Wrap Text
APN - Aspen Pharmacare Holdings Limited ("Aspen") - Reviewed preliminary
group financial results for the year ended 30 June 2011
Aspen Pharmacare Holdings Limited ("Aspen")
(Registration number 1985/002935/06)
Share code: APN ISIN: ZAE000066692
Reviewed preliminary Group financial results for the year
ended 30 June 2011
Normalised headline earnings per share from continuing operations up 29%
R2,4 billion
Normalised diluted headline earnings per share from continuing
operations up 20% 523,3 cents
Capital distribution up 50% - 105 cents
Revenue from continuing operations up 29% - R12,4 billion
Commentary
Group performance
Aspen grew revenue from continuing operations by 29% to R12,4 billion
and increased operating profit from continuing operations by 25% to R3,1
billion for the year ended 30 June 2011.
Normalised headline earnings being headline earnings from continuing
operations, adjusted for transaction and restructure costs mainly
related to the acquisition of the pharmaceutical division of Sigma
Pharmaceuticals Limited in Australia ("the Sigma business") were up 29%
at R2,4 billion. Diluted normalised headline earnings per share improved
20% to 523,3 cents.
South African business
Revenue from the South African business increased by 13% to R6,3 billion
and operating profit grew 17% to R1,9 billion. There was an improvement
in profit margins as a consequence of production efficiencies,
procurement savings, a change in mix away from low margin antiretroviral
("ARV") tender products and relative Rand strength.
The Pharmaceutical division led growth in the South African business,
increasing revenue by 15% to R5,2 billion. This was achieved despite
enduring the challenges of its two biggest brands, Seretide and Truvada,
coming under generic competition for the first time, as well as reduced
pricing and lower than expected off takes in the new ARV tender which
commenced in January 2011. ARV tender volumes have been well below
expected levels as Government has used substitute donor funded product.
Aspen has been particularly successful in its strategy to defend the
Seretide molecule by launching its own generic, Foxair, which has more
than compensated for volume declines in Seretide. Despite these
headwinds the pharmaceutical division is fundamentally in good shape
with a strong underlying growth rate. In particular, the Generic
division continues to perform, fuelled by the industry`s strongest
organic pipeline. This is further validated by the 2011 Campbell Belman
Confidence Predictor Results which again showed Aspen as the leading
pharmaceutical company in South Africa with first ranking given by
independent pharmacists, managed healthcare providers and managed
healthcare funders.
The Consumer division has had to adapt to the loss of the Pfizer infant
milk formula license in the last quarter. Infacare Gold was launched as
a substitute product range and initial off take has been encouraging.
The infant nutritional product offering in South Africa has also been
extended by the launch of Melegi acidified infant formula. Revenue from
the Consumer division for the year increased 3% to R1,1 billion in a
slow retail market.
The Group has continued to invest in its manufacturing capabilities in
South Africa. Projects are underway at the Port Elizabeth, East London
and Cape Town production sites. The focus of these projects is on adding
capacity, enhancing technical standards and improving efficiency. The
benefits of past capital investment programmes are already being
reflected in improved profit margins. Furthermore, Aspen`s production
competitiveness continues to be validated by the successes achieved in
recent tender awards by the South African Government for ARVs,
tuberculosis, anti-biotics and infant nutritionals where the Group
competed with manufacturers from across the world.
Sub-Saharan Africa business
The Group`s gross revenue in Sub-Saharan Africa advanced by 43% to R1,3
billion and operating profits almost tripled, increasing from R66
million to R182 million. A full year`s contribution (prior year 7
months) from the GSK Aspen Healthcare for Africa collaboration assisted
in this substantial step-up in results. There was also an improved
performance from the Shelys business in East Africa where margins
widened.
International business
The International business increased revenue by 56% to R5,6 billion.
Operating profit before amortisation, adjusted for one-off non-trading
items, grew 35% to R1,4 billion.
The acquisition of the Sigma business in Australia was completed with
effect from 31 January 2011. The purchase consideration of AUD 900
million was revised down to AUD 863 million as a consequence of a
reduction in the working capital at the acquisition date. The purchase
price allocation for the Sigma transaction shows goodwill of R4,0
billion. The goodwill valuation represents the value which Aspen expects
to add to the business through synergies with the Aspen Australia
business as well as cost of goods reductions from improved procurement
and lower manufacturing costs achieved through the Aspen global network.
The addition of the Sigma business was the primary driver in revenue
from customers in the Asia Pacific region increasing 122% to R3,1
billion. However, the original Australian business also performed
strongly, raising revenue by 33% to R1,7 billion.
