Wrap Text
Unaudited condensed consolidated interim results for the six months ended 31 December 2014
Ascendis Health Limited
(Incorporated in the Republic of South Africa)
Registration number 2008/005856/06
JSE share code ASC
ISIN ZAE000185005
("Ascendis" or "the group")
Unaudited condensed consolidated interim results
for the six months ended 31 December 2014
HIGHLIGHTS
Revenue
Up 101% to R1.3 billion
Operating profit
Up 84% to R161 million
Headline earnings
Up 65% to R89 million
HEPS
Up 22% to 35.5 cents
Interim dividend
8.0 cents per share
- Acquisition of The Scientific Group for R283.7 million
- Successful capital raising of R455 million
- R2 billion corporate bond programme launched
Commentary
Growth strategy
Ascendis is creating a synergistic group of market-leading health and care brands for people, plants
and animals. The products span the value chain from imports of raw materials, manufacturing, brand
development to distribution to consumers through wholesalers, pharmacies, hospitals, dispensing
doctors, retailers and direct selling channels locally and internationally.
Management is targeting to achieve 10% to 15% organic revenue growth from the group's strong and
resilient brands, based on price inflation and new product development. This is supported by the acquisition of
complementary businesses, brands and dossiers targeting a further 20% to 25% revenue growth, based on the
current acquisition pipeline. Synergistic growth from both vertical integration across the value chain and
horizontal integration from bolt-on acquisitions is planned to generate 5% profit growth from cost savings
achieved through the distribution network together with efficiencies in finance and administration.
Ascendis is rapidly growing its foreign customer base and the international expansion strategy includes
exports, establishing offshore operations and acquiring international businesses.
Financial performance
Revenue for the six-month period increased by 101% to R1 333 million (Dec 2013: R662 million), with the
performance driven by comparable organic growth of 14.9% and R617 million from strategic acquisitions
concluded over the past year.
Revenue from the acquisitions of Respiratory Care Africa ("RCA") and Arctic Healthcare ("Arctic") has
been included for five months and four months respectively.
Revenue generated from foreign markets increased by 10% to R114 million, accounting for 9% of the group's
total sales. Ascendis brands are currently sold in 52 countries globally, including 22 other African countries.
On the divisional performance, Consumer Brands increased revenue by 55% to R462 million and accounted
for 35% of group revenue; Pharma-Med grew 654% to R531 million (40% of total revenue); and Phyto-Vet
increased revenue 16% to R340 million, contributing 25% of group revenue.
The gross margin was impacted by the deterioration in the exchange rate, but this was offset by a
change in product mix. The net effect was that gross margin contracted by 1.3% to 44.8%. The average
R/US$ exchange rate devalued by 9% over the period.
Operating profit increased by 84% to R161 million (Dec 2013: R88 million) as the operating margin declined
from 13.2% to 12.1% at the end of the period.
Profit after tax was 59% higher at R89 million.
The performance for the reporting period translated into headline earnings growth of 65% to R88.6 million
(Dec 2013: R53.8 million), with headline earnings per share increasing 21.6% to 35.5 cents, impacted by the
35% increase in the weighted average number of shares in issue during the period.
The directors have declared an interim dividend of 8.0 cents per share.
Acquisitions and funding
A R2 billion domestic medium-term note programme was launched and the maiden tranche of
R400 million was issued in September 2014. The group also undertook a successful private capital
raising of R455 million which will be partially used to fund the acquisition of The Scientific Group.
In October 2014 the group announced the acquisition of the diagnostics business of The Scientific group
for R283.7 million. The diagnostics product range will further entrench a turnkey offering of medical
equipment and devices to private and public hospitals, clinics and medical professionals. This acquisition
will create a R1 billion Ascendis Medical business along with Surgical Innovations and RCA in the Pharma-
Med division.
The previously announced acquisitions of RCA and Arctic both become effective during the period.
The integration and merger of RCA with Surgical Innovations is on track. RCA distributes specialist
medical equipment for intensive care, trauma units and operating theatres in state and private
hospitals. This range of equipment is complementary to Surgical Innovations.
Arctic offers a range of market-leading vitamin and mineral brand dossiers, including Chela-Fer,
Menacal7, Chela-Preg and Supa Chewz. The integration of the Arctic business into Ascendis Consumer
Brands has now been completed.
Outlook
The group's priority is to deliver on its organic and acquisitive growth strategies.
Ascendis owns a portfolio of leading South African brands and plans to maximise the export potential
of these brands and to focus on offshore acquisitions to grow its international operations.
The group is currently considering the pursuit of international acquisitions for the Pharma-Med platform.
Potential bolt-on acquisitions for the Consumer Brands and Phyto-Vet divisions are also being evaluated.
