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CANCELLATION OF S436678 Condensed Consolidated Financial Results for the year ended 30 June 2020 - Short Form Announcement
Ascendis Health Limited
(Registration number 2008/005856/06)
(Incorporated in the Republic of South Africa)
Share code: ASC ISIN: ZAE000185005
(“Ascendis Health” or “the company”)
CONDENSED CONSOLIDATED FINANCIAL RESULTS FOR THE YEAR ENDED 30 JUNE 2020
SHORT FORM ANNOUNCEMENT
Key features
• Group revenue up by 19% to R6 963 million
• Normalised EBITDAPM up by 58% to R1 181 million
• Normalised EBITDAPM margin up by 410 bps to 16.9%
• Normalised operating profitPM up by 114% to R161 million
• Operational performance impacted by impairments and higher finance costs
• Normalised headline earningsPM down by 66% to R(29) million
• Normalised HEPSPM 66% lower at (6.0) cents
• Basic and diluted loss per share of 174 cents
• Basic and diluted headline loss per share of 49.3 cents
The full results announcement may be downloaded from
https://senspdf.jse.co.za/documents/2020/jse/isse/asc/FYE2020.pdf
or the group’s website
www.ascendishealth.com/investor-relations
Commentary
Ascendis Health Limited and its subsidiaries (together “the group”) is reporting normalised
results from continuing operations which have been adjusted for once-off transaction-related
and restructuring costs in the current and prior reporting periods (Normalised EBITDAPM).
Following the termination of the negotiations for the sale of Remedica in Cyprus in December
2019, the business is now classified as a continuing operation after being classified as a
discontinued operation for the year ended 30 June 2019. Scitec International has been
classified as a discontinued operation and the sale of this business was concluded with effect
from 31 July 2020.
Financial performance
Group revenue increased by 19% to R6 963 million (2019: R5 872 million). International
revenue increased by 28% to R3 676 million and accounts for 53% of the group’s total sales.
Revenue generated in South Africa grew by 10% to R3 287 million.
The group’s gross profit increased by 23% to R3 212 million with the gross profit margin up
180 basis points to 46.1% (2019: 44.3%).
Operating expenses increased by 9%, excluding depreciation, amortisation and impairments
of R1 021 million (2019: R1 870 million) and excluding once-off transaction and restructuring
costs of R264 million (2019: R124 million). These costs included extensive consulting and
professional fees associated with the restructuring of the senior lender debt, and other once-
off costs related to the disposal of Biosciences and the planned disposal of Remedica as well
as increased finance expenses associated with the interim stability agreements with the
group’s senior lenders.
Normalised earnings before interest, tax, depreciation and amortisation (Normalised
EBITDA)PM increased by 58% to R1 181 million. The growth was attributable to the higher
gross profit as a result of the increased revenue and lower stock write-offs in Consumer Health
compared to the prior year, partially offset by an increased investment in marketing in Europe
and South Africa in support of new product launches. The adoption of International Financial
Reporting Standards (“IFRS”) 16 Leases resulted in an EBITDA increase of R58 million. The
EBITDA margin expanded by 410 basis points to 16.9%.
The group’s normalised operating profitPM increased by 114% to R161 million (2019:
normalised operating lossPM of R1 121 million).
Net finance costs were R453 million higher at R856 million owing mainly to the costs related
to the refinancing and interim stability agreements with lenders, interest on deferred vendor
liabilities and the impact of the adoption of IFRS 16.
Impairment losses totalling R965 million (2019: R4.4 billion) were recognised as a result of the
deterioration in trading performance and the higher cost of capital applied in the impairment
testing due to the weaker economic environment in the wake of the COVID-19 pandemic.
The higher non-operating expenses and impairments contributed to a normalised loss after
tax for the year of R682 million, compared to a loss of R1 677 million in the prior year.
The normalised headline loss reduced by R55 million to a loss of R29 million, with the
normalised headline loss per share improving by 66% to (6.0) cents (2019: (17.7) cents).
The basic loss per share was (174.0) cents which improved by 54% on the prior year loss of
(374.4) cents. Headline loss per share was (49.3) cents compared to (41.2) cents on the prior
year, a decrease of 20%.