In Latin America revenue of R0,9 billion was generated, an increase of
19%. In the rest of the world revenue of R1,6 billion was up 12%.
In February 2011 the disposal of Onco Laboratories was completed,
realising a profit on disposal of R368 million. This was the largest
contributor to profits from discontinued operations.
Funding
Borrowings net of cash were R6,3 billion at the end of the year, despite
the R5,9 billion investment in the Sigma business. Strong operating cash
flows supported by capital receipts were instrumental in reducing the
net debt of the Group. Gearing stood at 34% at year end.
Interest paid, net of interest received of R418 million (prior year R351
million) reflects the increased level of borrowings during the period
and was covered eight times by operating profit before amortisation.
Prospects
Real growth is anticipated to be sustained in the year ahead with the
Asia Pacific region, fuelled by the acquisition of the Sigma business,
being the leading driver. It is anticipated that revenue and profit
contributions from the Group`s businesses outside of South Africa will
exceed that of the South African business for the first time.
Demographics in South Africa continue to support growth in the
utilisation of medicines which could be further accelerated by the
introduction of the National Health Insurance programme planned by
Government. Aspen`s pharmaceutical business in South Africa remains
fundamentally strong, and has retained its leadership position in the
private and public sectors. The outlook for the pharmaceutical business
is favourable although in the year ahead performance will be muted by
the genericisation of its two leading brands as well as the lower
pricing and off take in the
ARV tender mentioned above.
The South African Department of Health ("DoH") is presently considering
the promulgation of new regulations to implement a process of
international benchmarking of originator pharmaceutical products and to
cap the logistics fees paid in the distribution of pharmaceuticals.
Aspen has been an active participant in the formulation of industry
submissions on these proposals. Both proposals are with the DoH for
reconsideration. Revised proposals can be anticipated in the year ahead.
The South African Consumer business is faced with the loss of the Pfizer
infant milks which generated annual sales of approximately R250 million.
In response, Aspen has expanded its own product offering and competed in
the public sector tender for infant nutritionals for the first time.
Aspen has been awarded the vast majority of the volume of the products
for which it competed. This three year tender which covers eight of
South Africa`s nine provinces as well as the recently launched Infacare
Gold range will assist significantly in closing the gap left by the
Pfizer brands.
The Sub-Saharan African business is well placed to extend its position
as the leading supplier of quality pharmaceuticals in that region.
The Asia Pacific region is expected to lead growth in the Group in the
forthcoming year, as the profitability of the Sigma business is
improved. The integration of the Sigma business has proceeded well and
the combined businesses are an influential participant in this market.
The Group`s pipeline for Australia has been further augmented by the
conclusion of an agreement with Cipla, the leading Indian generic
company, to work together for Aspen to launch Cipla developed products
in Australia. The plan to expand the Group`s representation in the
region has taken a further step forward with the commencement of the
process to incorporate a subsidiary in the Philippines.
Leadership structures have been strengthened in Latin America. Improved
focus has been achieved in Brazil with the disposal of non-core
products. Aspen continues to regard this region as having significant
potential. Opportunities are being sought to improve the critical mass
of the product offering.
Capital distribution
Taking into account the earnings and cash flow performance for the year
ended 30 June 2011, existing debt service commitments and future
proposed investments, notice is hereby given that, in terms of a general
authority to distribute the company`s capital granted by shareholders at
the annual general meeting held on 26 November 2010, a capital
distribution of 105 cents per ordinary share (2010: 70 cents) by way of
a capital reduction has been declared, payable out of share premium to
shareholders recorded in the share register of the company at the close
of business on Friday,
14 October 2011. The directors are of the opinion that the company will
satisfy the solvency and liquidity requirements of Section
46 of the Companies Act, 2008. Future distributions will be decided on a
year-to-year basis.
In compliance with IAS 10: Events After Balance Sheet Date, the capital
distribution will only be accounted for in the financial statements in
the year ending 30 June 2012.
Last day to trade cum capital distribution Friday, 7 October 2011
Shares commence trading ex capital
distribution Monday, 10 October 2011
Record date Friday, 14 October 2011
Payment date Monday, 17 October 2011
Share certificates may not be dematerialised or rematerialised between
Monday, 10 October 2011 and Friday, 14 October 2011.
By order of the Board
NJ Dlamini SB Saad
(Chairman) (Group Chief Executive)
Woodmead
13 September 2011
Basis of accounting
The consolidated preliminary results have been prepared in accordance
with International Financial Reporting Standards ("IFRS"), IFRIC
interpretations, the Listings Requirements of the JSE Ltd, South African
Companies Act (2008) and the presentation and disclosure requirements of
IAS 34 - Interim Reporting.
