Ascendis Health: Entrepreneurial Culture Leads The Way
4 December 2017 | Jeremy Woods: Out of the Woods


Ascendis is delighted to announce yet another bolt-on acquisition for a sum of R396.4 million, of which ± 75% will be paid in cash and the balance through the issue of Ascendis ordinary shares.

The new add-on acquisition, Kyron Laboratories, a South African based company complements Ascendis well and offers a strategic fit to the Ascendis Phyto-Vet division.

Kyron is a specialist vertically-integrated animal health company, which manufactures and markets a wide range of market-leading pharmaceutical and nutritional products in South Africa and sub-Saharan Africa. 

An attractive feature behind the Kyron deal is that the majority of Kyron’s revenue is generated through products that are registered with the Department of Agriculture – an economic moat giving Ascendis a strong competitive advantage.

Ascendis Health is a South African based global health and care group with 60% earnings outside South Africa. The company owns a portfolio of market-leading brands for humans, plants and animals, which are housed in the Pharma-Med, Consumer Brands and Phyto-Vet divisions, with revenue diversified across products, channels, geographic regions and currencies.

Ascendis’s annual report reflects some impressive fundamentals, with revenue up 64% to R6.4 billion, normalised EBITA up 78% to R1.1 billion, and cash from operations at R787 million. To strengthen its cash position, the company has declared a rights offer opening early in December, where it intends to raise R750 million. Some of the proceeds will be allocated to reducing the mounting debt load and position Ascendis closer to its desired capital structure.

A more balanced debt-to-equity ratio should have a knock-on effect on the share price, which not too long ago was edging towards the R30 mark.

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Trade ASC From 0.3%

According to management at Ascendis: “The group will continue to pursue its proven strategy of organic, acquisitive, synergistic and international growth to create shareholder value.

Projects have been initiated to enhance organic growth and EBITDA margins. These include consolidating the medical devices division in South Africa focusing on cost efficiencies across the group, in particular in the sports nutrition businesses, rationalising manufacturing facilities in South Africa and investing in new product development and launches. Management is targeting to improve the EBITDA margin from 17% to 18% over the medium term. Plans are being implemented to maximise free cash generation and reduce gearing levels.

The group’s acquisition strategy in 2018 will be focused on buying complementary bolt-on businesses, mainly in the higher-growth economies in central and Eastern Europe, and South Africa, while targeting fast-growing health and care market segments.” 



Jeremy Woods

Jeremy Woods trained for three years as a journalist on the Herts Advertiser, St Albans, in the U.K. Once qualified, he left England to work as a crime reporter on the Vancouver Sun in Canada. After three years, he worked for the Los Angeles Times as a trainee financial journalist, spending most of his time reading company accounts and finding publishable stories in them. He moved to South Africa and for the last five years in journalism worked for the Sunday Times, Business Times, as Investment Editor. He has also published a financial thriller called "Special Payments", which was a best-seller on publication, and optioned three times for a film.

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