Aspen - voluntary announcement
On 13 September 2018, Aspen released its results for the 2018 financial year which reported that Aspen had improved revenue by 3% to R42.6 billion and had grown normalised headline earnings per share (˘NHEPS÷) by 10% to 1 605 cents in the year ended 30 June 2018. Following the release of these results, trading volumes in Aspen shares increased with the share price declining significantly. Aspen have received a number of enquiries in respect of certain aspects of their business and for the benefit of their shareholders the following supplementary information is provided.
Guarantees to financial institutions relative to net debt levels
Aspen has no off-balance sheet funding and all guarantees to financial institutions apply only to wholly owned Aspen subsidiaries.
In the announcement of 13 September 2018, Aspen reported guarantees to financial institutions of R73.5 billion and in the accompanying commentary, reported borrowings, net of cash, of R46.8 billion. The explanation for the difference between these two values is as follows:
- The guarantees are for the maximum value of all available facilities and credit lines, and not only for the drawn down portion thereof;
- Cash balances are offset against borrowings while the guarantees are on the full available debt facilities, drawn and undrawn; and
- The guarantees also cover the gross value of the South Africa cash pooling system, and certain lines which are linked to non-vanilla debt facilities, i.e. derivative lines, guarantee lines and other lines of credit.
Revenue growth prospects in Commercial Pharmaceuticals
Aspen is targeting organic revenue growth of between 1% and 4% in its Commercial Pharmaceuticals business for the 2019 financial year.
Sale of Nutritionals business
As also announced on 13 September 2018, Aspen has concluded an agreement to divest of its global nutritionals business (˘Nutritionals business÷) to the Lactalis Group, a leading multinational dairy corporation, for a fully funded cash consideration of EUR739,8 million which includes approximately EUR62 million to be paid to AspenĂs joint venture partners in Asia Pacific. The net proceeds to Aspen from completion of the divestment of the Nutritionals business, after transaction costs and related taxes, is expected to be approximately EUR644 million (R11.2 billion at EUR17.44/ZAR). These net proceeds will be utilised to reduce AspenĂs gearing, creating greater headroom and capacity.
Influence of relative exchange rates
Relative exchange rate movements can have a significant impact on AspenĂs Rand-reported results. Approximately 20% of the GroupĂs revenue and less than 20% of the GroupĂs profit after tax was earned in Rand in the year ended 30 June 2018, with the balance of revenue and profits earned in a wide spread of global currencies, the most material of which being the EUR, AUD, USD, CNY and JPN. Should present exchange rates persist for the remainder of the 2019 financial year this would have a positive impact on Rand-reported earnings.