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Unaudited interim financial results for the six months ended 31 December 2012 and renewal of cautionary
Aspen Pharmacare Holdings Limited
(Registration number 1985/002935/06)
Share code: APN
ISIN: ZAE000066692
Unaudited interim financial results for the six months ended 31 December 2012 and renewal of cautionary announcement
- Revenue from continuing operations increased 20% to R9,0 billion
- Operating profit from continuing operations increased 24% to R2,5 billion
- Normalised diluted headline earnings per share increased 23% to 379,0 cents
- Offshore contribution increased to 63% of Group operating profit
- Earnings per share increased 7% to 369,3 cents
- Headline earnings per share increased 17% to 371,1 cents
Commentary and renewal of cautionary announcement
Group performance
Aspen increased revenue by 20% to R9,0 billion and operating profit from continuing operations by 24% to R2,5 billion
in the six months ended 31 December 2012. Normalised headline earnings, being headline earnings adjusted for
restructuring costs, transaction costs and foreign exchange movements on transaction accounting, advanced by 24% to R1,7 billion.
Normalised diluted headline earnings per share was 23% higher at 379 cents.
South African business
The South African business maintained the favourable momentum from the second half of the prior year, raising revenue
by 23% to R3,6 billion and improving operating profit before amortisation, adjusted for specific non-trading items
(EBITA), by 14% to R960 million. Revenue in the Pharmaceutical division increased by 24%, buoyed by ongoing organic growth,
positive performances from new product launches and a strong upswing in anti-retrovirals (ARVs) sold under the public
sector tender. Higher priced raw materials due to the weakening Rand and a greater weighting towards low margin ARVs
resulted in margins in the Pharmaceutical division tightening despite production efficiency gains. The Consumer division
increased revenue by 17%, led by impressive advances from Infacare, Aspens leading infant milk formula brand. Consumer
margins were also negatively affected by the higher costs of imports.
Capital projects are underway at each of the Groups South African manufacturing sites. These projects are designed to
add capacity and advance technologies available to Aspen as part of the enduring aim to lower cost of goods. The Aspen
Board of Directors has recently authorised a new project for the construction of two high containment suites, one for
hormonals and one for oncolytics, on the Port Elizabeth site. The high containment suites are for oral solid dose products
requiring containment due to the risks associated with long term exposure to these drugs during manufacture. This
highly specialised manufacture is a further initiative towards Aspens objective of achieving a strategic advantage through
its production facilities.
Asia Pacific business
The Asia Pacific business maintained its record of continuous growth, lifting revenue by 18% to R3,4 billion and
growing EBITA by 29% to R949 million. Revenue growth was achieved in Australia, the dominant contributor to this territory,
despite mandatory price cuts imposed by the regulator. A key growth driver was new products secured through acquisitions.
Revenue from Aspens products in Asia also continued to grow. Margins widened as the programme of cost of goods savings
produced additional benefits. Results benefitted from the strengthening of local currencies relative to the Rand. The
consolidation and rationalisation of Australias manufacturing facilities progressed further with the decision reached to
close the Baulkham Hills site. Once complete this will result in all manufacture in Australia being concentrated on the
Dandenong site.
International business
The International business increased revenue by 22% to R1,8 billion and expanded EBITA by 33% to R604 million. The
Latin American region was the greatest contributor to the revenue advancement due to a combination of organic and
acquisitive growth. In line with Aspens objective of extending its footprint in Latin America, a subsidiary was established in
Argentina during the period. In addition to the revenue growth achieved in this territory, EBITA was also lifted by
improved margins delivered by the global brands portfolio.
Sub-Saharan Africa business
Gross revenue from Sub-Saharan Africa was up by 19% at R1,0 billion as greater promotional activity yielded positive
outcomes. An even better performance was inhibited by political unrest in both Nigeria and Kenya, two leading markets in
the territory. EBITA however declined 10% to R122 million as margins were pressured by an increased investment in sales
representatives and regulatory support, relative currency weakness in the territory and by a shift in sales mix.