These results have been reviewed by Aspen`s auditors,
PricewaterhouseCoopers Inc. Their unqualified review report is available
for inspection at the company`s registered office.
The accounting policies used in the preparation of these preliminary
results are consistent with those used in the annual financial
statements for the year ended 30 June 2010.
The statement of comprehensive income, the statement of cash flows and
the segmental analysis for the year ended 30 June 2010 were restated to
exclude the discontinued operations.
Operations classified as discontinued include the following:
- The South African personal care products disposed of during the year
and subsequent to year end;
- The products acquired from GSK for the territories of India, Pakistan,
Bangladesh, Sri Lanka and Afghanistan;
- The Oncology business; and
- The Campos facility and related products in Brazil.
The segmental analysis for the year ended 30 June 2010 was restated to
aggregate the revenue of the domestic and global brands as a result of
the transition of a significant portion of the global brands to Aspen`s
global distribution network.
Group statement of financial position
Reviewed Audited
year ended year ended
30 June 30 June
2011 2010
Rm Rm
ASSETS
Non-current assets
Property, plant and equipment 3 651,5 3 012,4
Goodwill 4 626,6 456,1
Intangible assets G# 8 916,7 8 609,9
Other non-current financial 11,8 34,4
receivables
Deferred tax assets 216,5 65,5
Total non-current assets 17 423,1 12 178,3
Current assets
Inventories 2 628,1 2 041,4
Receivables, prepayments and other 3 263,8 2 359,5
current assets
Cash restricted for use 28,7 21,8
Cash and cash equivalents 3 039,2 2 939,8
8 959,8 7 362,5
Assets classified as held for sale J# 414,5 260,1
Total current assets 9 374,3 7 622,6
Total assets 26 797,4 19 800,9
SHAREHOLDERS` EQUITY
Share capital and share premium 4 776,2 5 089,0
(including treasury shares)
Reserves 8 288,0 5 580,0
Ordinary shareholders` equity 13 064,2 10 669,0
Equity component of preference shares 162,0 162,0
Non-controlling interests 61,1 55,2
Total shareholders` equity 13 287,3 10 886,2
LIABILITIES
Non-current liabilities
Preference shares - liability 381,3 386,6
component
Borrowings 4 249,0 2 260,2
Retirement benefit obligations 18,8 15,4
Deferred revenue and other non- 148,2 159,4
current liabilities
Deferred tax liabilities 504,9 263,2
Total non-current liabilities 5 302,2 3 084,8
Current liabilities
Trade and other payables 2 830,8 1 913,9
Borrowings 5 138,0 3 720,8*
Derivative financial instruments 65,6 143,2
Other current liabilities 142,6 52,0
8 177,0 5 829,9
Liabilities associated with assets J# 30,9 -
held for sale
Total current liabilities 8 207,8 5 829,9
Total liabilities 13 510,1 8 914,7
Total equity and liabilities 26 797,4 19 800,9
Number of shares in issue (net of 433 883 431 407
treasury shares) (`000)
Net asset value per share (cents) 3 011,0 2 473,1
#See notes on Supplementary information.
*Bank overdrafts are included within borrowings under current
liabilities.
