Wrap Text
Audited annual results for the year ended 30 June 2014
Ascendis Health Limited
Registration number 2008/005856/06
JSE share code ASC
ISIN ZAE000185005
Annual Results for the year ended 30 June 2014
HIGHLIGHTS
Revenue
Up 171% to R1.6 billion
Operating profit
Up 310% to R216 million
Operating margin
Up from 8.8% to 13.3%
Headline earnings
Up from R1.7m to R138 million
HEPS
64.98 cents
Maiden dividend
15 cents per share
- Exceeded pre-listing profit forecast
- Concluded acquisitions totalling
R1.4 billion since July 2013
Subsequent to year end:
- BEE shareholding transaction (MIC) completed
- R2 billion corporate bond programme launched
Commentary
Overview
Ascendis is a fast growing health and care group which sells health brands for people, plants and
animals. The group owns a portfolio of market-leading health and care brands, which are housed in
three divisions: Consumer Brands (nutraceuticals, vitamins, sports nutrition and skin care products);
Phyto-Vet (plant and animal health and care) and Pharma-Med (prescription drugs and medical
devices). The group has an expanding international presence and currently exports products to
52 countries, mainly in Africa and Europe. Listed on the JSE in November 2013, the market capitalisation
of Ascendis is approximately R4 billion.
Strategy
Ascendis is creating a synergistic group of health and care product brands spanning the value chain, from
imports of raw materials, manufacturing, brand development to distribution to consumers through retail,
wholesale, pharmacies, hospitals, doctors and direct selling channels locally and internationally.
Organic growth from the group's established, market-leading brands will be supported by the acquisition
of complementary businesses and brands for synergistic growth. This includes vertical integration across the
value chain and horizontal integration from bolt-on acquisitions.
Ascendis is rapidly growing its foreign customer base and the international expansion strategy includes
exports, establishing offshore operations and acquiring international businesses.
Financial performance
Ascendis exceeded its pre-listing profit forecast in its maiden annual results to June 2014, with the
performance driven by healthy organic growth and the benefit of strategic acquisitions made over the
past year.
Revenue for the year increased by 171% from R598 million to R1 618 million and includes revenue for Surgical
Innovations for six months, PharmaNatura for only one month and exclude recent acquisitions Respiratory
Care Africa ("RCA") and Arctic Healthcare ("Arctic") (refer to Acquisitions below).
Revenue generated from foreign markets increased by 86% to R187 million, accounting for 11.5% of the
group's total sales.
The gross margin expanded by 1.9% through better buying, selected price increases as well as a better
product and customer mix. Further savings could be achieved by extracting synergies across the value
chain, including joint manufacturing, warehousing and route to market activities in the Consumer Brands
and Phyto-Vet divisions.
Operating profit increased by 310% from R53 million to R216 million as the operating margin improved from
8.8% to 13.3%.
Profit after tax exceeded the pre-listing forecast of R112 million and increased from R1.5 million to R140 million.
Cash generated by operations was a healthy R176 million.
The performance for the year translated into headline earnings of R138 million (2013: R9.3 million), with
headline earnings per share increasing from 9.20 cents to 64.98 cents.
A maiden final dividend of 15 cents per share has been declared.
Operational performance
Consumer Brands generated revenue of R658 million (2013: R245 million) and accounted for 41% of
group revenue; Pharma-Med R411 million (no comparative as businesses only acquired in FY2014)
and Phyto-Vet R549 million (2013: R353 million). The medium-term targeted revenue split is Consumer
Brands 40%, Pharma-Med 40% and Phyto-Vet 20%.
Ascendis brands are currently sold in 21 other African countries, which account for 68% of export sales.
Major export markets outside the continent are the Scandinavian countries, Netherlands, Germany,
Dubai and Australia.
Acquisitions
Ascendis follows an acquisition strategy of buying established businesses and resilient brands which
are integrated into divisional platforms without the full associated fixed overhead structure. This
bolt-on strategy ensures immediate synergy benefits and efficiencies as well as enhanced sales and
operating margins.
Since July 2013, the group has made strategic acquisitions totalling R1.4 billion, including four concluded
after 30 June 2014.
Shortly after the listing Ascendis acquired Surgical Innovations, a distributor of high-end medical devices
to surgeons, to create a medical devices platform in the Pharma-Med division.