Funding
As anticipated, borrowings, net of cash, increased, from R7,1 billion at the beginning of the period to R10,4 billion
as a consequence of the acquisition activity during the six months. Gearing moved up to 36% from 29% at the commencement
of the financial year. An investment of R3,5 billion was made in the acquisition of products, the largest of which was
the purchase from Glaxosmithkline of a portfolio of 25 established pharmaceutical productions (the classic brands)
distributed in Australia which completed on 30 November 2012 giving rise to a cash outflow of R2,2 billion. The upfront
investment in inventory to support the acquisition of the classic brands portfolio added R150 million to the investment in
working capital. Financing costs, net of interest received, was R263 million, covered 10 times by operating profit
before amortisation.
Prospects
The South African pharmaceutical business has the most comprehensive product offering in the country and leads the
industry in both the private and public sectors. Focus will remain on extensive sales representation and promotional
support driving consistent organic growth supplemented by regular new introductions to the market from the prolific product
pipeline. Aspen will implement the 5,8% Single Exit Price increase granted by the Department of Health during March which
will provide some relief to the margin pressure created by the weakening of the Rand and high administered inflation.
Aspen received a reduced share of the public sector ARV tender awarded recently and which has commenced on a phased basis.
However, in achieving the largest allocation of the once-a-day triple combination, Tenofovir/Emtricitabine/Efavirenz,
Aspen has secured supply of the product most favoured by clinicians as the first choice ARV treatment. Infant milk
formula products are set to continue as the most important contributor to the performance of the South African Consumer
division in the second half.
The Asia Pacific business is expected to replace South Africa as the Groups largest revenue generator by the end of
the 2013 financial year as sales from the classic brands add impetus to the second half performance. Aspens growing
prominence in Australia and its unique offering spanning branded, generic and OTC medicines positions it well to outperform
the market in this country. The demographic profile and regulator interventions limit growth prospects for the
Australian market and Aspen is looking to build its influence in Asia to sustain the growth achievements of the Asia Pacific
territory. Following the successful establishment of a subsidiary in the Philippines last year, Aspen will commence trade in
Malaysia before the end of the financial year. Further countries in which Aspen can set up its own sales infrastructure
in Asia are under consideration.
Growth of the global brands portfolio and improved profit margins from this product range have been important drivers
of the increased profit contribution from the International business. The Group is continuing to vigorously explore
opportunities to expand the global brands portfolio by adding value enhancing products. Prospects remain positive in the
Latin American territories for both organic and acquisitive growth.
Greater coverage by sales representatives in Sub-Saharan Africa should support further revenue generation provided the
volatile political situation in key areas does not constrain this activity. The decline in earnings in the first half
should be reversed over the full year as measures to address margin losses take effect. A subsidiary has recently been
established in Nigeria and will initially focus on Aspens OTC and consumer products.
Significant attention is being given to the assessment of investment opportunities which will add to the Groups value
proposition. It is expected that the favourable performance of the Group will continue into the second half of this
financial year.
Renewal of Cautionary Announcement
Shareholders are referred to the cautionary announcement released by Aspen on 4 February 2013 in which shareholders
were advised of discussions between Aspen and MSD (known as Merck in the United States and Canada) in respect of a
possible transaction comprising the acquisition of an active pharmaceutical ingredient facility situated primarily in the
Netherlands and a related portfolio of pharmaceutical finished dose form products.
These discussions are ongoing and may have a material effect on the price of Aspens securities if successfully
concluded and accordingly shareholders are advised to continue exercising caution when dealing in Aspens securities.
By order of the Board
N J Dlamini S B Saad
(Chairman) (Group Chief Executive)
Woodmead
7 March 2013
Aspens unaudited interim financial results for the six months ended 31 December 2012 were prepared under the
supervision of the Deputy Group Chief Executive, M G Attridge CA(SA) and approved by the Board of Directors.