Impact of Covid-19
As an essential healthcare service, the group continued to operate without restriction during
the national lockdown. The group’s businesses were generally defensive in the Covid-19
environment, with the vitamins and supplements brands proving beneficial to supporting
patients’ immunity levels.
The pharma portfolio of anti-infective medication, pain management and chronic medication
also played an important role in ensuring patient compliance to reduce co-morbidities during
the pandemic. New product opportunities and sources of revenue were identified, including
the provision of personal protective equipment.
Healthcare related businesses classified as non-essential services such as Nimue, the skin
brand sold through salons, were negatively impacted. Similarly, supply chain disruptions
adversely impacted the operations of Chempure, the group’s strategic raw material sourcing
business.
Cash and capital management
The group concluded a R6.9 billion debt refinancing agreement with its lender consortium in
June 2020, extending its repayment obligations until December 2021. New debt facilities of
R464 million were secured, including R100 million which was made available ahead of the
refinancing agreement to fund the investment in working capital for Covid-19 related inventory.
The group generated cash from operating activities of R754 million. At end June 2020, cash
and cash equivalents totalled R344 million (2019: R397 million). The group repaid borrowings
of R126 million and invested R326 million in capital expenditure. The sale of Biosciences
generated net proceeds of R424 million. No dividends were declared or paid during the current
or prior reporting period.
Outlook
The group’s diversified health and wellness offering will not only assist in offsetting the
negative commercial impact of Covid-19 but also allow Ascendis Health to play a meaningful
role in the country’s efforts to combat the spread of the disease.
The asset disposal programme is being accelerated and the group is committed to maximising
value from the sale of its businesses to restore the stability of the balance sheet. Advisers
have been appointed on key proposed asset disposals.
After the reporting period, the disposal of Scitec International in Hungary was completed for
R100 million, effective 31 July 2020, and Ascendis Direct Selling was sold for R10.5 million,
effective 31 August 2020. These funds have been applied to reducing the group’s debt levels.
Mark Sardi Kieron Futter
Chief Executive Officer Chief Financial Officer
Auditor’s opinion
The group’s independent auditor, PricewaterhouseCoopers Inc. (‘PwC’), has conducted a
review of the condensed consolidated annual financial statements for the group for the year
ended 30 June 2020 in accordance with the International Standard on Review Engagements
(ISRE) 2410. PwC has issued an unmodified review opinion on the condensed consolidated
annual financial statements, however containing an emphasis of matter in relation to the
group’s ability to continue as a going concern, as more fully detailed in the review report.
The auditor’s review report is available for inspection at the issuer’s registered office.
Any reference to future financial performance included in the condensed consolidated financial
results announcement has not been reviewed or reported on by the group’s independent
auditor.
Directors’ responsibility
This short-form announcement is the responsibility of the directors of Ascendis Health. Any
investment decisions should be based as a whole on consideration of the full announcement
which may be downloaded from the Company’s website (www.ascendishealth.com) or may
be viewed, at no cost, at the registered office of the Company, during ordinary business hours,
for a period of 30 calendar days following the date of this announcement.
A copy of the full announcement may also be requested via email from the Company Secretary
at mpeo.nkuna@ascendishealth.com, or accessed from the links provided above.
Performance Measures
Performance measures (PM’s) are not defined or specified per the requirements of IFRS but
are derived from the financial statements prepared in accordance with IFRS. They are
consistent with how the group’s performance is measured and reported internally to assist in
providing meaningful analyses. The PM’s are used to improve comparability of information
between reporting periods and segments by adjusting for infrequent items. The key PM’s used
by the group are Normalised EBITDA, Normalised operating profit and Normalised headline
earnings per share and Adjusted EBITDA. PM’s disclosed may not be comparable with similar
labelled measures and disclosures provided by other entities and users should not use them
in isolation or as a substitute for other measures. They are not intended to be projections or
forecasts of future results. The directors confirm that that there has been full compliance with
the JSE’s practice note 4/2019 as it relates to the PMs being presented. Detailed disclosure
of the performance measures is included on the Ascendis Health website:
https://ascendishealth.com/wp-content/uploads/2020/09/Ascendis-Health-Performance-
Measures-30-June-2020.pdf
Bryanston
29 September 2020
Sponsor
Questco Corporate Advisory Proprietary Limited
Date: 30-09-2020 02:45:59
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