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ASPEN HEALTHCARE HOLDINGS LIMITED
REGISTRATION NUMBER: 85/02935/06
INTERIM REPORT
FOR THE SIX MONTHS ENDED 31 DECEMBER 1998
* HEADLINE EARNINGS UP 285%
* REVENUE FROM CONTINUING OPERATIONS UP 417%
* OPERATING PROFIT FROM CONTINUING OPERATIONS UP 580%
CONSOLIDATED INCOME STATEMENT
AUDITED UNAUDITED UNAUDITED
FOURTEEN SIX SIX
MONTHS MONTHS MONTHS
ENDED ENDED ENDED
JUNE DECEMBER OCTOBER
1998 1998 1997
R'000 NOTES R'000 R'000
118 602 GROSS REVENUE 64 623 56 004
34 210 - CONTINUING OPERATIONS 64 623 12 605
84 392 - DISCONTINUED OPERATIONS - 43 399
OPERATING PROFIT/(LOSS) 1
6 875 - FROM CONTINUING OPERATIONS 17 191 2 527
(10 598) - FROM DISCONTINUED OPERATIONS - 634
- EXCEPTIONAL LOSS 2 - (550)
OPERATING PROFIT/(LOSS)
(3 723) AFTER EXCEPTIONAL ITEMS 171 191 2 611
(12 106) LOSS ON DISPOSAL OF BUSINESS - -
PROFIT/(LOSS) BEFORE INTEREST
(15 829) AND TAXATION 17 191 2 611
NET INTEREST RECEIVED/(PAID)
1 728 - FROM CONTINUING OPERATIONS 3 519 (110)
(4 893) - FROM DISCONTINUED OPERATIONS - (1 351)
(18 994) PROFIT/(LOSS) BEFORE TAXATION 20 710 1 150
TAXATION 3
412 - FROM CONTINUING OPERATIONS 205 -
100 - FROM DISCONTINUED OPERATIONS - -
(19 506) PROFIT/(LOSS) ATTRIBUTABLE
TO GROUP 20 505 1 150
OUTSIDE SHAREHOLDERS INTEREST
2 248 - IN PREFERENCE DIVIDENDS PAID BY 1 639 864
SUBSIDIARY
(382) - IN DISCONTINUED OPERATIONS - (126)
PROFIT/(LOSS) ATTRIBUTABLE TO
(21 372) ORDINARY SHAREHOLDERS 18 866 412
- ORDINARY DIVIDENDS - -
(21 372) RETAINED PROFIT/(LOSS) FOR PERIOD 18 866 412
(34,8) EARNINGS/(LOSS) PER ORDINARY 4 7,7 0,7
SHARE (CENTS)
(14,7) HEADLINE EARNINGS/(LOSS) 4 7,7 2,0
PER SHARE (CENTS)
CONSOLIDATED BALANCE SHEET
AUDITED UNAUDITED UNAUDITED
FOURTEEN SIX SIX
MONTHS MONTHS MONTHS
ENDED ENDED ENDED
JUNE DECEMBER OCTOBER
1998 1998 1997
R'000 NOTES R'000 R'000
CAPITAL EMPLOYED
20 836 ORDINARY SHAREHOLDERS' INTERESTS 45 282 46 708
20 000 PREFERENCE SHARE CAPITAL 20 000 20 000
- OUTSIDE SHAREHOLDERS' INTEREST - 1 957
124 LONG-TERM LIABILITIES - INTEREST
BEARING - 10 714
4 720 SHORT-TERM BORROWINGS 10 522 -
45 680 75 804 79 379
EMPLOYMENT OF CAPITAL
959 INTANGIBLES - 18 106
217 PROPERTY, PLANT AND EQUIPMENT 5 1 632 14 247
20 000 INVESTMENTS 6 20 000 -
21 176 TOTAL FIXED ASSETS 21 632 32 353
35 804 CURRENT ASSETS 74 203 61 232
56 980 TOTAL ASSETS 95 835 93 585
11 300 CURRENT LIABILITIES 20 031 14 206
45 680 75 804 79 379
34,0 NET ASSET VALUE PER SHARE 4 18,5 76,1
(CENTS)
NOTES
1. OPERATING PROFIT/(LOSS)
OPERATING PROFIT ON ORDINARY ACTIVITIES FOR THE PERIOD IS STATED AFTER CHARGING
DEPRECIATION OF R241 821 (1997: R970 000).