In the second half of the financial year the group acquired Atka Pharma and PharmaNatura, which
have been integrated into the Consumer Brands division, while RCA will bring further scale to the
medical devices offering in the Pharma-Med division from August 2014 onwards.
Atka Pharma markets the BioBalance brand and PharmaNatura sells nutraceutical, homeopathic and
herbal brands such as Vitaforce, Bettaway, Homeoforce and Herbaforce which are manufactured at
their GMP accredited plant in Johannesburg.
RCA distributes specialist medical equipment and surgical consumables for critical care facilities such
as intensive care units and operating theatres. The range of equipment is complementary to Surgical
Innovations. Both companies will offer joint turnkey solutions to hospitals and further growth potential is
expected from this opportunity.
Shortly after the end of the reporting period the group acquired Arctic, a market-leading vitamin and
mineral brand, including Chela-Fer, Menacal7 and Supa Chewz, and one small bolt-on acquisition for
the Pharma-Med and one for the Phyto-Vet division.
Outlook
After an extensive strategic planning process Ascendis has identified the following medium-term
imperatives: in the Consumer Brands division the focus will be on continued strong organic growth of its
market-leading brands; profit enhancing bolt-on acquisitions in South Africa; integration and synergy
projects and the internationalisation of selected brands.
In Phyto-Vet the focus will mainly be on profit enhancing bolt-ons and synergies between the existing
businesses.
The brands in the Consumer Brands and Phyto-Vet divisions are mostly aimed at higher LSM consumers
making the business more resilient in the face of weaker economic conditions. The brands in the
pharmaceutical sector of the Pharma-Med division focus more on the lower LSM consumer and will
benefit from government's focus on making medicines more affordable and accessible, and the
National Health Insurance implementation. Pharma-Med plans to reduce its dependence on raw
material imports, focus on internationalisation and new product launches to enhance profitability. The
medical devices business will concentrate on economies of scale between Surgical Innovations and
RCA, and better offerings for its complementary hospital customer base. Acquisitions will include local
bolt-ons and the first international acquisitions.
The group is well positioned to accelerate the growth in its export operations and is targeting to achieve
30% of sales from international markets within three years.
The group has a healthy acquisition pipeline and is currently evaluating projects in all divisions. After 30
June 2014, a R2 billion domestic medium-term note programme has been launched. The first tranche
of R400 million, together with further facilities (term facility, revolving credit facility and a trade finance
facility) of R660 million, will be issued in September 2014. This programme is supported by leading local
institutions and is a significant milestone to enable further growth of Ascendis Health. Management
plans to increase the group's BEE shareholding and to raise further capital locally and internationally
to fund its continued growth aspirations.
The key deliverables for the year ahead include the finalisation of current acquisition projects; the
integration of the recently announced acquisitions of PharmaNatura, RCA and the Arctic brands;
further organic growth; the extraction of vertical and horizontal synergies and internationalising its
strong owned brands.
Dr Karsten Wellner Robbie Taylor
Chief Executive Officer Chief Financial Officer
Cape Town
9 September 2014
Audited
Audited Summarised Group Audited Year ended
Statement of Comprehensive Income Year ended (Restated)
30 Jun 30 Jun
2014 2013
R'000 R'000
Continuing operations
Revenue 1 617 946 597 531
Cost of sales (890 100) (339 934)
Gross profit 727 846 257 597
Selling and distribution costs (46 829) (19 263)
Administrative expenses (502 891) (179 589)
Other operating expenses (30 538) (14 896)
Other income 68 351 8 829
Operating profit 215 940 52 678
Finance income 25 592 6 866
Finance costs (54 730) (52 984)
Share of profit of investments accounted for using the equity method (683) –
Profit/(loss) before income tax 186 119 6 560
Income tax expense (45 950) (5 091)
Profit/(loss) for the year from continuing operations 140 169 1 469
Discontinued operations
Profit/(loss) for the year from discontinued operations
(attributable to owners of the parent) (181) 147
