ASPEN: 10,550 +850 (+8.76%)
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
The commercial pharmaceuticals business consists of regional
brands, anaesthetics, thrombosis and high potency & cytotoxics
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
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
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
($1 = 14.4998 rand)
(Reporting by Nqobile Dludla; Editing by Kirsten Donovan and
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