Group statement of financial position
Unaudited Unaudited
31 December 31 December Audited
2012 2011 30 June 2012
Notes Rmillion Rmillion Rmillion
ASSETS
Non-current assets
Property, plant and equipment 4 021,7 3 915,3 3 807,0
Goodwill G# 5 592,1 5 263,7 5 343,9
Intangible assets H# 15 565,7 10 223,5 11 869,8
Other non-current financial receivables 27,0 41,4 31,5
Deferred tax assets 235,7 200,2 234,4
Total non-current assets 25 442,2 19 644,1 21 286,6
Current assets
Inventories 3 704,4 3 046,4 3 292,0
Receivables, prepayments and other current assets 4 260,8 3 701,5 3 825,2
Cash and cash equivalents 3 754,9 3 330,5 3 313,5
Cash restricted for use - 22,3 1,2
Total current assets 11 720,1 10 100,7 10 431,9
Total assets 37 162,3 29 744,8 31 718,5
SHAREHOLDERS' EQUITY
Share capital and share premium (including treasury shares) 3 983,4 4 322,2 4 703,1
Reserves 14 981,3 11 215,4 12 686,3
Ordinary shareholders equity 18 964,7 15 537,6 17 389,4
Preference shares - equity component - 162,0 -
Non-controlling interests 11,4 71,4 8,7
Total shareholders equity 18 976,1 15 771,0 17 398,1
LIABILITIES
Non-current liabilities
Preference shares - liability component - 378,9 -
Borrowings 6 241,2 6 449,4 6 254,1
Deferred revenue 140,1 148,5 143,6
Deferred tax liabilities 524,4 518,2 536,0
Retirement benefit obligations 74,6 18,8 66,4
Total non-current liabilities 6 980,3 7 513,8 7 000,1
Current liabilities
Trade and other payables 2 906,7 2 684,9 2 929,2
Borrowings 7 941,5 3 473,1 4 127,1*
Other current liabilities 343,3 269,9 241,9
Derivative financial instruments 14,4 32,1 22,1
Total current liabilities 11 205,9 6 460,0 7 320,3
Total liabilities 18 186,2 13 973,8 14 320,4
Total equity and liabilities 37 162,3 29 744,8 31 718,5
Number of shares in issue (net of treasury shares) (000) 454 996 436 541 454 186
Net asset value per share (cents) 4 168,1 3 559,3 3 828,7
#See notes on Supplementary information.
*Bank overdrafts are included within borrowings under current liabilities.
Group statement of cash flows
Unaudited Unaudited Audited
six months six months year
ended ended ended
31 December 31 December 30 June
2012 2011 2012
Rmillion Rmillion Rmillion
CASH FLOWS FROM OPERATING ACTIVITIES
Cash operating profit 2 855,9 2 308,2 4 746,0
Changes in working capital (866,5) (497,0) (869,6)
Cash generated from operations 1 989,4 1 811,2 3 876,4
Net financing costs paid (230,6) (302,4) (513,9)
Tax paid (443,0) (298,2) (454,1)
Cash generated from operating activities 1 315,8 1 210,6 2 908,4
CASH FLOWS USED IN INVESTING ACTIVITIES
Capital expenditure - property, plant and equipment (301,9) (237,0) (469,6)
Proceeds on the sale of property, plant and equipment 3,0 1,7 36,5
Capital expenditure - intangible assets (3 457,5) (381,3) (2 148,8)
Proceeds on the sale of intangible assets - 11,6 2,8
Acquisition of subsidiaries and businesses - (42,5) (315,6)
Increase in other non-current financial receivables (6,2) (29,6) (19,7)
Proceeds on the sale of assets held-for-sale - 250,1 250,4
Net investment hedge in Aspen Asia Pacific - - 6,8
Capital funding from non-controlling interests - - 0,9
Settlement of sale and leaseback agreement in
Aspen Asia Pacific - (102,2) -
Cash used in investing activities (3 762,6) (529,2) (2 656,3)
CASH FLOWS FROM FINANCING ACTIVITIES
Net proceeds from borrowings 3 378,6 (239,4) 138,3
Dividends paid (0,2) (2,0) (2,0)
Proceeds from issue of ordinary share capital 4,9 22,0 25,1
Acquisition of treasury shares (21,1) (18,6) (19,3)