Profit/(loss) for the year 139 988 1 616
Other comprehensive income/(loss) for the year
Items that may subsequently be reclassified to profit or loss:
Fair value adjustments to cash flow hedging reserve 672
– 672
Movement on foreign currency translation reserve
Currency translation differences (with no tax effect) (483) –
Items that will not be subsequently reclassified to profit or loss:
Gain on property revaluation – 1 955
Taxation related to gain on property revaluation – (548)
Total comprehensive income for the year 139 505 3 696
Profit/(loss) attributable to:
Owners of the parent
– For continuing operations 137 945 9 334
– For discontinued operations (181) 147
Non-controlling interests
– For continuing operations 2 225 (7 865)
139 988 1 616
Total comprehensive income/(loss) attributable to:
Owners of the parent
– For continuing operations 137 461 10 982
– For discontinued operations (181) 147
Non-controlling interests
– For continuing operations 2 225 (7 433)
139 505 3 696
Earnings per share
Basic earnings per share (cents)
– From continuing operations 65.00 9.07
– From discontinued operations (0.09) 0.14
64.91 9.21
Diluted earnings per share (cents)
– From continuing operations 65.00 8.99
– From discontinued operations (0.09) 0.14
64.91 9.13
Audited
Audited Summarised Group Audited Year ended
Statement of Financial Position Year ended (Restated)
30 Jun 30 Jun
2014 2013
R'000 R'000
Assets
Non-Current Assets
Property, plant and equipment 86 689 42 721
Goodwill 1 047 708 233 123
Intangible assets 251 337 86 968
Investments accounted for using the equity method 48 133 –
Deferred income tax assets 1 945 3 174
Loans to related parties – 42 258
Other financial assets – 198
1 435 813 408 443
Current Assets
Inventories 431 516 169 492
Trade and other receivables 475 559 172 786
Loans to related parties 102 795 52 111
Other financial assets 2 647 3 613
Current tax receivable – 2 360
Cash and cash equivalents 94 883 134 984
Non-current assets held for sale 13 361 –
1 120 761 535 345
Total Assets 2 556 573 943 787
EQUITY AND LIABILITIES
Equity attributable to owners of the parent
Ordinary shares 1 108 036 378 981
Other reserves (56 119) (7 376)
Retained earnings 153 998 16 234
1 205 915 387 839
Non-controlling interests 6 805 348
1 212 720 388 186
Liabilities
Non-Current Liabilities
Borrowings 415 286 84 876
Deferred income tax liabilities 62 239 14 755
Deferred vendor liabilities 36 423 –
513 948 99 630
Current Liabilities
Trade and other payables 395 477 128 786
Provision for onerous contract 35 238 –
Derivative financial instruments 1 371 –
Current income tax liabilities 16 118 5 789
Borrowings 230 738 242 010
Bank overdraft 100 848 10 737
Loans from related parties 26 286 38 990
Deferred vendor liabilities 16 509 29 658
Non-current liabilities held for sale 7 320 –
829 906 455 970
Total Liabilities 1 343 854 555 601
Total Equity and Liabilities 2 556 573 943 787
Total
attributable
Share- Accumulated to equity
Foreign Change in based (Loss)/ holders of Non-
Preference Ordinary Stated translation Revaluation ownership payment retained the Group/ controlling Total
Audited Summarised share shares capital reserve reserve reserve reserve income Company interest equity
Statement of Changes in Equity R'000 R'000 R'000 R'000 R'000 R'000 R'000 R'000 R'000 R'000 R'000
Balance as at 1 July 2012 – 8 649 – – – 1 146 – 6 696 16 491 7 203 23 694
Profit/(loss) for the year – – – – – – – 12 039 12 039 (7 433) 4 605
Other comprehensive income/(loss) for the year – – – – 976 – – – 976 – 976
Issue of shares – 370 332 – – – – – – 370 332 – 370 332
Exchange differences on translating foreign operations – – – 672 – – – – 672 – 672
Dividends – – – – – – – – – (680) (680)
Changes in ownership interest – control not lost – – – – – (10 170) – – (10 170) (819) (10 990)
Purchase price adjustments – – – – – – – (2 500) (2 500) – (2 500)
NCI allocation on acquisition – – – – – – – – – 2 077 2 077
Balance as at 1 July 2013 (Restated) – 378 981 – 672 976 (9 024) – 16 234 387 839 348 388 186
Profit/(loss) for the year – – – – – – – 137 764 137 764 2 225 139 988
Other comprehensive income/(loss) for the year – – – (483) – – – – (483) – (483)
Transfer of ordinary shares to stated capital – (378 981) 378 981 – – – – – – – –
Stated capital issued pre-private placement – – 173 834 – – 400 – – 174 234 – 173 834
Stated capital issued upon private placement – – 400 000 – – – – – 400 000 – 400 000
Listing fees capitalised against stated capital – – (19 037) – – – – – (19 037) – (19 037)