Group statement of comprehensive income
Reviewed Restated
year ended year ended
30 June 30 June
% 2011 2010
change Rm Rm
Continuing operations
Revenue 29 12 383,2 9 619,2
Cost of sales (6 769,7) (5 142,7)
Gross profit 25 5 613,5 4 476,5
Selling and distribution (1 460,7) (1 148,2)
expenses
Administrative expenses (827,3) (740,4)
Other operating income 192,8 179,9
Other operating expenses (369,3) (243,4)
Operating profit B# 25 3 149,0 2 524,4
Investment income C# 193,2 187,9
Financing costs D# (605,3) (553,2)
Operating profit after 27 2 736,9 2 159,1
investment income and
financing costs
Share of after-tax net - (1,7)
losses of associates
Profit before tax 27 2 736,9 2 157,4
Tax (582,1) (458,5)
Profit after tax from 27 2 154,8 1 698,9
continuing operations
Discontinued operations
Profit after tax for the E# 434,0 279,6
year from discontinued
operations
Profit for the year 31 2 588,8 1 978,5
Other comprehensive income
Currency gains on net 81,2 -
investment in Asia Pacific
Net investment hedge loss on (66,1) -
capital reduction in Asia
Pacific
Net gains from cash flow 216,8 -
hedging in respect of the
Sigma transaction
Net impact in respect of the 231,9 -
Sigma transaction
Oncology business - 0,8
transaction
Currency translation losses F# (223,0) (25,1)
Cash flow hedges realised 4,6 (4,8)
Unrealised cash flow hedges 59,7 -
recognised
Total comprehensive income 37 2 662,0 1 949,4
Profit for the year
attributable to:
Equity holders of the parent 2 577,8 1 989,6
Non-controlling interests 11,0 (11,1)
31 2 588,8 1 978,5
Total comprehensive income
for the year attributable
to:
Equity holders of the parent 2 655,3 1 969,3
Non-controlling interests 6,7 (19,9)
37 2 662,0 1 949,4
Weighted average number of 432 914 401 987
shares in issue (`000)
Basic earnings per share
(cents)
From continuing operations 16 495,2 425,4
From discontinued operations 100,3 69,5
20 595,5 494,9
Diluted earnings per share
(cents)
From continuing operations 16 476,5 409,1
From discontinued operations 95,5 65,6
20 572,0 474,7
CAPITAL DISTRIBUTION
Capital distribution per share (cents) 70,0 -
The capital distribution of 70 cents relates to the distribution
declared after the 2010 year end. A capital distribution of 105 cents
has been declared after the 2011 year end and in compliance with IAS 10,
Events After Balance Sheet date, the capital distribution will only be
accounted for in the financial statements for the year ending 30 June
2012.
#See notes on Supplementary information,
Group statement of headline earnings
Reviewed Restated
year ended year ended
30 June 30 June
% 2011 2010
change Rm Rm
HEADLINE EARNINGS
Reconciliation of headline
earnings
Profit attributable to equity 2 577,8 1 989,6
holders of the parent
Adjusted for:
Continuing operations
- Impairment of property, plant 7,4 25,3
and equipment (net of tax)
- (Profit)/loss on disposal of (11,8) 2,5
tangible and intangible assets
(net of tax)
- Net impairment of intangible 83,8 68,4
assets (net of tax)
- Impairment of deferred - 17,1
receivable (net of tax)
- Insurance compensation - (11,5) (27,7)
capital component (net of tax)
- Capital gains tax on transfer - 20,7
of intellectual property rights
Discontinued operations
- Profit on the sale of the (367,9) (154,7)
Oncology business (net of tax)
- Profit on sale of Co-Pharma (7,4) -
(net of tax)
- Profit on disposal of personal (18,1) -
care products (net of tax)
16 2 252,3 1 941,2
Headline earnings
From continuing operations 22 2 211,7 1 816,3
From discontinued operations 40,6 124,9
16 2 252,3 1 941,2
Headline earnings per share
(cents)
From continuing operations 13 510,9 451,8
From discontinued operations 9,4 31,1
8 520,3 482,9
Headline earnings per share -
diluted (cents)
From continuing operations 13 491,4 434,1
From discontinued operations 8,9 29,3
8 500,3 463,4
NORMALISED HEADLINE EARNINGS
Reconciliation of normalised
headline earnings
Headline earnings 2 252,3 1 941,2
Adjusted for:
Continuing operations
- Restructuring costs (net of 23,1 -
tax)
- Transaction costs (net of tax) 121,7 15,6
Discontinued operations
- Restructuring costs (net of 3,7 -
tax)
23 2 400,8 1 956,8
Normalised headline earnings
From continuing operations 29 2 356,5 1 831,9
From discontinued operations 44,3 124,9
23 2 400,8 1 956,8
Normalised headline earnings per
share (cents)
From continuing operations 19 544,3 455,7
From discontinued operations 10,2 31,1
14 554,5 486,8
Normalised headline earnings per
share - diluted (cents)
From continuing operations 20 523,3 437,7
From discontinued operations 9,7 29,3
14 533,0 467,0
Segmental analysis
Reviewed
30 June 2011
Rm % of total
Revenue from continuing operations
South Africa 6 296,2 48
Sub-Saharan Africa 1 300,9 10
International 5 617,0 42
Total gross revenue 13 214,1 100
Adjustment* (830,9)
Total revenue 12 383,2
Operating profit before amortisation
from continuing operations
Adjusted for specific non-trading items
South Africa 1 934,1 55
Operating profit 1 857,4
Amortisation of intangible assets 51,1
Insurance compensation - capital (14,3)
component
Transaction costs -
Restructuring costs 11,3
Impairment of assets 28,6
Sub-Saharan Africa 177,4 5
Operating profit 182,4
Amortisation of intangible assets 3,7