Capital distribution (714,9) (457,6) (457,6)
Decrease in cash restricted for use as security for borrowings 1,2 6,4 27,2
Cash generated from/(used in) financing activities 2 648,5 (689,2) (288,3)
Movement in cash and cash equivalents before translation
effects of foreign operations 201,7 (7,8) (36,2)
Translation effects on cash and cash equivalents of
foreign operations 86,4 253,4 273,2
CASH AND CASH EQUIVALENTS
Movement in cash and cash equivalents 288,1 245,6 237,0
Cash and cash equivalents at the beginning of the period 1 989,8 1 752,8 1 752,8
Cash and cash equivalents at the end of the period 2 277,9 1 998,4 1 989,8
Change
Diluted operating cash flow per share (cents)
From continuing operations 8% 288,4 266,4 638,6
From discontinued operations - - 0,4
8% 288,4 266,4 639,0
THE ABOVE INCLUDES DISCONTINUED OPERATIONS OF
Cash generated from operating activities - - 1,7
Cash and cash equivalents per the statement of cash flows - - 1,7
RECONCILIATION OF CASH AND CASH EQUIVALENTS
Cash and cash equivalents per the statement of
financial position 3 754,9 3 330,5 3 313,5
Less: bank overdrafts (1 477,0) (1 332,1) (1 323,7)
2 277,9 1 998,4 1 989,8
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 comprehensive income
Unaudited Unaudited
six months six months Audited
ended ended year ended
31 December 31 December 30 June
2012 2011 2012
Notes Change Rmillion Rmillion Rmillion
CONTINUING OPERATIONS
Revenue 20% 8 997,1 7 504,9 15 255,8
Cost of sales (4 630,0) (3 929,1) (7 979,5)
Gross profit 22% 4 367,1 3 575,8 7 276,3
Selling and distribution expenses (1 128,8) (953,0) (1 967,4)
Administrative expenses (641,3) (553,5) (1 101,8)
Other operating income 40,6 99,1 218,9
Other operating expenses (152,3) (167,9) (485,4)
Operating profit B# 24% 2 485,3 2 000,5 3 940,6
Investment income C# 125,4 115,2 275,4
Financing costs D# (388,5) (386,6) (776,0)
Profit before tax 29% 2 222,2 1 729,1 3 440,0
Tax (538,7) (383,1) (772,3)
Profit after tax from continuing operations 25% 1 683,5 1 346,0 2 667,7
DISCONTINUED OPERATIONS
Profit after tax for the period from discontinued operations E# - 157,5 159,2
Profit for the period 12% 1 683,5 1 503,5 2 826,9
OTHER COMPREHENSIVE INCOME, NET OF TAX*
Currency gains/(losses) on net investment in Aspen Asia Pacific 16,1 (54,4) (53,3)
Net investment hedge profit on capital reduction in Aspen Asia Pacific - - 6,8
Currency translation gains F# 592,4 1 452,0 1 494,4
Unrealised cash flow hedges recognised 11,3 19,4 32,6
Total comprehensive income 2 303,3 2 920,5 4 307,4
Profit for the period attributable to
Equity holders of the parent 1 682,4 1 495,3 2 817,8
Non-controlling interests 1,1 8,2 9,1
1 683,5 1 503,5 2 826,9
Total comprehensive income attributable to
Equity holders of the parent 2 300,4 2 909,5 4 295,4
Non-controlling interests 2,9 11,0 12,0
2 303,3 2 920,5 4 307,4
Weighted average number of shares in issue ('000) 455 553 435 143 436 303
Diluted weighted average number of shares in issue ('000) 456 317 454 490 455 161
EARNINGS PER SHARE
Basic earnings per share (cents)
From continuing operations 20% 369,3 307,4 609,3
From discontinued operations - 36,2 36,5
7% 369,3 343,6 645,8
Diluted earnings per share (cents)
From continuing operations 24% 368,7 296,5 588,2
From discontinued operations - 34,7 35,0
11% 368,7 331,2 623,2
CAPITAL DISTRIBUTION
Capital distribution per share (cents) 157,0 105,0 105,0
The capital distribution of 157,0 cents relates to the distribution declared on 12 September 2012 and paid on 15 October 2012.