Treasury shares on hand at year end – – (14 594) – – – – – (14 594) – (14 594)
Issue of ordinary shares related to business combination – – 188 852 – – – – – 188 852 – 188 852
Share-based payment reserve – – – – – – 13 233 – 13 233 13 233
Non-controlling interest arising on business combination – – – – – – – – – 4 633 4 633
Total changes in ownership interests in subsidiaries that
do not result in a loss of control – – – – – (61 892) – – (61 492) (400) (61 892)
Balance as at 30 June 2014 – – 1 108 036 188 976 (70 516) 13 233 153 998 1 205 915 6 805 1 212 720
Audited
Audited Summarised Group Audited Year ended
Statement of Cash Flows Year ended (Restated)
30 Jun 30 Jun
2014 2013
R'000 R'000
Cash flows from operating activities
Cash generated from operations 175 919 7 734
Interest income 25 592 801
Interest paid (54 730) (52 429)
Dividends paid – (680)
Income tax paid (43 680) (10 679)
Net cash flows from operating activities: discontinued operations (2 353) (938)
Net cash generated from operating activities 100 747 (56 190)
Cash flows from investing activities
Acquisition of subsidiary, net of cash acquired (690 623) (101 812)
Acquisition of investments in joint venture (48 133) –
Movement in other reserves – –
Purchases of property, plant and equipment (14 765) (3 685)
Proceeds from sale of property, plant and equipment 36 501 326
Purchases of intangible assets (1 750) (1 841)
Loans granted to related parties (20 997) –
Loan repayments received from related parties – 3 408
Repayment of deferred vendor liabilities (33 549) (10 868)
Proceeds from other financial assets 1 103 –
Dividends received – –
Dividends received – –
Net cash flows from investing activities: discontinued operations (103) (284)
Net cash used in investing activities (772 316) (114 755)
Cash flows from financing activities
Proceeds from issuance of ordinary shares 366 370 370 332
Acquisition of non-controlling interest (61 492) (10 989)
Movement in redeemable preference shares – (14 677)
Proceeds from borrowings 504 993 –
Repayments of borrowings (271 651) (6 757)
Net cash movement from loans with related parties – (68 470)
Net cash flows from financing activities: discontinued operations 3 138 (1 159)
Net cash used in financing activities 541 357 268 279
Net (decrease)/increase in cash and cash equivalents (130 212) 97 334
Cash and cash equivalents at beginning of year 124 247 26 913
Cash and cash equivalents at end of year (5 965) 124 247
Audited
Audited Summarised Group Audited Year ended
Segmental Analysis Year ended (Restated)
30 Jun 30 Jun
2014 2013
R'000 R'000
Operating segments
Revenue
The revenue of Ascendis Health is predominantly earned in Southern Africa.
Revenue split by division
Consumer Brands 658 388 260 609
Phyto-Vet 548 919 336 922
Pharma-Med 410 639 –
Total revenue 1 617 946 597 531
Geographical revenue split
South African 1 431 165 497 254
Foreign: 186 781 100 277
Total revenue 1 617 946 597 531
Currently there are no intersegmental sales between operating segments
within the group.
EBITDA
Consumer Brands
Operating profit 96 912 30 972
Amortisation and depreciation 15 909 2 095
Impairment of assets – 209
Consumer Brands EBITDA 112 821 33 276
Phyto-Vet
Operating profit 37 659 31 193
Amortisation and depreciation 10 967 4 562
Impairment of assets –
Phyto-Vet EBITDA 48 626 35 755
Pharma-Med
Operating profit 99 856 –
Amortisation and depreciation 3 228 –
Pharma-Med EBITDA 103 084 –
Head office adjustments (18 202) (3 772)
Total EBITDA 246 329 65 259
Reconciliation of EBITDA to consolidated results
Consolidated operating profit 215 940 52 678
Total consolidated amortisation, depreciation and impairments 30 601 12 789
Head-office portions excluded from segmental analysis (212) (209)
Total EBITDA 246 329 65 259
Segmental assets and liabilities
Consumer Brands
– Total assets 921 195 274 027
– Total liabilities (592 139) (106 629)
Consumer Brands net asset value 329 056 167 398
Phyto-Vet
– Total assets 500 507 434 034
– Total liabilities (431 117) (411 396)
Phyto-Vet net asset value 69 389 22 639
Pharma-Med
– Total assets 854 612 –
– Total liabilities (330 647) –
Pharma-Med net asset value 523 965 –
Holding company net asset value 290 310 198 150
Consolidated net asset value 1 212 720 388 186
Audited
Audited Year ended
Earnings Per Share Year ended (Restated)
30 June 30 June
2014 2013
R'000 R'000
Earnings per share is calculated by dividing earnings attributable to the parent by the
weighted average number of ordinary shares in issue during the financial period.