The key operational deliverables for the remainder of the financial year include the integration of
The Scientific Group; continued new product development and innovation; extracting vertical and
horizontal synergies; growing export markets; managing the impact of foreign exchange fluctuations
on revenue and profitability; and simplifying its group structure and realising cost synergies across the
value chain and between its divisions.
The ongoing focus on these growth strategies is expected to result in continued value creation for
shareholders.
Dr Karsten Wellner Robbie Taylor
Chief Executive Officer Chief Financial Officer
Cape Town
11 March 2015
Unaudited Unaudited
UNAUDITED CONDENSED GROUP Six months Six months Audited
STATEMENT OF COMPREHENSIVE INCOME ended ended Year ended
31 December 31 December 30 June
2014 2013 2014
R'000 R'000 R'000
Continuing operations
Revenue 1 333 229 661 902 1 617 947
Cost of sales (735 597) (356 786) (890 101)
Gross profit 597 632 305 116 727 846
Selling and distribution costs (152 781) (18 087) (46 829)
Administrative expenses (246 363) (194 229) (502 891)
Other operating expenses (63 010) (11 795) (30 538)
Other income 25 515 6 573 68 352
Operating profit 160 993 87 578 215 940
Finance income 9 680 9 909 25 592
Finance costs (46 700) (19 060) (54 730)
Share of profit of investments accounted for using the
equity method (850) – (683)
Profit before taxation 123 123 78 427 186 119
Taxation (34 464) (22 743) (45 950)
Profit from continuing operations 88 659 55 684 140 169
Discontinued operations
Profit/(loss) for the year from discontinued operations
(attributable to owners of the parent) – – (181)
Profit for the period 88 659 55 684 139 988
Other comprehensive income:
Items that may be subsequently reclassified to profit and loss:
Derivative financial instruments (798) – –
Exchange differences on translating foreign operations 6 463 (483)
Other comprehensive income for the period net of taxation (792) 463 (483)
Total comprehensive income for the period 87 867 56 147 139 505
Profit/(loss) attributable to:
Owners of the parent
– For continuing operations 88 507 53 920 137 945
– For discontinued operations – – (181)
Non-controlling interests
– For continuing operations 152 1 763 2 225
88 659 55 683 139 989
Total comprehensive income/(loss) attributable to:
Owners of the parent
– For continuing operations 87 715 56 147 137 461
– For discontinued operations – – (181)
Non-controlling interests
– For continuing operations 152 – 2 225
87 867 56 147 139 505
Earnings per share (cents) continuing operations 35.5 29.2 65.0
Diluted earnings per share (cents) continuing operations 35.1 28.6 65.0
Headline earnings per share – continued operations 35.5 29.2 65.1
Diluted headline earnings per share – continued operations 35.2 28.6 65.1
Normalised headline earnings per share (cents) 43.1 33.4 72.0
Diluted normalised headline earnings per share (cents) 43.1 32.8 72.0
Unaudited Unaudited Audited
UNAUDITED CONDENSED GROUP 31 December 31 December 30 June
STATEMENT OF FINANCIAL POSITION 2014 2013 2014
R'000 R'000 R'000
Assets
Non-current assets
Property, plant and equipment 158 313 57 309 86 689
Goodwill 1 142 947 557 148 1 047 708
Intangible assets 442 506 273 757 251 337
Investments accounted for using the equity method 44 044 52 500 48 134
Deferred income tax assets – 2 960 1 945
Loans to related parties 49 596 85 734 –
Other financial assets 1 731 – –
1 839 137 1 029 408 1 435 813
Current assets
Inventories 520 325 344 550 431 516
Trade and other receivables 520 446 323 147 475 559
Loans to related parties 37 951 – 102 795
Other financial assets 11 908 1 822 2 647
Current tax receivable – 3 861 –
Cash and cash equivalents 219 928 238 729 94 882
Non-current assets held for sale 435 – 13 361
1 310 993 912 109 1 120 760
Total assets 3 150 130 1 941 517 2 556 573
Equity and Liabilities
Total equity 1 740 255 1 012 894 1 212 720
Liabilities
Non-current liabilities
Deferred tax 119 125 – 62 239
Deferred vendor liabilities 41 857 – 36 423
Other financial liabilities 547 430 579 248 415 285
708 412 579 248 513 947
Current liabilities
Trade and other payables 367 288 280 559 395 478
Provision for onerous contracts 16 510 – 35 238
Current income tax liabilities 16 786 17 291 16 118
Borrowings and other financial liabilities 177 478 15 188 232 109
Bank overdraft 30 601 – 100 848
Loans from related parties 26 286 – 26 286
Deferred vendor liabilities 66 514 36 337 16 508
Non-current liabilities held for sale – – 7 320
701 463 349 374 829 905
Total liabilities 1 409 875 928 623 1 343 853
Total equity and liabilities 3 150 130 1 941 517 2 556 573
Total
attributable
Accumulated to equity
Foreign Mark-to- Change in Share-based (loss)/ holders of Non-
Stated translation Revaluation market ownership payment Distributable retained the group/ controlling Total