Profit on sale of non-current assets (8,7)
Impairment of assets -
International 1 377,1 40
Operating profit 1 109,2
Amortisation of intangible assets 88,2
Profit on sale of non-current assets (6,4)
Transaction costs 86,1
Restructuring costs 21,3
Impairment of assets 78,7
3 488,6 100
Entity wide disclosure - Revenue from
continuing operations
Analysis of revenue in accordance with
customer geography
South Africa - pharmaceuticals 5 177,7 39
South Africa - consumer 1 118,5 9
Sub-Saharan Africa 1 300,9 10
Asia Pacific 3 090,8 23
Latin America 924,9 7
Rest of the world 1 601,3 12
Total gross revenue 13 214,1 100
Adjustment* (830,9)
Total revenue 12 383,2
Segmental analysis (continued)
Restated
30 June 2010 %
Rm % of total change
Revenue from continuing
operations
South Africa 5 575,4 55 13
Sub-Saharan Africa 910,0 9 43
International 3 602,6 36 56
Total gross revenue 10 088,0 100 31
Adjustment* (468,8)
Total revenue 9 619,2 29
Operating profit before
amortisation from continuing
operations
Adjusted for specific non-
trading items
South Africa 1 639,0 60 18
Operating profit 1 593,1 17
Amortisation of intangible 44,8
assets
Insurance compensation - (38,5)
capital component
Transaction costs 2,1
Restructuring costs -
Impairment of assets 37,5
Sub-Saharan Africa 72,3 3 145
Operating profit 66,4 175
Amortisation of intangible 4,2
assets
Profit on sale of non-current -
assets
Impairment of assets 1,7
International 1 023,3 37 35
Operating profit 864,9 28
Amortisation of intangible 52,4
assets
Profit on sale of non-current -
assets
Transaction costs 5,0
Restructuring costs -
Impairment of assets 101,0
2 734,6 100 28
Entity wide disclosure -
Revenue from continuing
operations
Analysis of revenue in
accordance with customer
geography
South Africa - pharmaceuticals 4 491,3 44 15
South Africa - consumer 1 084,1 11 3
Sub-Saharan Africa 910,0 9 43
Asia Pacific 1 393,3 14 122
Latin America 774,2 8 19
Rest of the world 1 435,1 14 12
Total gross revenue 10 088,0 100 31
Adjustment* (468,8)
Total revenue 9 619,2 29
*The profit share from the GSK Aspen Healthcare for Africa collaboration
has been disclosed as revenue in the statement of comprehensive income.
For segmental purposes the total revenue for the collaboration has been
included to provide enhanced revenue visibility in this territory.
Group statement of cash flows
Reviewed Restated
year ended year ended
30 June 30 June
2011 2010
Rm Rm
Cash flows from operating
activities
Cash operating profit 3 845,0 3 269,5
Changes in working capital (463,2) (344,4)
Cash generated from operations 3 381,8 2 925,1
Net financing costs paid (401,3) (427,1)
Tax paid (534,6) (465,0)
Cash generated from operating 2 445,9 2 033,0
activities#
Cash flows from investing
activities
Capital expenditure - property, (651,5) (632,0)
plant and equipment
Proceeds on disposal of tangible 2,8 9,8
assets
Capital expenditure - intangible (188,7) (660,5)
assets
Proceeds on disposal of 197,5 0,3
intangible assets
Acquisition of subsidiary and K# (5 893,2) 307,5
businesses
Proceeds on disposal of L# 628,1 -
subsidiary and associate
Proceeds on disposal of assets 10,3 -
held for sale
Decrease/(Increase) in non- 25,1 (27,1)
current financial receivables
Advance proceeds on held for 290,2 -
sale assets
Net investment hedge of capital (66,1) -
reduction in Asia Pacific
Payment of outstanding Oncology - (18,7)
business purchase consideration
Cash used in investing (5 645,5) (1 020,7)
activities
Cash flows from financing
activities
Net proceeds from/(repayment of) 3 567,8 (478,7)
borrowings
Capital distribution (302,9) -
Dividend paid (1,7) (0,8)
Proceeds from issue of ordinary 10,0 16,1
shares
Acquisition of treasury shares (20,1) (13,5)
Increase in cash restricted for (6,1) (21,8)
use as security for borrowings
Cash generated from/(used in) 3 247,0 (498,7)
financing activities
Movement in cash and cash
equivalents before
translation effects of foreign 47,4 513,6
operations
Translation effects on cash and (107,3) (23,8)
cash equivalents of foreign
operations
Cash and cash equivalents
Movement in cash and cash (59,9) 489,8
equivalents
Cash and cash equivalents at the 1 812,7 1 322,9
beginning of the year
Cash and cash equivalents at the 1 752,8 1 812,7
end of the year
#Operating cash flow per share
(cents)
% change
From continuing operations 18 554,8 471,2
From discontinued operations 10,2 34,5
12 565,0 505,7
The above includes discontinued
operations of:
Cash generated from operating 44,2 138,7
activities
Cash used in investing - (62,3)
activities
Translation effects on cash and - 0,2
cash equivalents of foreign
operations
Movement in cash and cash 44,2 76,6
equivalents
Cash and cash equivalents at the - 0,3
beginning of the year
Cash and cash equivalents per 44,2 76,9
the statement of cash flows
Reconciliation of cash and cash
equivalents
Cash and cash equivalents per 3 039,2 2 939,8
the statement of financial
position
Less: bank overdrafts (1 286,4) (1 127,1)
Cash and cash equivalents per 1 752,8 1 812,7
the statement of cash flows
For the purposes of the statement of cash flows, cash and cash
equivalents comprise cash-on-hand, deposits held on call with banks less
bank overdrafts.