Appropriate adjustments are made to earnings per share in order
to calculate headline earnings per share.
The number of shares in 2013 has been adjusted for the 8 000:1 share split that took
place in the current financial year.
Reported at beginning of period 166 616 91 984
Issue of ordinary shares 72 847 74 632
Minus treasury shares in issue (96) –
Total shares in issue net of treasury shares 239 368 166 616
Weighted average number of shares 212 228 102 952
Number of shares in issue
Shares in issue at the beginning of the period 166 616 102 952
Shares issued during the period net of treasury shares 72 752 74 632
Number of shares in issue 239 368 166 616
Reconciliation between earnings and headline earnings
Profit from continuing operations attributable to owners of the parent 137 763 9 481
Adjusted for:
– Impairment of goodwill (gross amount) –
– Loss/(profit) on the sale of property, plant and equipment 139 (161)
Gross amount 193 (223)
Tax effect (54) 63
– Impairment of intangible assets – 150
Gross amount – 209
Tax effect – (58)
Headline earnings 137 902 9 471
Weighted average number of shares in issue 212 228 102 952
Reconciliation between weighted average number of shares and diluted weighted
average number of shares: Cents Cents
Basic earnings per share (cents) 64.91 9.21
Diluted earnings per share (cents) 64.91 9.13
Basic headline earnings per share(cents) 64.98 9.20
Diluted headline earnings per share (cents) 64.98 9.12
NOTES TO THE Audited Summarised CONSOLIDATED
Annual FINANCIAL STATEMENTS
1. Corporate information
Ascendis is a fast growing health and care brands company consisting of three divisions, Consumer Brands
(nutraceuticals, vitamins, sports nutrition and skin care products); Phyto-Vet (plant and animal health); and
Pharma-Med (prescription drugs and medical devices). The group's vision, which is encapsulated in its motto
‘A healthy home, a healthy you', is to bring health to the consumer at all stages of his or her life – from health
maintenance (preventative medicine) to chronic medication and critical care (intervention). These summarised
consolidated group interim financial results as at and for the year ended 30 June 2014 comprise of the company
and its subsidiaries (together referred to as the group) and the group's interest in joint ventures.
2. Basis of preparation
The summary consolidated financial statements are prepared in accordance with the requirements of the JSE
Limited Listings Requirements for abridged reports, and the requirements of the Companies Act applicable
to summary financial statements. The Listings Requirements require abridged reports to be prepared in
accordance with the framework concepts and the measurement and recognition requirements of International
Financial Reporting Standards ("IFRS") and the SAICA Financial Reporting Guides as issued by the Accounting
Practices Committee and Financial Pronouncements as issued by the Financial Reporting Standards Council
and to also, as a minimum, contain the information required by IAS 34 Interim Financial Reporting. The
accounting policies applied in the preparation of the consolidated financial statements from which the
summary consolidated financial statements were derived are in terms of International Financial Reporting
Standards and are consistent with those accounting policies applied in the preparation of the previous
consolidated annual financial statements.
These summary consolidated financial statements for the year ended 30 June 2014 have been prepared
under the supervision of the Financial Director, Mr RJ Taylor CA (Z) and audited by PricewaterhouseCoopers
Inc., who expressed an unmodified audited opinion thereon. The auditor also expressed an unmodified
opinion on the annual financial statements from which these summary consolidated financial statements
were derived. A copy of the auditor's report on the summary consolidated financial statements and of the
auditor's report on the annual consolidated financial statements are available for inspection at the
Company's registered office.
The auditor's report does not necessarily report on all of the information contained in this announcement.
Any reference to future financial information included in this announcement has not been reviewed or
reported on by the auditors.
Shareholders are advised that in order to obtain a full understanding of the nature of the auditors' engagement
they should obtain a copy of that report together with the accompanying financial information from the
Company's registered office.