UNAUDITED CONDENSED GROUP capital reserve reserve reserve reserve reserve reserves 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 2013 378 981 672 976 – (9 024) – – 16 234 387 839 348 388 186
Total comprehensive income for the period – – – – – – – 53 921 53 921 1 764 55 685
Issue of shares 659 959 – – – – – – – 659 959 – 659 959
Exchange differences on translating foreign operations – 463 – – – – – – 463 – 463
Dividends – – – – – – – – – (318) (318)
Listing fees capitalised (18 596) – – – – – – – (18 596) – (18 596)
Treasury shares held for payments of acquisitions (15 291) – – – – – – – (15 291) – (15 291)
Changes in ownership interest – control not lost – – – – (59 893) – – – (59 893) (1 378) (61 271)
NCI allocation on acquisition – – – – – – – – – 1 576 1 576
Balance as at 31 December 2013 1 005 053 1 135 976 – (68 917) – – 70 155 1 008 402 1 992 1 010 394
Profit for the period – – – – – – – 83 843 83 843 780 84 623
Other comprehensive income/(loss) for the period – (947) – – – – – – (947) – (947)
Capital share listing costs capitalised against stated capital (441) – – – – – – – (441) – (441)
Movement in treasury shares on hand at year end 697 – – – – – – – 697 – 697
Issue of ordinary shares related to business combination 102 726 – – – – – – – 102 726 – 102 726
Share-based payment reserve – – – – – 13 234 – – 13 234 – 13 234
Non-controlling interest arising on business combination – – – – – – – – – 3 058 3 058
Total changes in ownership interests in subsidiaries that
do not result in a loss of control – – – – (1 603) – – – (1 603) 979 (624)
Balance as at 30 June 2014 1 108 035 188 976 – (70 520) 13 234 – 153 998 1 205 911 6 809 1 212 720
Profit for the period – – – – – – – 88 507 88 507 152 88 659
Other comprehensive income/(loss) for the period – – – (798) – – – – (798) – (798)
Dividends – – – – – – – (40 760) (40 760) – (40 760)
Issue of ordinary shares 483 124 – – – – – – – 483 124 – 483 124
Raising fees capitalised (898) – – – – – – – (898) – (898)
Translation of foreign subsidiaries – 10 – – – – – – 10 – 10
Total changes in ownership interests in subsidiaries that
do not result in a material loss of control – – – – 5 159 – – – 5 159 (6 961) (1 802)
Balance as at 31 December 2014 1 590 261 198 976 (798) (65 361) 13 234 – 201 745 1 740 255 – 1 740 255
Unaudited Unaudited Audited
UNAUDITED CONDENSED GROUP Six months Six months Year
STATEMENT OF CASH FLOWS ended ended ended
31 December 31 December 30 June
2014 2013 2014
R'000 R'000 R'000
Cash flows from operating activities
Cash generated from/(utilised) in operations 120 776 (71 215) 175 918
Interest income 9 680 – 25 592
Interest paid (46 699) (9 151) (54 730)
Dividends paid (40 760) – –
Income tax paid (34 368) (5 384) (43 680)
Net cash flows from operating activities:
discontinued operations – – (2 353)
Net cash generated/(utilised) in operating activities 8 629 (85 750) 100 747
Cash flows from investing activities
Acquisition of subsidiary, net of cash acquired (275 646) (427 034) (690 623)
Acquisition of investments in joint venture 4 089 (17 056) (48 133)
Purchases of property, plant and equipment (18 180) – (14 765)
Proceeds from sale of property, plant and equipment 1 211 4 890 36 501
Purchases of intangible assets (1 298) – (1 750)
Movement in loans to related parties 15 249 – (20 997)
Repayment of deferred vendor liabilities (16 934) – (33 549)
Proceeds from other financial assets 2 115 – 1 103
Change in ownership – (39 547) –
Net cash flows from investing activities:
discontinued operations – – (103)
Net cash used in investing activities (289 394) (478 747) (772 316)
Cash flows from financing activities
Proceeds from issuance of ordinary shares 455 059 400 000 366 370
Acquisition of non-controlling interest (12 500) – (61 493)
Movement in other financial liabilities 129 849 (829) –
Finance lease payments 549 962 –
Proceeds from borrowings – 268 109 504 993
Repayments of borrowings (96 900) – (271 651)
Net cash flows from financing activities:
discontinued operations – – 3 138
Net cash used in financing activities 476 057 668 242 541 357
Net increase/(decrease) in cash and cash equivalents 195 292 103 746 (130 212)
– Continuing operations 195 292 103 746 (131 033)
– Discontinued operations – – 822
Cash and cash equivalents at beginning of period (5 966) 134 984 124 247
Cash and cash equivalents at end of period 189 326 238 730 (5 966)
– Continuing operations 189 326 238 730 (5 188)
– Discontinued operations – – (778)
EARNINGS PER SHARE, DILUTED EARNINGS PER SHARE AND HEADLINE EARNINGS PER SHARE
The group presents basic and diluted earnings per share (EPS) for its ordinary shares. Basic EPS is calculated by
dividing the profit or loss attributable to ordinary shareholders by the weighted average number of ordinary
shares in issue. Diluted EPS is determined by adjusting the profit or loss attributable to ordinary shareholders and
the weighted average number of ordinary shares in issue for the dilutive effects of all share options granted to
employees.
