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Ascendis posts 39% revenue rise

Cape Town – Health and care brands group Ascendis Health [JSE:ASC] announced on Wednesday that it has increased revenue by 39% to R3.9bn in the year to end-June 2016, with normalised headline earnings rising by 37% to R336m.

Shareholders will receive a total dividend of 21.5 cents per share, an increase of 13%.

Ascendis said its financial performance for the year was impacted by once-off transaction costs of R143m relating to two international acquisitions which will only be finalised after year-end from August 2016. Operating profit, excluding these transaction costs, rose by 41% to R529m. 

Chief executive officer Dr Karsten Wellner said the strong increase in revenue and normalised profits was driven by organic growth and supported by the acquisitions concluded over the past year, including its first international acquisition of a 49% stake in Spanish pharma business Farmalider.

Ascendis’ foreign revenue, which is mostly generated in hard currencies, increased by 233% to R861m, accounting for 22% of the group’s total sales. 

The largest acquisition in the past year was the R345m purchase of local pharmaceutical business Akacia Healthcare, which produces and sells South Africa’s market leading Reuterina probiotic range, as well as cold and flu brands Sinucon and Sinuend.

Following acquisitions in Europe, Ascendis is now the second-largest listed health company in Africa. The group’s market capitalisation has grown to R12.4bn from R3.9bn in July last year.

Wellner said the overseas acquisitions will be transformative for Ascendis, creating sizeable European and developing market platforms to support international growth and expansion. “Approximately half of Ascendis’ sales will in future be generated in US dollars and euros, providing a natural hedge against rand volatility and weakness.”

“Our international acquisitive growth strategy will focus mid-term on purchasing platform companies for the wellness, medical devices and phyto-vet businesses in Eastern Europe and emerging markets. We will also seek bolt-on acquisitions for Remedica and Scitec,” Wellner said.

The company said it has a "healthy acquisition pipeline" in South Africa, with a focus on brands with existing exports or the potential to grow exports.

“New product development and innovation remain key to maintaining our competitive advantage in the health and care markets both locally and internationally. However, our top priority is to integrate and extract synergies between our great South African business and its brands, and the two new exciting platform acquisitions in Europe,” said Dr Wellner.

Ascendis shares were trading at R27.98 on the JSE at 10:30.

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