Group statement of changes in equity
Share capital
and share Equity
premium component of
(including preference
treasury shares) Reserves shares
Rm Rm Rm
Balance at 30 June 2009 509,8 3 515,3 162,0
Total comprehensive - 1 969,3 -
income
Profit for the year - 1 989,6 -
Other comprehensive - (20,3) -
income
Dividend paid - - -
Issue of ordinary share 4 592,8 - -
capital
Shares issued - share 17,0 - -
schemes
Shares issued - GSK 4 575,8 - -
transactions
Treasury shares (13,5) - -
purchased
Treasury shares (0,1) 0,1 -
cancelled
Share options and - 25,4 -
appreciation rights
expensed (including
deferred incentive
bonus)
Equity portion of tax - 56,2 -
claims in respect of
share schemes
Hyperinflationary - 13,7 -
adjustment - Venezuela
Balance at 30 June 2010 5 089,0 5 580,0 162,0
Total comprehensive - 2 655,3 -
income
Profit for the year - 2 577,8 -
Other comprehensive - 77,5 -
income
Capital distribution (302,9) - -
Dividend paid - - -
Issue of ordinary share 10,0 - -
capital - share schemes
Treasury shares (20,1) - -
purchased
Share options and - 26,3 -
appreciation rights
expensed (including
deferred incentive
bonus)
Equity portion of tax - 23,6 -
claims in respect of
share incentive schemes
Deferred bonus shares 0,2 (0,2) -
exercised
Hyperinflationary - 3,0 -
adjustment - Venezuela
Balance at 30 June 2011 4 776,2 8 288,0 162,0
Group statement of changes in equity (continued)
Total
attributable to Non-
equity holders controlling
of the parent interests Total
Rm Rm Rm
Balance at 30 June 2009 4 187,1 75,9 4 263,0
Total comprehensive 1 969,3 (19,9) 1 949,4
income
Profit for the year 1 989,6 (11,1) 1 978,5
Other comprehensive (20,3) (8,8) (29,1)
income
Dividend paid - (0,8) (0,8)
Issue of ordinary share 4 592,8 - 4 592,8
capital
Shares issued - share 17,0 - 17,0
schemes
Shares issued - GSK 4 575,8 - 4 575,8
transactions
Treasury shares (13,5) - (13,5)
purchased
Treasury shares - - -
cancelled
Share options and 25,4 - 25,4
appreciation rights
expensed (including
deferred incentive
bonus)
Equity portion of tax 56,2 - 56,2
claims in respect of
share schemes
Hyperinflationary 13,7 - 13,7
adjustment - Venezuela
Balance at 30 June 2010 10 831,0 55,2 10 886,2
Total comprehensive 2 655,3 6,7 2 662,0
income
Profit for the year 2 577,8 11,0 2 588,8
Other comprehensive 77,5 (4,3) 73,2
income
Capital distribution (302,9) - (302,9)
Dividend paid - (1,7) (1,7)
Issue of ordinary share 10,0 - 10,0
capital - share schemes
Treasury shares (20,1) - (20,1)
purchased
Share options and 26,3 - 26,3
appreciation rights
expensed (including
deferred incentive
bonus)
Equity portion of tax 23,6 - 23,6
claims in respect of
share incentive schemes
Deferred bonus shares - - -
exercised
Hyperinflationary 3,0 0,9 3,9
adjustment - Venezuela
Balance at 30 June 2011 13 226,2 61,1 13 287,3
Supplementary information
Reviewed Restated
year ended year ended
30 June 30 June
2011 2010
Rm Rm
A. Capital expenditure
Incurred 840,2 5 750,3
- tangible assets 651,5 632,0
- GSK transactions (tangible and - 4 457,8
intangible assets)
- intangible assets 188,7 660,5
Contracted
- tangible assets 134,2 61,4
- intangible assets 49,0 20,9
Authorised but not contracted for
- tangible assets 275,3 502,8
- intangible assets 58,1 33,6
B. Operating profit has been arrived at