The calculation of headline earnings per share is based on the profit attributable to equity holders of the parent,
after excluding all items of a non-trading nature, divided by the weighted average number of ordinary shares in
issue during the period. The presentation of headline earnings is not an IFRS requirement, but is required by JSE
Listings Requirements and Circular 3 of 2012.
Unaudited Unaudited
Six months Six months Audited
ended ended Year ended
31 Dec 31 Dec 30 Jun
2014 2013 2014
R'000 R'000 R'000
(a) Basic
Basic earnings per share is calculated by dividing the profit
attributable to equity holders of the company by the weighted
average number of ordinary shares in issue during the period,
excluding ordinary shares purchased by the company and held
as treasury shares.
Weighted average number of shares in issue is calculated as the
number of shares in issue at the beginning of the period, increased
by shares issued during the period weighted on a time basis for
the period during which they have participated in the profit of the
group. Shares which are held by a subsidiary company as treasury
shares have been adjusted on a time basis when determining the
weighted average number of shares in issue.
Profit from continuing operations attributable to owners
of the parent 88 507 53 920 137 944
Profit from discontinued operations attributable to owners
of the parent – – (181)
Total 88 507 53 920 137 763
Weighted average number of ordinary shares in issue 249 601 184 581 212 228
Earnings per share (cents) – continuing operations 35.5 29.2 65.0
(b) Diluted
Diluted earnings per share is calculated by adjusting the weighted average number of ordinary shares outstanding
to assume conversion of all dilutive potential ordinary shares.
The company has three categories of dilutive potential ordinary shares: share options, share appreciation rights
and convertible preference shares. The convertible debt is assumed to have been converted into ordinary shares,
and the net profit is adjusted to eliminate the interest expense less the tax effect. For the share options, a
calculation is done to determine the number of shares that could have been acquired at fair value (determined as
the average annual market share price of the company's shares) based on the monetary value of the subscription
rights attached to outstanding share options. The closing price is used for share appreciation rights, as these are
classified as contingently issuable shares in terms of IAS 33 – Earnings per share. The number of shares calculated
as above is compared with the number of shares that would have been issued assuming the exercise of the shareoptions.
Unaudited Unaudited
Six months Six months Audited
ended ended Year ended
31 Dec 31 Dec 30 Jun
2014 2013 2014
R'000 R'000 R'000
Earnings
Profit from continuing operations attributable to owners
of the parent 88 507 53 920 137 944
Profit used to determine diluted earnings per share 88 507 53 920 137 944
Profit from discontinued operations attributable to owners
of the parent – – (181)
Total 88 507 53 920 137 763
Weighted average number of ordinary shares in issue 249 601 184 581 212 228
Weighted average number of ordinary shares for diluted
earnings per share 251 958 188 215 212 228
Earnings per share (cents) – continuing operations 35.1 28.6 65.0
(c) Headline earnings per share
Profit attributable to equity holders of the parent –
continued operations 88 507 53 920 137 944
Adjusted for:
– Loss/(profit) on the sale of property, plant and equipment – (74) 139
Gross amount – (103) 193
Tax effect – 29 (54)
– Impairment of intangible assets 74 – –
Gross amount 103 – –
Tax effect (29) – –
Headline earnings 88 581 53 846 138 083
Weighted average number of shares in issue* 249 601 184 581 212 228
Headline earnings per share – continuing operations 35.5 29.2 65.1
*After deduction of weighted treasury shares.
Unaudited Unaudited
Six months Six months Audited
ended ended Year ended
31 Dec 31 Dec 30 Jun
2014 2013 2014
R'000 R'000 R'000
(d) Diluted headline earnings
Profit attributable to equity holders of the parent –
continued operations 88 507 53 920 137 944
Adjusted for:
– Loss/(profit) on the sale of property, plant and equipment – (74) 139
Gross amount – (103) 193
Tax effect – 29 (54)
– Impairment of intangible assets 74 – –
Gross amount 103 – –
Tax effect (29) – –
Headline earnings 88 581 53 846 138 083
Weighted average number of ordinary shares for diluted earnings
per share 251 958 188 215 212 228
Diluted headline earnings per share (cents) – continuing
operations 35.2 28.6 65.1
*After deduction of weighted treasury shares.