3. Business combinations
Consumer Brands
During the current financial year Ascendis Health Limited acquired 100% of the following businesses:
- Solal Technologies Proprietary Limited and its subsidiaries (05 July 2013)
- Nimue Skin Southern Africa Proprietary Limited (25 July 2013)
- Bolus Distribution (01 October 2013)
- Dealcor Forty Proprietary Limited T/a Evox (01 November 2013)
- 74% of SwissGarde Proprietary Limited (1 November 2013)
- PharmaNatura Proprietary Limited (1 June 2014)
These acquisitions amounted to a total consideration of R508 889 283 in this specific segment.
These companies possess exceptional brands further enhancing Ascendis' presence in the consumer
brands market. Solal specialises in healthy ageing products, offering solutions to most health problems
and anti-ageing needs, Nimue is a globally recognised brand, primarily available in leading skin care salons.
Bolus Distribution t/a Muscle Tech and Dealcor Forty Proprietary Limited t/a Evox, both specialise in sports
nutrition products for active lifestyle consumers and professional athletes. SwissGarde specialising in direct
selling of nutraceutical and home care products with a strong network in South Africa and Nigeria.
The total addition to the segmental revenue due to these acquisitions is R354 668 263, from the date
of acquisition.
Pharma-Med
During the financial year Ascendis acquired the following businesses at a total consideration of
R608 154 145: On 1 November 2013 the group acquired 100% of Pharmachem Group which collectively
consists of Dezzo, Pharmadyne and Pharmachem Pharmaceuticals. The company specialises in marketing
and distribution of its own branded generic pharmaceuticals, nutraceuticals and OTC products. On
17 January 2014 the group received approval from the Competition Commission for the acquisition of
Surgical Innovations Proprietary Limited imports, within the medical devices market, it markets and
distributes surgical and medical devices, and gives the group a footprint.
These companies possess exceptional dossiers and medical devices that can be used as a base by Ascendis
to broaden its footprint in the Pharma/Med division.
The total addition to the segmental revenue due to these acquisitions is R410 639 136, from the date
of acquisition.
Phyto-Vet
On 1 October 2013 the group acquired 100% of Marlton's Pets and Products Proprietary Limited. The
company specialises in pet care and accessories, distributing to its customers through retail and specialist
vet and pet stores.
This company possesses exceptional relationships and a long legacy of quality products in the companion
pet market.
The total addition to the segmental revenue due to this acquisition is R146 790 624, from the date
of acquisition
Consumer
Acquisition Brands Pharma-Med Phyto-Vet 2014 2013
Breakdown R'000 R'000 R'000 R'000 R'000
Cash 424 691 288 303 14 357 727 350 103 142
Equity instruments 73 385 273 852 15 448 362 685 53 111
Vendor loans 10 823 46 000 – 56 823 29 658
Total consideration 508 899 608 154 29 805 1 146 859 185 910
Business combinations
Group
Consumer
Brands Pharma-Med Phyto-Vet 2014 2013
R'000 R'000 R'000 R'000 R'000
Cash 424 691 288 303 14 357 727 350 103 142
Equity instruments 73 385 273 852 15 448 362 685 53 111
Vendor loans 10 823 46 000 - 56 823 29 658
Total consideration transferred 508 899 608 154 29 805 1 146 859 185 910
Recognised amounts of identifiable assets acquired and liabilities assumed
Cash and cash equivalents 39 359 12 541 (15 172) 36 727 1 330
Property, plant and
equipment 26 489 44 088 5 847 76 423 3 479
Intangible assets – – – – 1 208
Other financial assets 5 (65) – (60) 7 219
Inventories 100 846 159 172 25 348 285 365 45 202
Trade and other receivables 69 343 140 219 31 382 240 944 40 153
Trade and other payables (17 392) (296 677) (29 949) (344 018) (15 109)
Borrowings (56 888) (76 297) (7 846) (141 031) (19 306)
Current tax payable (3 341) 860 (419) (2 901) (2 362)
Contingent liability – – – – (50 762)
Deferred tax liabilities (2 273) (1 305) 1 271 (2 307) 4
Total identifiable
net assets 156 146 (17 464) 10 461 149 143 11 055
Initial resultant goodwill 352 753 625 619 19 344 997 716 174 855
The initial resultant goodwill was allocated as follows:
Total Intangibles on
acquisition 103 897 61 174 18 059 183 131 54 444
Defered tax on acquisition (29 091) (17 129) (5 057) (51 277) (15 244)
Non-controlling interest 4 633 – – 4 633 2 077
Initial resultant goodwill 352 753 625 619 19 344 997 716
Less: Intangibles assets
identified from the
business combination 103 897 61 174 18 059 183 131
Remaining goodwill 248 856 564 444 1 285 814 585
Intangibles assets identified from the business combination:
– Brand names and Trademarks 43 064
– Client relationships 74 739
– Drug master files 12 938
52 390
183 131
Acquisition date fair value of consideration paid
Cash 424 691 288 303 14 357 727 350 103 142
Cash flow on business combinations
Cash consideration paid (424 691) (288 303) (14 357) (727 350) (103 142)
Cash acquired 39 359 12 541 (15 172) 36 727 1 330
(385 332) (275 761) (29 529) (690 623) (101 812)
Vendor loan repayment Reconciliation
Total Vendor Loans per above 56 823 29 658
Repayments during the year (3 891) –
Total Vendor Loans 52 932 29 658
Final dividend
The board of directors has approved a final gross ordinary dividend of 15 cents per share (2013: nil). The source
of the dividend will be from distributable reserves and paid in cash.