after charging/(crediting)
Depreciation of property, plant and 215,0 167,8
equipment
Amortisation of intangible assets 143,0 101,4
Impairment of property, plant and 10,0 37,6
equipment
Impairment of intangible assets 97,3 85,5
Share-based payment expenses - employees 30,6 29,8
Transaction costs 86,1 7,1
Restructuring costs 32,6 -
Insurance compensation (156,5) (162,4)
C. Investment income
Interest received 193,2 187,9
D. Financing costs
Interest paid (611,1) (538,7)
Capital raising fees (33,2) (9,2)
Net foreign exchange gains/(losses) 60,8 (19,1)
Fair value gains on financial instruments 1,2 37,9
Notional interest on financial 3,3 3,8
instruments
Preference share dividends paid (26,3) (27,9)
(605,3) (553,2)
E. Profit after tax for the year from
discontinued
operations
Profit after tax for the year from 40,6 124,9
discontinued operations
Profit on sale of personal care products 18,1 -
Profit on sale of Co-Pharma 7,4 -
Profit on sale of the Oncology business 367,9 154,7
434,0 279,6
F. Currency translation losses
Currency translation losses arising on
the translation of the international
businesses is as a result of the
difference between the weighted average
exchange rate used for trading results
and the closing exchange rate applied in
the statement of financial position.
G. Intangible assets movement
Opening balance 8 609,9 4 103,6
Acquisition of subsidiaries 1 083,9 -
Additions - GSK transactions - 4 054,9
Additions - other 188,7 660,5
Disposals (179,0) (0,1)
Amortisation (144,4) (101,9)
Translation of foreign operations (547,2) 14,6
Transferred to assets held for sale (29,4) (51,8)
Software projects implemented 31,5 15,6
Impairment of intangible assets (97,3) (85,5)
Closing balance 8 916,7 8 609,9
H. Contingent liabilities
There are contingent liabilities in
respect of:
Additional payments in respect of the 6,7 7,6
Quit worldwide intellectual property
rights
Contingency arising from product 17,6 -
liability claim
Contingencies arising from labour cases 24,8 -
Guarantees covering loan and other 1,7 3,4
obligations to third parties
Tax duty contingencies 10,3 8,3
I. Guarantees to financial institutions
Material guarantees given by Group
companies for indebtness of subsidiaries
to financial institutions 5 787,6 2 874,9
J. Net assets classified as held for sale
Onco Laboratories - 239,7
Co-pharma - 18,8
Decommissioned Beta Healthcare OTC - 1,6
manufacturing facility
Campos facility and related products 348,5 -
Personal care products 35,1 -
383,6 260,1
Campos facility and related products
An agreement was reached for the sale of the Campos facility and
related products in Brazil to Strides Arcolab Ltd as the
specialised manufacture of penicillins and penems, primarily for
the public sector and contract manufacturing business, is not
considered to be core to the product offering of the Brazilian
company. The net assets of the Campos facility were reclassified
as held for sale as conditions precedent relating to the sale
remain to be fulfilled, completion being expected during the year
ahead.
K. Acquisitions of subsidiaries and businesses
During the year the Group acquired the following subsidiaries and
businesses
80% shareholding in Formule Naturelle (Pty) Ltd with an effective
date of 1 July 2010.
