused on its portfolio of valuable branded pharmaceuticals. The Group is a uniquely positioned multinational with its weighting towards Emerging Markets and offers a portfolio of critical medicines with enduring global demand. Emerging Markets are expected to continue to lead growth in Commercial Pharmaceuticals. Supply constraints are expected to impact Anaesthetics at a similar level to that experienced in the past year.
Manufacturing revenue will be lower as limited availability of mucosa will prevent the Group from supplying third parties with heparin and the full year effect is felt of the termination of the major supply contract referred to earlier. The Nutritionals Business is well set to deliver a positive performance as benefits of many of the initiatives undertaken in the last year begin to be realised although the contribution will clearly be limited to the period prior to completion of the disposal.
The Group will continue its projects aimed at reducing cost of goods which have already proven successful in protecting gross profit margins from the price erosion experienced in recent years. This includes the capital expenditure programmes underway at the Port Elizabeth, Notre Dame de Bondeville and Bad Oldesloe sites targeted at bringing the manufacture of a significant portion of the Anaesthetics portfolio into Aspen facilities. Complex manufacturing capabilities represent a critical strategic advantage for the Group.
Strong operating cash flows are anticipated to continue although there will be additional investment in inventory required to facilitate various planned changes in manufacturing sites aligned to the initiatives aimed at lowering the cost of goods.
Foreign exchange rates will continue to be a factor affecting relative ZAR performance. Further divestments will be considered where portfolios are identified which are no longer aligned to the Group's specific areas of focus. Deleveraging the Aspen balance sheet will give headroom for other potential opportunities.
Withdrawal of cautionary announcement
Shareholders are advised that following the release of the full details of the divestment of the Nutritionals Business, shareholders no longer need to exercise caution when dealing in their Aspen securities in this regard.