(e) Normalised headline earnings per share
Normalised headline earnings per share is calculated by dividing
the normalised headline earnings by the weighted average
number of ordinary shares in issue during the period, excluding
ordinary shares purchased by a subsidiary of Ascendis and held as
treasury shares.
Normalised headline earnings is calculated by excluding
depreciation and amortisation from earnings. Since Ascendis
Health is a pharmaceutical company and not an investment
entity, the income statement effect of fixed and intangible assets
of its subsidiaries should be excluded.
Reconciliation of normalised headline earnings
Headline earnings 88 581 53 846 138 083
Adjusted for**
Once-off bond raising fee 1 285 – –
Other once off costs 4 446 – –
Tax effect thereof (1 758) – –
Amortisation 20 220 10 907 20 356
Tax effect thereof (5 662) (3 054) (5 700)
Normalised headline earnings 107 661 61 699 152 739
Weighted average number of shares in issue 249 601 184 581 212 228
Normalised headline earnings per share (cents) 43.1 33.4 72.0
Unaudited Unaudited
Six months Six months Audited
ended ended Year ended
31 Dec 31 Dec 30 Jun
2014 2013 2014
R'000 R'000 R'000
(f) Normalised diluted headline earnings per share
Normalised diluted headline earnings per share is calculated on
the same basis used for calculating diluted earnings per share,
other than normalised headline earnings being the numerator. – – –
Normalised headline earnings: 107 661 61 699 152 739
Adjusted normalised headline earnings 107 661 61 699 152 739
Weighted average number of shares for diluted headline
earnings per share 249 601 188 215 212 228
Shares to be issued to vendors – 3 634 –
Weighted average number of shares in issue 249 601 184 581 212 228
Diluted normalised headline earnings per share (cents) 43.1 32.8 72.0
* After deduction of weighted treasury shares.
** None of the normalised headline earnings adjustments includes non-controlling interests.
REPORTING SEGMENTS
(a) Ascendis Health Limited Group accounting policy
The group has three main reportable segments that comprise the structure used by the group executive
committee (EXCO) to make key operating decisions and assess performance. The Group's reportable segments
are operating segments that are differentiated by the activities that each undertakes and the products they
manufacture and market (referred to as business segments). Each business utilises different technology,
manufacturing and marketing strategies.
The group evaluates the performance of its reportable segments based on operating profit after re-measurement
items. The group accounts for inter-segment sales and transfers as if the sales and transfers were entered into
under the same terms and conditions as would have been entered into in a market related transaction.
The financial information of the group's reportable segments is reported to the exco for purposes of making
decisions about allocating resources to the segment and assessing its performance.
Operating segments are reported in a manner consistent with the internal reporting provided to the chief
operating decision-maker. The chief operating decision-maker, who is responsible for allocating resources and
assessing performance of the operating segments, reports to the EXCO who is responsible for strategic decisions.
(b) Ascendis Health Limited Group qualitative application of the segmental accounting policy
The EXCO is the group's chief operating decision-maker. Management has determined the operating segments
based on the information reviewed by the strategic steering committee for the purposes of allocating resources
and assessing performance.
The EXCO considers the business from both a geographic and product perspective. Geographically, management
considers the performance within South Africa and internationally. From a product perspective, management
separately considers the activities in these geographies on a segmental basis. Ascendis operates and sells health
and care products through three divisions across the full health spectrum, two of which cater for human health
(Consumer Brands and Pharma-Med) and one for the plant and animal health sector (Phyto-Vet).
The three operating divisions are:
– Consumer Brands Division (human health), incorporating all of the Ascendis Over The Counter (OTC) and
Complementary and Alternative Medicines (CAMs ) consumer brands products;
– Pharma-Med Division (human health), incorporating Ascendis' pharmaceutical business and its medical devices
business; and
– Phyto-Vet Division (animal and plant health), incorporating all of the Ascendis animal and plant health and care
products.
Consumer Brands Division
The Consumer Brands Division comprises health and personal care products sold to the general public, primarily
at the retail store level. The health products sold to these consumers are products catering for preventative health
needs and can be categorised into OTC medicines and CAMS (including vitamins and minerals), homeopathic,
ayurvedic products, herbals, dermaceuticals, functional foods, functional super foods, sports nutrition, health
beverages, weight management and therapeutic cosmetics.
The brands have been established in the South African market for between six and 45 years and are generally
targeted at higher LSM customers. As a result this division has shown itself to be resilient in difficult economic
times, hence its consistently strong historical financial performance.
Pharma-Med Division
This division comprises the sale of prescription, selected OTC pharmaceuticals, and includes medical devices.