(The capital distribution of 105,0 cents relates to the distribution declared on 13 September 2011 and paid on 17 October 2011).
*All items included in other comprehensive income may subsequently be reclassified to profit or loss.
Group statement of headline earnings
Unaudited Unaudited
six months six months Audited
ended ended year ended
31 December 31 December 30 June
2012 2011 2012
Change Rmillion Rmillion Rmillion
HEADLINE EARNINGS
Reconciliation of headline earnings
Profit attributable to equity holders of the parent 13% 1 682,4 1 495,3 2 817,8
Continuing operations
- Impairment of goodwill (net of tax) - - 43,6
- Impairment of property, plant and equipment (net of tax) 7,4 3,6 25,2
- Net impairment of intangible assets (net of tax) 0,2 35,7 107,9
- Loss/(Profit) on the sale of tangible and intangible assets
(net of tax) 0,7 (0,1) (0,7)
Discontinued operations
- Profit on the sale of the personal care products in South Africa
(net of tax) - (35,6) (35,6)
- Profit on the sale of the Campos facility and related products in
Brazil (net of tax) - (121,9) (121,9)
23% 1 690,7 1 377,0 2 836,3
Headline earnings
From continuing operations 23% 1 690,7 1 377,0 2 834,6
From discontinued operations - - 1,7
23% 1 690,7 1 377,0 2 836,3
Headline earnings per share (cents)
From continuing operations 17% 371,1 316,4 649,7
From discontinued operations - - 0,4
17% 371,1 316,4 650,1
Diluted headline earnings per share (cents)
From continuing operations 21% 370,5 305,2 626,9
From discontinued operations - - 0,4
21% 370,5 305,2 627,3
NORMALISED HEADLINE EARNINGS
Reconciliation of normalised headline earnings
Headline earnings 23% 1 690,7 1 377,0 2 836,3
Continuing operations
- Restructuring costs (net of tax) 13,5 9,3 52,0
- Transaction costs (net of tax) 25,1 4,1 24,8
- Foreign exchange gain on transaction funding (net of tax) - - (34,5)
24% 1 729,3 1 390,4 2 878,6
Normalised headline earnings
From continuing operations 24% 1 729,3 1 390,4 2 876,9
From discontinued operations - - 1,7
24% 1 729,3 1 390,4 2 878,6
Normalised headline earnings per share (cents)
From continuing operations 19% 379,6 319,5 659,4
From discontinued operations - - 0,4
19% 379,6 319,5 659,8
Normalised diluted headline earnings per share (cents)
From continuing operations 23% 379,0 308,1 636,2
From discontinued operations - - 0,4
23% 379,0 308,1 636,6
Group statement of changes in equity
Share capital and Preference Total
share premium shares attributable to
(including treasury equity equity holders of Non-controlling
shares) Reserves component the parent interests Total
Rmillion Rmillion Rmillion Rmillion Rmillion Rmillion
BALANCE AT 1 JULY 2011 4 776,2 8 288,0 162,0 13 226,2 61,1 13 287,3
Total comprehensive income - 4 295,4 - 4 295,4 12,0 4 307,4
Profit for the year - 2 817,8 - 2 817,8 9,1 2 826,9
Other comprehensive income - 1 477,6 - 1 477,6 2,9 1 480,5
Capital distribution (457,6) - - (457,6) - (457,6)
Subsidiary capital reduction - 1,0 - 1,0 - 1,0
Acquisition of non-controlling interests in subsidiaries - (117,3) - (117,3) (64,3) (181,6)
Capital funding from non-controlling interest - - - - 0,9 0,9
Dividends paid - - - - (2,0) (2,0)
Issue of ordinary share capital 401,9 - - 401,9 - 401,9
Issue of ordinary share capital - share schemes 25,1 - - 25,1 - 25,1