Additional information
Dividends Tax ("DT") at the rate of 15% amounting to 2.25 cents per ordinary share will be withheld in terms
of the Income Tax Act. Ordinary shareholders who are not exempt from DT will therefore receive a dividend
of 12.75 cents per share net of DT.
The company has 239 367 785 ordinary shares in issue. Its income tax reference number is 9810/017/15/3.
Shareholders are advised of the following salient dates in respect of the final dividends:
Last day to trade "cum" the dividend Friday, 5 December 2014
Shares trade "ex" the dividend Monday, 8 December 2014
Record date Friday, 12 December 2014
Payment to shareholders Monday, 15 December 2014
Share certificates may not be dematerialised or rematerialised between Monday, 8 December 2014 and
Friday, 12 December 2014, both days inclusive.
The directors of the company have determined that dividend cheques amounting to R50.00 or less due to
any ordinary shareholder will not be paid unless a written request to the contrary is delivered to the transfer
secretaries, Computershare Investor Services Proprietary Limited, by no later than close of business on Friday,
5 December 2014, being the last day the shares trade "cum" the dividend. Unpaid dividend cheques will be
aggregated with other such amounts and donated to a charity to be nominated by the directors.
By order of the board
Andy Sims
Company secretary
9 September 2014
Transactions with non-controlling interests
During July 2013 and November 2013, the group acquired the remaining 15% of Efekto Holdings Proprietary
Limited and its subsidiaries and 20% of Chempure Proprietary Limited for a purchase consideration of
R39 770 917 and R21 721 349. The group now holds 100% of the equity share capital of Efekto Holdings
and its Subsidiaries and Chempure. The carrying amount of the non-controlling interest in Efekto Holdings
and Chempure on the date of acquisition was (R4 398 502) and R3 998 532. The effect of changes in the
ownership interest in Efekto Holdings and Chempure on the equity attributable to owners of the company
during the period is summarised as follows:
Audited year ended
June 2014
R
Carrying amount of non-controlling interests acquired 399 970
Excess of consideration paid recognised in parent's equity 61 492 266
Consideration paid for non-controlling interest 61 892 236
Going concern
After taking into account the current economy, the group's liquidity position as well as internal budgets and
forecasts for the short to medium term, it is expected that the group will continue to trade as a going concern
within the next 12 months.
The bridge facility of R150 million classified as short term debt will be replaced by a long-term 5-year bond.
JSE Limited Listings Requirements
The interim results announcement has been prepared in accordance with the Listings Requirements of the
JSE Limited.
Corporate governance
Detailed disclosure of the company's application of the principles contained in the King Report on Governance
for South Africa 2009 (King III) was made in the 2013 Pre-listing Statement and is available on the company's
website in accordance with the JSE Listings Requirements. No material changes have occurred since the
disclosure. Efforts are constantly employed to address the areas requiring improvement. The classification
of the independence of the non-executive directors is currently under review and could potentially change in
the short term. Please contact the Group Company Secretary, Andy Sims, for any additional information in
this regard.
