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Ascendis Health [JSE: ASC] announced on Tuesday that it will focus on its pharmaceutical and consumer healthcare offerings, and move to disinvest from its biosciences business, as it announced a 35% increase in international revenue for the year ended June 30, 2018.
The biosciences business includes the Avima, Efekto, Marltons and Afrikelp brands.
The JSE-listed health and wellness company communicated its new strategic focus in a shareholder notice, issued shortly after the release of the group’s annual financial results for the year ended June 30, 2018.
The decision to change up the strategy comes following a review process undertaken in March 2018, after the appointment of new CEO Thomas Thomsen on March 1.
“Increasing our focus on Pharma and Consumer Healthcare will strengthen the group’s market position by building on our globally competitive positions in these attractive sectors. Strategic acquisitions will be considered to complement our core businesses," said Thomsen.
It said its medical and animal health business divisions would remain key to its portfolio. “These businesses are strategically aligned with the rest of the group and management aims to strengthen and scale these businesses to continue to provide stable returns."
Ascendis previously announced it would disinvest from Ascendis Sports Nutrition, Ascendis Direct Selling and the group’s pharmaceutical manufacturing facility in Isando, Gauteng. On Tuesday it said it had sold Ascendis Sports Nutrition for R54m, while an agreement had been reached for the sale of Ascendis Direct for R40 million. It was in the "final stages" of concluding an agreement for the sale of the manufacturing facility.
The group announced it would also be adopting a global operating model, as opposed to having the current geographic structures focussing on SA and Europe. It said the new model is expected to yield a 7% to 10% organic revenue growth rate and a 22% to 25% margin for earnings before interest, tax, depreciation and amortisation (ebitda) by the 2023 financial year.
International revenue up
In its annual financial results the group had reported a 21% increase in revenue growth to R7.7bn. International revenue increased by 35% to R3.7bn as a result of acquisitions of Remedica in Cyprus and Sun Wave Pharma in Romania. International revenue now accounts for 48% of the group’s total revenue.
The group’s normalised results - adjusted to remove the effect of one-time transactions and seasonality – reflect an increase in operating profit by 18% to R1.2bn and an 18% increase in ebitda to R1.3bn.
Normalised headline earnings were up 14% to R738m, and headline earnings per share were up 2% to 159.7 cents.
During the period the group managed to settle R1.2bn of its debt.
Ascendis' share price was trading 2.29% stronger at R10.74 at 12:55 on the JSE.
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