2. EXCEPTIONAL ITEMS
THE PRIOR PERIOD EXCEPTIONAL LOSS RELATED TO THE ESTIMATED COST OF CLOSING DOWN
THE PHARMA CLINIC OPERATION WHICH HAS SINCE BEEN DISPOSED OF.
3. TAXATION
THE EXPENSE RELATES TO SECONDARY TAX ON COMPANIES. DUE TO ASSESSABLE LOSSES, NO
SOUTH AFRICAN NORMAL TAXATION HAS BEEN PROVIDED.
4. EARNINGS AND NET ASSET VALUE PER SHARE
NET ASSET VALUE PER SHARE HAS BEEN CALCULATED ON THE ACTUAL NUMBER OF SHARES IN
ISSUE AT 31 DECEMBER 1998 BEING 244 843 363 (1997: 61 343 363). EARNINGS/(LOSS)
PER SHARE HAVE BEEN CALCULATED ON THE WEIGHTED AVERAGE NUMBER OF SHARES IN
ISSUE FOR THE SIX MONTHS ENDED 31 DECEMBER 1998 BEING 244 843 363 (1997: 61 343
363). THE DIFFERENCE BETWEEN EARNINGS ON ORDINARY ACTIVITIES AND HEADLINE
EARNINGS IS RECONCILED AS FOLLOWS:
JUNE DECEMBER OCTOBER
1998 1998 1997
R'000 R'000 R'000
(3 723) OPERATING PROFIT/(LOSS) 17 191 3 161
(3 165) INTEREST RECEIVED/(PAID) 3 519 (1 461)
(512) TAXATION (205) -
382 OUTSIDE SHAREHOLDERS INTEREST - 126
(2 248) PREFERENCE DIVIDENDS (1 639) (864)
255 LOST ON DISPOSAL OF FIXED ASSETS - 16
(9 011) HEADLINE EARNINGS 18 866 978
5. CAPITAL EXPENDITURE
CAPITAL EXPENDITURE DURING THE PERIOD AMOUNTED TO R399 432 (1997: R1 851 000).
6. INVESTMENT
THE INVESTMENT REPRESENTS A LOAN TO THE CUPBOARD GROUP (PTY) LIMITED. THE LOAN
IS UNSECURED, REPAYABLE IN FULL ON 14 SEPTEMBER 2000 AND ACCRUES INTEREST AT
73,125% OF THE FIRST NATIONAL BANK PRIME RATE PAYABLE TWICE A YEAR.
FINANCIAL REVIEW
CHANGE TO ASPEN
THE BUSINESSES OF ASPEN HEALTHCARE (PTY) LIMITED ("ASPEN HEALTHCARE") WERE
ACQUIRED BY MEDHOLD LIMITED ("MEDHOLD") WITH EFFECT FROM 1 JULY 1998. THIS
AMOUNTED TO A CHANGE IN CONTROL IN MEDHOLD, WITH ASPEN HEALTHCARE'S
PHARMACEUTICAL BUSINESS BECOMING THE DOMINANT COMPONENT OF THE RESTRUCTURED
GROUP. THE RESTRUCTURING OF THE PREVIOUS MEDHOLD INVOLVED THE DISPOSAL OF SEVEN
COMPANIES AND BUSINESSES HOUSED WITHIN MEDHOLD UP UNTIL THE END OF THE PREVIOUS
FINANCIAL PERIOD. ONLY THE TWINCARE INTERNATIONAL AND WATKINS VALEUR
BUSINESSES (HEREINAFTER COLLECTIVELY REFERRED TO AS THE PERSONAL CARE AND
CONSUMER DIVISION) WERE RETAINED. THESE BUSINESSES SHARE THE COMMON STRATEGY OF
BRAND BUILDING WITH THE CORE PHARMACEUTICAL BUSINESS OF ASPEN. THE NAME MEDHOLD
LIMITED WAS CHANGED TO ASPEN HEALTHCARE HOLDINGS LIMITED WITH EFFECT FROM 1
FEBRUARY 1999.
