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Johannesburg - Ascendis Health [JSE:ASC], which listed on the JSE main board in November 2013 on the JSE, announced its maiden yend results on Tuesday.
The group recorded revenue up 171% to R1.6bn, operating profit up 310% to R216m, operating margin improved from 8.8% to 13.3% with headline earnings up from R9.0m to R138m.
Cash generated from operations was R176m, resulting in a dividend of 15 cents per share.
“We are extremely pleased with our maiden year end results, which far exceed our pre-listing forecast and was driven by healthy double digit organic growth and the benefit of our strategic acquisitions," said Ascendis CEO Dr Karsten Wellner.
"The benefit of these acquisitions will only be fully accretive in the new financial year, hence our annualised sales would have been close to R2.2bn.
Further growth will be recorded by its two important post year end acquisitions of Respiratory Care Africa and the Arctic Healthcare brands.
"It also affirms our focused business model and importantly delivers on our original commitment to our shareholders,” said Wellner.
Ascendis sells health brands for people, plants and animals, housed in three divisions, namely Consumer Brands (nutraceuticals, vitamins, sports nutrition and skin care products), Pharma-Med (prescription drugs and medical devices) and Phyto-Vet (plant and animal health and care).
The revenue split in 2014 was Consumer Brands 41%, Pharma-Med 25% and Phyto-Vet 34%. The company aims to strategically achieve a mix of 40%, 40% and 20% for its three divisions.
Acquisition strategy
Ascendis follows an acquisition strategy of buying established, well managed businesses and resilient brands, which are integrated into the divisional platforms without the full associated fixed overhead structure.
Bolt-on acquisitions increased the group's gross margin for the year to 45.0%.
The group currently exports products to 53 countries, mainly in Africa and Europe. The market capitalisation of Ascendis is approximately R4bn.
Shortly after the JSE listing Ascendis acquired Surgical Innovations, a distributor of high-end medical devices to surgeons, and, together with the post year-end acquisition of Respiratory Care Africa (RCA), a medical devices platform in the pharma-med division has been created.
In the second half of the financial year the group acquired Atka Pharma and PharmaNatura, which have been integrated into the consumer brands division.
Shortly after the end of the reporting period the group acquired vitamin and mineral brands, Arctic Healthcare, which includes the Chela-Fer, Menacal7 and Supa Chewz brands.
Export markets
Ascendis brands are currently sold in 22 African countries, which account for the majority of export sales.
Major export markets outside the continent are the Scandinavian countries, Netherlands, Germany, Dubai and Australia.
Revenue generated from foreign markets increased by 86% to R187m. The increase in export performance together with the strong market position of the brands has allowed Ascendis to counteract the higher than expected imported inflation due to the rand weakness.
“We are currently accelerating the growth of our export operations through recent acquisitions of category leading brands into existing well established distribution channels, and are aiming to achieve 30% of our sales from international markets within three years,” said Wellner.
Going forward Ascendis plans to focus on the continued strong organic growth of its market leading brands in the consumer brands division through profit enhancing bolt-on acquisitions together with integration and synergy projects and the internationalisation of selected brands.
Pharma-Med plans to reduce its dependence on raw material imports, focus on internationalisation and new product launches to enhance profitability.
In Phyto-Vet, which services the higher LSM market, the focus will mainly be on profit enhancing bolt-ons and synergies between the existing businesses.
The group is currently evaluating acquisition projects across all divisions. This pipeline will be supported by the establishment of a R2bn domestic medium term note (DMTN) programme, which includes a R400m debut issue.
The group has negotiated a debt reference package, which includes a term facility, revolving credit facility, general banking facility and a trade finance facility totaling R660m.
Management plans to increase the group's BEE shareholding and seek further capital both locally and internationally to fund its growth aspirations.
Futre focus
The key deliverables for the year ahead include the finalisation of current acquisition projects, the integration of the recently announced acquisitions of PharmaNatura, RCA and the Arctic Healthcare brands, further organic growth locally and internationally, the extraction of vertical and horizontal synergies and internationalising of strong owned brands.
- Fin24