Issue of ordinary share capital - conversion of
preference shares 376,8 - - 376,8 - 376,8
Treasury shares purchased (19,3) - - (19,3) - (19,3)
Deferred incentive bonus shares excercised 1,9 (1,9) - - - -
Share options and appreciation rights expensed
(including deferred incentive bonus) - 24,5 - 24,5 - 24,5
Equity portion of tax claims in respect of share schemes - 30,6 - 30,6 - 30,6
Conversion of preference shares - 162,0 (162,0) - - -
Hyperinflationary adjustment - Venezuela - 4,0 - 4,0 1,0 5,0
BALANCE AT 30 JUNE 2012 4 703,1 12 686,3 - 17 389,4 8,7 17 398,1
Total comprehensive income - 2 300,4 - 2 300,4 2,9 2 303,3
Profit for the period - 1 682,4 - 1 682,4 1,1 1 683,5
Other comprehensive income - 618,0 - 618,0 1,8 619,8
Capital distribution (714,9) - - (714,9) - (714,9)
Dividends paid - - - - (0,2) (0,2)
Issue of ordinary share capital - share schemes 4,9 - - 4,9 - 4,9
Treasury shares purchased (21,1) - - (21,1) - (21,1)
Deferred incentive bonus shares excercised 11,4 (11,4) - - - -
Share options and appreciation rights expensed
(including deferred incentive bonus) - 6,0 - 6,0 - 6,0
BALANCE AT 31 DECEMBER 2012 3 983,4 14 981,3 - 18 964,7 11,4 18 976,1
Segmental analysis
Unaudited Unaudited Audited
six months ended six months ended year ended
31 December 2012 31 December 2011 30 June 2012
Rmillion % of total Rmillion % of total Change Rmllion % of total
REVENUE FROM CONTINUING OPERATIONS
South Africa 3 565,7 37 2 908,2 36 23% 6 159,9 38
Asia Pacific 3 383,3 35 2 858,9 36 18% 6 021,0 37
International^ 1 756,0 18 1 443,2 18 22% 2 522,9 15
Sub-Saharan Africa 990,1 10 835,3 10 19% 1 651,7 10
Total gross revenue 9 695,1 100 8 045,6 100 21% 16 355,5 100
Adjustment* (698,0) (540,7) (1 099,7)
Total revenue 8 997,1 7 504,9 20% 15 255,8
OPERATING PROFIT BEFORE AMORTISATION FROM CONTINUING OPERATIONS
Adjusted for specific non-trading items ("EBITA")
South Africa 960,4 36 840,6 39 14% 1 768,4 40
Operating profit# 923,9 798,8 16% 1 616,2
Amortisation of intangible assets 33,3 33,4 66,8
Restructuring costs 1,0 3,4 3,4
Impairment of assets 2,2 5,0 82,0
Asia Pacific 948,7 36 735,8 34 29% 1 460,2 33
Operating profit# 874,1 677,3 29% 1 291,6
Amortisation of intangible assets 56,3 49,8 100,2
Restructuring costs 18,3 8,7 68,4
International 603,9 23 455,0 21 33% 938,5 21
Operating profit# 568,5 389,1 46% 790,9
Amortisation of intangible assets 26,5 19,5 41,1
Impairment of assets 8,9 46,4 106,5
Sub-Saharan Africa 122,3 5 135,8 6 (10%) 247,9 6
Operating profit# 118,8 135,3 (12%) 241,9
Amortisation of intangible assets 3,5 0,5 4,2
Restructuring costs - - 1,7
Impairment of assets - - 0,1
Total EBITA 2 635,3 100 2 167,2 100 22% 4 415,0 100
ENTITY WIDE DISCLOSURE - REVENUE FROM CONTINUING OPERATIONS
Analysis of revenue in accordance with customer geography
South Africa - pharmaceutical 3 008,1 31 2 430,7 30 24% 5 161,7 32
South Africa - consumer 558,1 6 477,5 6 17% 998,2 6
Asia Pacific 3 472,1 36 2 892,4 36 20% 6 088,8 37
Sub-Saharan Africa 1 018,7 10 835,3 10 22% 1 651,7 10
Latin America 750,9 8 543,9 7 38% 1 023,7 6
Rest of the world 887,2 9 865,8 11 2% 1 431,4 9
Total gross revenue 9 695,1 100 8 045,6 100 21% 16 355,5 100
Adjustment* (698,0) (540,7) (1 099,7)
Total revenue 8 997,1 7 504,9 20% 15 255,8
Excludes inter-segment revenue of R20,5 million (2011: R1,2 million).