Contingent liabilities
There are no additional contingent liabilities since the reporting period ended on 30 June 2014.
Significant events after the reporting period
Arctic Health Care
The Company has concluded an agreement in terms of which Ascendis has acquired certain market-leading
brands from Arctic Healthcare for a consideration of R151 million.
Broad Based Black Economic Empowerment ("BBBEE") Transaction for Ascendis Health
A transaction between Coast2Coast and the MIC Investment Holdings Proprietary Limited will increase the
BEE ownership in Ascendis from R165 million currently to a potential R365 million over a three year period,
excluding any further investment or disposal by existing or new BEE shareholders.
Respiratory Care Africa
With the acquisition of Respiratory Care Africa Ascendis will scale its medical devices platform in the
Pharma-Med Division, to become a leading provider of medical devices throughout South Africa. RCA
complements Surgical Innovations and will enhance Ascendis' ability to service hospitals, clinics and
government tenders with leading brands and on a turnkey basis within a growing market.
Listing of a bond on the JSE
The bridge facility of R150 million classified as short term debt will be replaced by a long-term 5-year bond.
Ascendis is in the process of refinancing all its existing term debt and working capital facilities into a single
group facility. The purpose of this is to introduce a sustainable funding structure and to streamline the
treasury management process of the group.
This debt consolidation process involves 2 steps:
1. "A Bond or High Yield Note Programme" funded by 2 institutions being Futuregrowth and Sanlam; and
2. "Term and Working Capital Facilities" funded by 3 banks, being Standard Bank, Nedbank and FNB.
In aggregate this process provides Ascendis with R1.05 billion in total facilities, as follows:
1. R400 million in high yield notes via the establishment of a R2 billion Domestic Medium Term Note
Programme ("DMTN"). The initial issuance will be R400 million and Ascendis will be in a position to issue
further notes and "tap the market" as it requires expansion capital and on more competitive terms; and
2. R650 million in term and working capital facilities, as follows,:
a. 5-year term debt facility of R200 million ("Term Debt");
b. Revolving credit facility of R250 million ("RCF");
c. General Banking facility (Overdraft) of R150 million ("GBF") ; and
d. Trade Finance facilities of R50 million.
To effect this in a tax efficient manner, the group debt will be introduced via a dedicated financing vehicle,
Ascendis Financial Services Ltd (AFS), a 100% subsidiary of Ascendis.
Structure
The practice amongst domestic lenders requires the implementation of a ring-fenced security structure, as
described below:
The security SPV secures the debt of all the lenders via one legal entity, being Ascendis Financial Services
Security SPV ("AFS SPV");
a. Ascendis cedes and pledges all of its assets to the AFS SPV as security for the R1.05 billion facility; and
b. The lenders rank parri passu in respect of any security provided by Ascendis.
Security
The security provided under this structure, requires all material Ascendis subsidiaries, ("Obligors") to provide
the Security SPV with the following:
Cession and Pledge (share pledge) between each Obligor that holds shares in a non-wholly owned subsidiary
and the Security SPV;
Cession of Debtors between each Obligor and the Security SPV;
Cession of the Medical Dossiers between each relevant Obligor and the Security SPV;
Cession of the TradeMarks in terms of which each Obligor cedes its Trade Marks to and in favour of the
Security SPV; and
General Notarial Bond over all of the movable assets of each Obligor in favour of the Security SPV.
This programme will ensure the appropriate recapitalisation of current debt and support the Ascendis
growth strategy.
Corporate Information
Ascendis Health Limited
Registration number 2008/005856/06
JSE share code ASC
ISIN ZAE000185005
Registered office 22 Sloane Street, Bryanston, Gauteng, 2191
PostNet Suite #252, Private Bag X21, Bryanston, 2021
Contact details +27 (0)11 036 9600 / info@ascendis.co.za
Sponsor Investec Securities
Auditors PricewaterhouseCoopers Inc
Transfer secretaries Computershare Investor Services (Pty) Limited, 70 Marshall Street, Johannesburg, 2001
PO Box 61051, Marshalltown, 2107
Company secretary Andy Sims CA (SA)
Directors J Bester (Chairman)*
Dr KUHH Wellner (CEO)
OP Cunningham*
CD Dillon#
B Harie*
GJ Shayne#
RJ Taylor (CFO)
* Independent non-executive #Non-executive
www.ascendis.co.za
Date: 09/09/2014 07:45:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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