100% shareholding in AHN Pharma (Pty) Ltd with an effective date of
1 June 2011.
100% shareholding in Sigma Pharmaceuticals Australia Pty Ltd
("Sigma pharmaceutical business"), the pharmaceutical business of
Sigma Pharmaceuticals Ltd in Australia, with an effective date of
31 January 2011.
Fair value of assets and liabilities acquired in subsidiaries and
businesses
Formule Sigma
Naturelle
AHN Pharma-
Pharma ceutical
(Pty) Ltd (Pty) Ltd business Total
Rm Rm Rm Rm
Property, plant and - 2,6 566,5 569,1
equipment
Intangible assets 20,2 27,3 1 036,4 1 083,9
Current assets 16,5 62,9 863,6 943,0
Non-current - (12,0) - (12,0)
borrowings
Deferred tax 2,3 (14,5) (74,6) (86,8)
assets/(liabilities)
Current liabilities (2,0) (22,7) (365,3) (390,0)
Fair value of assets 37,0 43,6 2 026,6 2 107,2
acquired
Goodwill - - 4 029,0 4 029,0
Deferred - (43,6) - (43,6)
consideration
Decrease in (2,0) - - (2,0)
investment in
associate
Purchase 35,0 - 6 055,6 6 090,6
consideration paid
Cash flow hedge in - - (169,0) (169,0)
respect of the Sigma
transaction
Cash and cash (6,1) (22,3) - (28,4)
equivalents in
acquired companies
Total cash 28,9 (22,3) 5 886,6 5 893,2
outflow/(inflow) on
acquisition
The initial accounting for these business combinations has been reported
on a provisional basis and will only be finalised in the year ending 30
June 2012.
Distinguishing the post-combination earnings of Sigma from earnings of
the combined entity is impracticable as significant estimate of amounts
are required which are not reasonably determinable, given that the
operations of Sigma have been integrated with those of the Aspen
Australia operations.
Goodwill
The goodwill arising on the acquisition of the Sigma pharmaceutical
business recognises:
- the synergies identified from the consolidation of the Sigma
pharmaceutical business with Aspen`s existing Australian business; and
- the ability of Aspen`s global procurement network and manufacturing
know-how to achieve significant savings in cost of goods.
The total amount of goodwill recognised is not tax deductible.
L. Disposal of subsidiary and associate
Onco Laboratories was classified as held for sale in June 2010 as the
conditions precedent relating to the sale had not been fulfilled on 30
June 2010. These conditions were met in February 2011 and this
transaction is now complete.
Aspen disposed of its 49% investment in Co-Pharma with effect from 1
July 2010. This investment was classified as held for sale at 30 June
2010.
Carrying values of assets disposed
Onco
Co-pharma Laboratories Total
Rm Rm Rm
Carrying value of assets 18,8 234,0 252,8
disposed
Profit on sale 7,4 367,9 375,3
Cash inflow on disposal 26,2 601,9 628,1
Subsequent events
The sale of the South African toothpaste business to the Unilever group
was concluded in September 2011. The intangible assets and inventory
were reclassified as held for sale in June 2011. The business has been
reclassified as a discontinued operation in compliance with IFRS 5.
With effect from 1 July 2011, Aspen Brazil disposed of certain non-core
hospital products to Agila Especialidades Farmaceuticas Ltda, a company
under the control of Strides Arcolab Ltd. The transaction comprises the
purchase of the technical information on, and rights to commercialise
the products as well as a license agreement to use the relevant
trademarks for a period with a cross option on the trademarks after that
period. The business has been reclassified as a discontinued operation
in compliance with IFRS 5.
Disclaimer
We may make statements that are not historical facts and relate to
analyses and other information based on forecasts of future results and
estimates of amounts not yet determinable. These are forward-looking
statements as defined in the U.S. Private Securities Litigation Reform
Act of 1995. Words such as "believe", "anticipate", "expect", "intend",
"seek", "will", "plan", "could", "may", "endeavour" and "project" and
similar expressions are intended to identify such forward-looking
statements will not be achieved. If one or more of these risks
materialise, or should underlying assumptions prove incorrect, actual
results may be very different from those anticipated. The factors that
could cause our actual results to differ materially from the plans,
objectives, expectations, estimates and intentions expressed in such
forward-looking statements are discussed in each year`s annual report.
Forward-looking statements apply only as of the date on which they are
made, and we do not undertake other than in terms of the Listings
Requirements of the JSE Limited. Any obligation to update or revise any
of them, whether as a result of new information, future events or
otherwise. All profit forecasts published in this report are unaudited.
Directors: NJ Dlamini* (Chairman), RC Andersen*, MG Attridge,
MR Bagus*, JF Buchanan*, SA Hussain*, CN Mortimer*, DM Nurek*,
SB Saad, SV Zilwa*
*Non-executive directors
Company secretary: HA Shapiro
Transfer secretaries: Computershare Investor Services (Pty) Ltd
(Registration number 1987/003382/06). 70 Marshall Street, Johannesburg
2001. PO Box 61051, Marshalltown 2107
Registered office: Building 8, Healthcare Park, Woodlands Drive,
Woodmead
www.aspenpharma.com
Date: 13/09/2011 13:00:13 Supplied by www.sharenet.co.za
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