Ascendis' pharmaceutical products are typically sold through dispensing and doctors, wholesalers, pharmaceutical
retailers and hospitals to both the Private and Government sectors. Ascendis' medical device products are focused
on the areas of general surgery gynaecology, urology, ear, nose and throat, cardiology and radiology and the
marketing of devices in a South African agent function, on an exclusive basis, for international brands of high
value-add. Ascendis imports and sells pharmaceutical products and medical devices through its Pharma-Med
Division which targets the human health sector via medical professionals (doctors and pharmacists) using the
following channels: medical practices, pharmacies, wholesalers and hospitals (both state and privately owned).
Phyto-Vet Division
The Phyto-Vet Division supplies health and care products to the plant and animal markets. The Phyto-Vet Division
manufactures and supplies mainly its own brands which in aggregate comprise 3 500 different products supplied
to over 4 500 retail stores throughout South Africa and a further 20 African countries. The division also sells
products into 20 African countries via a network of distributors or direct governmental tender participation.
(c) Ascendis Health Limited Group quantitative application of the segmental accounting policy
(c1) Statement of comprehensive income measures applied
(R'000) Dec 2014 Dec 2013 Jun 2014
Revenue
Revenue split by division
Consumer Brands 462 457 299 292 658 388
Pharma-Med 530 555 70 411 410 639
Phyto-Vet 340 217 292 199 548 919
Total revenue 1 333 229 661 902 1 617 946
Geographical revenue split
South Africa 1 219 072 558 358 1 431 165
Foreign 114 157 103 544 186 781
Total revenue 1 333 229 661 902 1 617 946
The group has an expanding international presence and currently
exports products to 52 countries, mainly in Africa and Europe.
15% (2013: 6%) of the group's total revenue is derived from a
single customer in the retail environment in South Africa.
EBITDA
Consumer Brands
Operating profits 77 052 61 873 96 912
Depreciation 2 518 1 831 3 372
Amortisation 9 362 6 810 12 537
Consumer Brands EBITDA
Pharma-Med
Operating profits 76 816 2 578 99 856
Depreciation 3 971 14 1 197
Amortisation 6 735 24 2 031
Pharma-Med EBITDA 87 522 2 540 103 084
Phyto-Vet
Operating profits 34 898 33 958 37 659
Depreciation 2 944 2 462 5 112
Amortisation 3 372 2 819 5 855
Impairment of assets 103 – –
Phyto-Vet EBITDA 41 317 39 239 48 626
Head office expenses (includes amortisation of 751 in Dec 2014) (26 819) (10 714) (18 202)
Total EBITDA 190 952 101 579 246 329
(R'000) Dec 2014 Dec 2013 Jun 2014
Reconciliation of EBITDA to consolidated results
Consolidated operating profit 160 992 87 578 215 940
Total consolidated amortisation, depreciation and impairments 29 005 14 279 30 601
Head office portions excluded from segmental analysis 955 (279) (212)
Total EBITDA 190 952 101 578 246 329
EBITDA is a measure of a company's operating profitability.
It equals earnings before interest, tax, depreciation and
amortisation.
EBITDA excludes depreciation and amortisation, EBITDA provides
a measurement criteria view of a segment's core profitability.
(c2) Statement of financial position
Segmental assets and liabilities
Consumer Brands
– Total assets 581 525 665 629 921 195
– Total liabilities (167 944) (87 831) (592 139)
Consumer Brands net asset value 413 581 577 798 329 056
Pharma-Med
– Total assets 868 711 381 444 854 612
– Total liabilities (271 280) (187 750) (330 647)
Pharma-Med net asset value 597 431 193 695 523 965
Phyto-Vet
– Total assets 222 550 489 018 500 507
– Total liabilities (146 004) (132 312) (431 118)
Phyto-Vet net asset value 76 546 356 706 69 389
Head office net asset value 652 697 (115 305) 290 310
Consolidated net asset value 1 740 255 1 012 893 1 212 720
NOTES TO THE AUDITED CONDENSED 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); Pharma-Med (prescription drugs and
medical devices) and Phyto-Vet (plant and animal health). 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
consolidated group interim financial results as at and for the six months ended 31 December 2014 comprise of
the company and its subsidiaries (together referred to as the group) and the group's interest in joint ventures.
2. Going concern
The directors consider that the group has adequate resources to continue operating for the foreseeable
future and that it is therefore appropriate to adopt the going concern basis in preparing the group's financial
statements. The directors have satisfied themselves that the group is in sound financial position and that it has
access to sufficient borrowing facilities to meet its foreseeable cash requirements.