GROUP RESULTS: CONTINUING OPERATIONS
THE KEY PERFORMANCE LINES OF THE GROUP RESULTS FOR CONTINUING OPERATIONS ARE AS
FOLLOWS:
* GROSS REVENUE UP 417% TO R64,6 MILLION
* OPERATING PROFIT UP 580% TO R17,2 MILLION
* PROFIT BEFORE TAX UP 1 701% TO R20,7 MILLION
* ATTRIBUTABLE PROFIT UP 4 479% TO R18,9 MILLION
REVIEW
RESULTS FOR THE RECONSTITUTED GROUP FOR THE SIX MONTHS TO
31 DECEMBER 1998 ARE IN LINE WITH MANAGEMENT'S EXPECTATIONS. WATKINS VALEUR,
THE COSMETICS AND HOUSEHOLD PRODUCTS DIRECT SALES BUSINESS, WAS NEGATIVELY
EFFECTED BY THE IMPACT OF HIGH INTEREST RATES ON THE DISPOSABLE INCOME OF ITS
TARGET MARKET. HOWEVER, STRONG PERFORMANCES, DESPITE THE ECONOMIC CLIMATE, BY
THE ASPEN PHARMACEUTICAL DIVISION AND BY TWINCARE ENSURED THAT PROFIT TARGETS
WERE ACHIEVED.
ACQUISITIONS
THE LEANOR AND QUIT PRODUCTS ACQUIRED DURING THE PERIOD FOR A COMBINED
CONSIDERATION OF R21,6 MILLION HAVE PROVEN EXCELLENT ADDITIONS TO THE ASPEN
OVER THE COUNTER PRODUCT RANGE. BOTH PRODUCTS HAVE ACHIEVED MARKET PENETRATION
AT THE TOP END OF MANAGEMENT'S EXPECTATIONS SINCE BEING INTEGRATED INTO ASPEN'S
SALES AND MARKETING FRAMEWORK. THE ACQUISITION OF THE BUSINESS OF COLUMBIA
PHARMACEUTICALS (PTY) LIMITED ("COLUMBIA") FOR
R10,6 MILLION WAS ANNOUNCED ON 1 FEBRUARY 1999. THE COLUMBIA BUSINESS
REINFORCES ASPEN'S EXISTING STRENGTH IN THE COLD AND FLU AND VITAMIN SUPPLEMENT
MARKETS AND ADDITIONALLY BRINGS A PRODUCT PIPELINE WITH SUBSTANTIAL FUTURE
POTENTIAL.
SOUTH AFRICAN DRUGGISTS LIMITED ("SAD") TRANSACTION
IT WAS ANNOUNCED TO SHAREHOLDERS ON 19 MARCH 1999 THAT ASPEN HAD PRESENTED TO
INVESTEC GROUP LIMITED ("INVESTEC"), THE CONTROLLING SHAREHOLDER OF SAD, A
FORMAL OFFER ("THE OFFER") TO BE SUBMITTED TO THE BOARD OF SAD TO ACQUIRE, WITH
EFFECT FROM 28 FEBRUARY 1999, SIGNIFICANTLY THE WHOLE BUSINESS OF SAD FOR A
PURCHASE CONSIDERATION OF R2 390 MILLION ("THE SAD TRANSACTION"). INVESTEC
SUPPORTS THE OFFER AND INTENDS VOTING IN FAVOUR OF ALL RESOLUTIONS NECESSARY TO
IMPLEMENT THE SAD TRANSACTION. SUBJECT, INTER ALIA, TO THE ACCEPTANCE OF THE
SAD OFFER AND THE SAD TRANSACTION BECOMING UNCONDITIONAL, MACMED HEALTH CARE
LIMITED ("MACMED") HAS AGREED TO ACQUIRE FROM ASPEN THE INTRAMED BUSINESS AND
CERTAIN CHEMICAL BUSINESSES ACQUIRED FROM SAD FOR A PURCHASE CONSIDERATION OF
APPROXIMATELY R500 MILLION AND FEDSURE HOLDINGS LIMITED ("FEDSURE") HAS AGREED
TO ACQUIRE FROM ASPEN THE HEALTHCARE BUSINESS OF SAD FOR A PURCHASE
CONSIDERATION OF R470 MILLION. THE MACMED AND FEDSURE DISPOSALS WILL BE
EFFECTIVE FROM 28 FEBRUARY 1999.