^ Excludes inter-segment revenue of R426,0 million (2011: R220,3 million).
* The profit share from the Aspen GSK Healthcare for Africa collaboration has been disclosed as revenue in the statement of
comprehensive income. For segmental purposes the total revenue for the Aspen GSK Healthcare for Africa collaboration has
been included to provide enhanced revenue visibility in this territory.
# The aggregate segmental operating profit total of R2 485,3 million (2011: R2 000,5 million) agrees to the statement of
comprehensive income.
Supplementary information
Unaudited Unaudited
six months six months Audited
ended ended year ended
31 December 31 December 30 June
2012 2011 2012
Rmillion Rmillion R'million
A. CAPITAL EXPENDITURE
Incurred 3 759,4 618,3 2 618,4
- Tangible assets 301,9 237,0 469,6
- Intangible assets 3 457,5 381,3 2 148,8
Contracted 456,7 231,8 171,5
- Tangible assets 373,3 156,5 158,8
- Intangible assets 83,4 75,3 12,7
Authorised but not contracted for 733,3 28,8 3 713,6
- Tangible assets 700,7 19,6 456,4
- Intangible assets 32,6 9,2 3 257,2
B. OPERATING PROFIT HAS BEEN ARRIVED AT AFTER CHARGING/(CREDITING)
Depreciation of property, plant and equipment 141,0 125,1 252,7
Amortisation of intangible assets 119,6 103,2 212,3
Impairment of property, plant and equipment 10,9 4,8 32,3
Impairment of intangible assets 0,2 46,6 112,7
Impairment of goodwill - - 43,6
Share-based payment expenses - employees 17,5 15,1 31,5
Restructuring costs 19,3 12,1 73,5
Insurance compensation - (63,0) (63,0)
C. INVESTMENT INCOME
Interest received 125,4 115,2 275,4
D. FINANCING COSTS
Interest paid (399,6) (374,3) (754,7)
Debt raising fees on acquisitions (26,8) (5,4) (26,8)
Net foreign exchange gains/(losses) 46,7 (30,8) 2,5
Fair value gains on financial instruments (7,6) 34,5 24,0
Notional interest on financial instruments (1,2) 1,7 2,1
Preference share dividends paid - (12,3) (23,1)
(388,5) (386,6) (776,0)
E. PROFIT AFTER TAX FOR THE PERIOD FROM DISCONTINUED OPERATIONS
Profit after tax for the period from discontinued operations - - 1,7
Profit on the sale of the Campos facility and related non-core hospital products in Brazil - 121,9 121,9
Profit on the sale of the personal care products in South Africa - 35,6 35,6
- 157,5 159,2
F. CURRENCY TRANSLATION MOVEMENTS
Currency translation movements on the translation of the offshore 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. For the year the weaker
closing Rand translation rate increased the Group net asset value.
G. GOODWILL MOVEMENT
Opening balance 5 343,9 4 626,6 4 626,6
Acquisition of subsidaries - 65,9 104,3
Impairment of goodwill - - (43,6)
Translation of foreign operations 248,2 571,2 656,6
5 592,1 5 263,7 5 343,9
H. INTANGIBLE ASSETS MOVEMENT
Opening balance 11 869,8 8 916,7 8 916,7
Additions 3 457,5 381,3 2 148,8
GSK pharmaceutical products* 2 193,5 - -
Novartis pharmaceutical products# 459,5 - -
GSK OTC products^ 575,4 - 1 589,2
Other 229,1 381,3 559,6
Disposals - (11,6) (2,8)
Amortisation (119,6) (103,2) (212,3)
Acquisition of subsidiaries - - 4,2
Software projects implemented 0,4 7,1 22,2
Impairment (0,2) (46,6) (112,7)
Hyperinflationary adjustment Venezuela - - 0,4
Translation of foreign operations 357,8 1 079,8 1 105,3
15 565,7 10 223,5 11 869,8
* Competition approval authority was granted in November 2012 for the acquisition from GSK of a portfolio of 25 established pharmaceutical
products distributed in Australia.