3. Presentation of interim financial statements:
3.1 Statement of compliance
The unaudited condensed group interim financial results for the six-month period ended 31 December 2014
have been prepared under the supervision of RJ Taylor (CA) Z, in accordance with International Accounting
Standard (IAS) 34 Interim Financial Reporting, the SAICA Financial Reporting Guides as issued by the
Accounting Practices Committee, the Listings Requirements of the Johannesburg Stock Exchange (JSE),
Financial Pronouncements as issued by the Financial Reporting Standards Council and the requirements of the
South African Companies Act, No 71 of 2008. The condensed unaudited group interim financial results should
be read in conjunction with the audited group annual financial statements as at and for the year ended 30 June
2014 and the company's pre-listing statement which was prepared for listing on the Main Board of the JSE on
22 November 2013, which have been prepared in accordance with International Financial Reporting Standards
(IFRS) as issued by the International Accounting Standards Board (IASB).
3.2 Basis of preparation
The interim financial statements have been prepared on the historical cost basis, except for the measurement
of certain financial instruments and property, plant and equipment at fair value. The accounting policies
used in preparation of the interim financial results are consistent with those applied in the audited financial
statements for the year ended 30 June 2014.
The interim financial statements are presented in South African Rands.
4. Business combinations
Group
Dec 2014
Consumer
R'000 Brands Pharma-Med Phyto-Vet Total
Cash 161 600 102 370 9 570 273 540
Equity instruments – 24 168 3 000 27 168
Vendor loans 30 000 42 372 – 72 372
Total consideration transferred 191 600 168 910 12 570 373 080
Recognised amounts of identifiable
assets acquired and liabilities
assumed
Cash and cash equivalents – (6532) 4 426 (2 106)
Property, plant and equipment 40 600 1 578 42 178
Other financial assets – 1 397 – 1 397
Inventories 1 760 52 464 3 184 57 408
Trade and other receivables – 92 441 1 057 93 498
Trade and other payables – (34 911) (222) (35 133)
Borrowings – (30 185) (1 640) (31 825)
Current tax payable – (1 160) – (1 160)
Contingent liability – (3 211) – (3 211)
Deferred tax liabilities – 1 268 – 1 268
Total identifiable net assets 42 360 73 149 6 805 122 314
Initial resultant goodwill 149 240 95 761 5 765 250 766
All relevant purchase price allocations (PPA) were completed and the intangible assets identified, except for
Arctic and RCA which was completed on a preliminary basis.
Consumer Brands
During the period Ascendis acquired 100% of the following businesses (with effective dates):
Arctic Health Brands – August 2014
Ascendis purchased six brands from Arctic Health, these are well-established products and the brands have
shown solid growth annually and have a proven track record of over 15 years. The products enjoyed excellent
support from prescribing healthcare practitioners and have developed a credible reputation in this market.
The Arctic brands are a perfect bolt-on for Ascendis, increasing the number of CAMS products sold as well
as increasing Ascendis' market penetration in the detailing market. Three of Arctic's products are amongst
the market leaders in their particular category in the mineral market. These are Chela-Fer (Iron), MenaCal7
(Calcium) and Chela-Preg (Prenatal). All of the minerals contained in the range are the chelated form, which
has been shown to have better Bio-Availability than other forms of minerals. This ensures better absorption
of these important minerals.
Due to the size and nature of this business, it will be added to the CAMS Division, where it will be
complemented by our other successful CAMS companies.
The revenue included in the statement of comprehensive income since August 2014 contributed by Arctic
was R29 621 817. Artic also contributed profit after tax of R15 645 222 over the same period.
PharmaNatura Manufacturing Facility – November 2014
PharmaNatura's 12 000 sq.m manufacturing plant has some of the most advanced production equipment.
This, supported by stringent C-GMP-certified systems and procedures, allows PharmaNatura to produce
high pharmaceutical products, consistently and reliably. The facility carries stock levels of over 200 raw
materials at any given point and time.
The plant has the capacity to manufacture over 600 products, including capsules (hard and soft gel), creams,
liquids, pastes, tablets and teas.
The state of the art laboratory is fully equipped to guarantee quality assurance and quality control.
All incoming raw material has to pass our stringent testing before being allowed to be used, all new
products are put on stability testing before manufacture and all batches produced are tested before being
released.
Due to the size and nature of this business, it will be seen as being complementary to PharmaNatura's
business which was acquired during the later part of the previous financial year and will therefore form part
of the CAMS Segment in Ascendis Health.
The properties acquired include the following: R'000
No 1 Carey Street c/o 5th Street, Marlboro, Sandton, JHB. 28 600
Erf 1114, Marlboro Ext 1, Johannesburg 12 000
Total market value of properties 40 600
The properties have been valued by a qualified valuer and Ascendis paid the market related price of these
properties during the acquisition.
The revenue and profit since November 2014 contributed by PharmaNatura were all inter-company in
nature, and therefore eliminated upon consolidation.
