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Aspen to split South African pharma business after disposal of non-core assets

(Adds results, background)

JOHANNESBURG, March 7 (Reuters) - Multinational drugmaker Aspen Pharmacare said it will split its South African Commercial Pharmaceuticals business into two divisions as it disposes of non-core assets to reduce its debt.

Without giving details, the company said in its half-year results statement that it was conducting a strategic review of its South African and European operations and a second phase would develop strategies for each of the businesses.

Although it did not say what each division would include, Aspen said the split would improve its focus on products and customers.

The commercial pharmaceuticals business consists of regional brands, anaesthetics, thrombosis and high potency & cytotoxics portfolios.

Over the past five years Aspen has transitioned from a generics-focused pharmaceutical business operating in a few select countries into a multi-national firm with strong regional brands and diversifying into specialised therapies such as thrombosis and anaesthetics.

Aspen's normalised headline earnings per share (HEPS) for the six-months ended Dec. 31, fell by 9 percent to 743.4 cents from 814.1 cents a year earlier. HEPS is the main profit gauge in South Africa, which strips out certain one-off items.

Normalised earnings before interest, tax, depreciation and amortisation from continuing operations fell 3 percent to 5.5 billion rand ($379.32 million), while revenue inched up 1 percent to 19.7 billion rand.

"Relative movements in exchange rates had an impact on financial performance," the company said.

Shares in Aspen, which operates in 56 countries, have plunged nearly 50 percent since it announced a lower-than-expected sale price of its infant milk business in September, which raised questions on whether the company was pressured to sell because it was close to breaching its debt obligations.

On Thursday, Aspen said borrowings, net of cash, have increased by 6.7 billion rand to 53.5 billion rand as a result of the rand currency weakness relative to foreign currency denominated loans, payments relating to acquisitions and capital expenditure.

Aspen said it expects proceeds from its infant milk disposal and inflows from the divestment of its non-core pharmaceutical portfolio in the Asia-Pacific region to bring the gearing ratio covenant measure within the specified level of 4.0 times for the June and December 2019 measurement periods.

"Aspen's medium-term target for the gearing ratio is less than 3.0 times," it said.

In December, Aspen said it had engaged with its creditors to negotiate a conditional and temporary adjustment to its leverage ratio covenant to allow for any delay in the infant milk disposal. ($1 = 14.4998 rand) (Reporting by Nqobile Dludla; Editing by Kirsten Donovan and Elaine Hardcastle)

2019-03-07 19:51:33

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