# A selected territory agreement was concluded in July 2012 with Novartis Pharma AG for the acquisition of two pharmaceutical products,
Enablex and Tofranil.
^ A multi-territory agreement was concluded with GSK in April 2012 for the acquisition of a portfolio of established OTC productss in selected
territories including South Africa, Australia and Brazil. The leading products include recognised household brands such as Phillips Milk of
Magnesia, Dequadin, Solpadeine, Cartia, Zantac and Borstol. The deal was effective 1 May 2012 except for certain markets which required
competition authority approval: South Africa, Swaziland, Namibia, Kenya, Tanzania and the product, Zantac, in Australia. Competition authority
approval was granted in Australia, South Africa and Swaziland during July and August 2012. Namibia, Kenya and Tanzania received competition
authority approval in September 2012, October 2012 and February 2013 respectively.
I. CONTINGENT LIABILITIES
There are contingent liabilities in respect of:
Additional payments in respect of the Quit worldwide intellectual property rights 8,5 8,1 8,1
Contingency arising from product liability claim 22,4 21,1 21,3
Contingencies arising from labour cases 3,4 24,8 4,2
Guarantees covering loan and other obligations to third parties 2,4 17,2 3,3
Import duty contingency 9,0 11,7 10,8
J. TAX CONTINGENCY
Following an audit, the South African Revenue Services (SARS) notified Aspen by way of letter of findings and letters of assessment of its intention to impose
tax on various South African companies relating to prior years. The letters deal mainly with corporate income tax and employees tax issues. Aspen has
responded to these letters and believes that all issues raised by SARS are defendable and that Aspen has sufficient evidence in support of its views and treatment
of these tax matters. Due to the uncertainties inherent in the process, particularly in the early stages, the quantum of the amounts claimed by SARS and the timing
of resolution of these matters cannot be determined.
K. GUARANTEES TO FINANCIAL INSTITUTIONS
Guarantees given by Group companies for indebtedness of subsidiaries to financial institutions 5 312,0 3 659,5 5 003,0
Basis of accounting
The condensed interim financial results have been prepared in accordance with IAS 34 Interim Financial Reporting,
the Listings Requirements of the JSE Limited and the South African Companies Act, 2008.
The accounting policies used in the preparation of these interim results are consistent with those used in the annual
financial statements for the year ended 30 June 2012.
* These interim financial results were prepared under the supervision of the Deputy Group Chief Executive, M G
Attridge CA(SA) and approved by the Board of Directors.
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, indicate, could, may, endeavour and project and similar expressions are intended to identify
such forward looking statements, but are not the exclusive means of identifying such statements. By their very nature,
forward looking statements involve inherent risks and uncertainties, both general and specific, and these are risks that
predictions, forecasts, projections and other 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 years 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
N J Dlamini (Chairman)*, R C Andersen*, M G Attridge, M R Bagus*, J F Buchanan*, D K Dlamini*,
S A Hussain*, C N Mortimer*, S B Saad, S V Zilwa*
*Non-executive director
Company Secretar: R Verster
There have been no changes in the directorate and company secretary of Aspen during the reporting period.
REGISTERED OFFICE
Building no 8, Healthcare Park, Woodlands Drive, Woodmead
TRANSFER SECRETARY
Computershare Investor Services (Pty) Ltd
(Registration number 2004/003647/07),
70 Marshall Street, Johannesburg, 2001.
(PO Box 1053, Johannesburg, 2000)
www.aspenpharma.com
Date: 07/03/2013 11:20:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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