Pharma-Med Division
Respiratory Care Africa (RCA) – August 2014
Respiratory Care Africa established in 1998, historically only focusing on the areas of Critical Care,
Neonatology and pulmonary function testing. Over the last 15 years RCA have also established themselves
as market leaders in the areas of pendant systems and theatre lights and have experienced significant
growth in the areas of anaesthetics, patient monitoring, imaging, theatre tables and hospital beds. Today,
RCA is capable of offering complete solutions for the Operating Theatre, all ICUs, Trauma Units, Maternity,
General Wards and Radiology. RCA is supplied by leading companies around the world, most of which are
publicly listed entities. The RCA business is structured into operating divisions staffed and managed by
dedicated independent teams, thus offering focus and expertise in order to ensure high levels of professional
service. A team of qualified and experienced application specialists supports every division to ensure our
clients are secure in their knowledge of the products. In addition to the product divisions, RCA has a technical
department servicing all RCA supplied equipment as well as a clinical support department responsible for
training and clinical support. During its history RCA has received in excess of 20 excellence awards, the most
significant of which is the Critical Care Society of Southern Africa Floating trophy, won twice in five years.
Due to the size and nature of this business, it will be added to the Pharma-Med Division, where it will be
complemented by our other successful Medical Devices companies.
The revenue included in the statement of comprehensive income since August 2014 contributed by RCA was
R143 085 677. RCA also contributed profit after tax of R9 067 218 over the same period.
Transactions with non-controlling interests
During the period Ascendis purchased the remaining minority interest of 16% in Swissgarde Proprietary
Limited for an amount of R12.5 million, increasing Ascendis's stake in Swissgarde to a 100% holding.
Swissgarde is a leading international network marketing company, specialising in a range of more than
150 health and beauty products, with over 50 000 distributors through out its African footprint which
includes Southern Africa and Nigeria. The company contributes to both the economy and aspiring
distributors, by equipping distributors for success by providing free training in network marketing,
the business opportunity and products. Swissgarde provides superior service and day to day support to
distributors and depot owners from its Gauteng-based head office.
Swissgarde forms part of the CAMS segment where it complements the business of other direct marketing
offerings within the group.
Unaudited Unaudited
Six months Six months Audited
ended ended Year ended
R'000 Dec 2014 Dec 2013 Jun 2014
Carrying amount of non-controlling interests acquired (7 341) 400 400
Consideration paid for non-controlling interest 12 500 61 492 61 492
Excess of consideration paid recognised in
parent's equity 5 159 61 892 61 892
5. Related party transactions
During the period the company and its subsidiaries, in the ordinary course of business, entered into various
sale and purchase transactions with joint ventures. These transactions were subject to terms that are no less
or more favourable than those arranged with third parties.
6. Contingent liabilities
There are no additional contingent liabilities since the reporting period ended on 30 June 2014.
7. Dividends
7.1 Final dividend paid
Dividends paid by Ascendis Health Limited for the six months ending 31 December 2014 amounted
to R40 759 422 (15 cents per share). Total shares in issue on date of dividend declaration amounted to
271 729 482 shares.
7.2 Interim dividend declaration
The board of directors has approved an interim gross ordinary dividend of 8 cents per share (2014: 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 1.2 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 6.8 cents per share net of DT.
The company has 271 729 482 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 interim dividend:
Last day to trade "cum" the dividend – Friday, 8 May 2015
Shares trade "ex" the dividend – Monday, 11 May 2015
Record date – Friday, 15 May 2015
Payment to shareholders – Monday, 18 May 2015
Share certificates may not be dematerialised or rematerialised between Monday, 11 May 2015 and Friday,
15 May 2015, 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, 8 May 2015 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
11 March 2015
8. Events after the reporting period
After period end, the Competition Commission approved the acquisition of the majority of The Scientific
Group Proprietary Limited (TSG).
"Ascendis will acquire 100% of the issued ordinary share capital of Lexshell 834 Investments Proprietary
Limited – the holder of 100% of the issued ordinary share capital of TSG."
The net effect of the transaction will be the acquisition by Ascendis of 100% of the diagnostics business
of TSG.
The medical devices businesses within the Pharma-Med Division of Ascendis have been important drivers of
growth for Ascendis, via the established platform of Surgical Innovations and the recently acquired
Respiratory Care Africa businesses ("Ascendis Medical"). Collectively, these businesses have positioned
Ascendis Medical as a leading provider of turnkey solutions to private and public hospitals and clinics,
as well as medical professionals in the southern African primary health care markets. Accordingly,
Ascendis now seeks to further consolidate its position as a market leading supplier through
implementing the TSG acquisition.
9. Audit
These results and any references to future financial performance included in this announcement have not been
audited or reviewed by the external auditors.
Corporate Information
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 Bank Limited
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: 11/03/2015 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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