THE NECESSARY STATUTORY AND REGULATORY REQUIREMENTS TO GIVE EFFECT TO THE SAD
TRANSACTION ARE BEING UNDERTAKEN AND PREPARED FOR PROCESSING IN ACCORDANCE WITH
AN ESTABLISHED TIMETABLE. IMPLEMENTATION OF THE FIRST PHASE PLANS TO FOCUS THE
ACQUIRED SAD BUSINESSES IN LINE WITH ASPEN STRATEGIES HAVE ALREADY COMMENCED.
PROSPECTS
THE SUCCESSFUL COMPLETION OF THE SAD TRANSACTION WILL HAVE A MATERIAL EFFECT ON
THE FUTURE RESULTS OF ASPEN. THE EXISTING BUSINESS HAS SUCCESSFULLY BEEN
TRANSFORMED INTO A BRAND BASED HEALTHCARE BUSINESS STRONGLY FOCUSSED IN
PHARMACEUTICALS. ALL INDICATIONS TO DATE ARE THAT FORECASTS FOR THE FULL YEAR
WILL BE COMFORTABLY ATTAINED. MANAGEMENT IS CONFIDENT THAT THEIR CHOSEN
STRATEGIES WILL PROVE EFFECTIVE IN THE EVOLVING SOUTH AFRICAN HEALTH CARE
CLIMATE AND THAT THE IMPLEMENTATION OF THESE STRATEGIES IN THE BUSINESSES TO BE
ACQUIRED FROM SAD WILL LEAD TO REALISATION OF ENHANCED VALUE WITHIN THOSE
BUSINESSES.
YEAR 2000 COMPLIANCE
THE GROUP DOES NOT EXPECT ANY MATERIAL OPERATIONAL DIFFICULTIES TO ARISE AS A
RESULT OF THE TECHNOLOGY PROBLEMS ASSOCIATED WITH THE YEAR 2000. BASED ON ITS
CURRENT ASSESSMENT OF THE SITUATION, IT IS THE OPINION OF THE BOARD OF
DIRECTORS THAT ADEQUATE MEASURES ARE BEING TAKEN TO AVOID ANY DIFFICULTIES IN
THIS REGARD.
DIRECTOR'S STATEMENT
THE ACCOUNTING POLICIES IN RESPECT OF THE FINANCIAL PERIOD ENDED
30 JUNE 1998, HAVE BEEN CONSISTENTLY APPLIED TO THE RESULTS FOR THE SIX MONTHS
ENDED 31 DECEMBER 1998.
DIVIDENDS
NO ORDINARY DIVIDEND HAS BEEN DECLARED.
FURTHER ANNOUNCEMENT AND FURTHER CAUTIONARY ANNOUNCEMENT
AN ANNOUNCEMENT GIVING FULL DETAILS OF THE SAD TRANSACTION WILL BE PUBLISHED IN
DUE COURSE. ACCORDINGLY, ASPEN SHAREHOLDERS ARE ADVISED TO CONTINUE TO EXERCISE
CAUTION IN DEALING IN THEIR ASPEN SHARES UNTIL A FURTHER ANNOUNCEMENT IS MADE.
BY ORDER OF THE BOARD
SB SAAD MG ATTRIDGE
JOINT CHIEF EXECUTIVE FINANCIAL DIRECTOR
DURBAN
29 MARCH 1999
DIRECTORS: SB SAAD, GAR STURLESE, MG ATTRIDGE, M KROK, FLGP DE NOBREGA, AJ
AARON*, KJ HLONGWANE*, MZ KROK*, CN MORTIMER* (*NON-EXECUTIVE)
TRANSFER SECRETARIES: MERCANTILE REGISTRARS LIMITED, 8TH FLOOR, 11 DIAGONAL
STREET, JOHANNESBURG 2001 (PO BOX 1053, JOHANNESBURG, 2000)
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