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Ascendis' strength lies in diversification - CEO

Cape Town - The strength of the business of health and care brands group Ascendis Health [JSE:ASC] lies in its diversification from a customer point of view - and from a product point of view, it makes the business resilient, according to CEO Dr Karsten Wellner.

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.

"In two years' time we want about 60% of our sales from international," he said at a briefing on the latest results.

Ascendis 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%.

Chief financial officer Kieron Futter said Ascendis wants to continue paying dividends. He pointed out that it had also paid an interim one earlier.

"We are now a truly global company, providing a perfect rand hedge and lower tax rates," said Futter.

Wellner added that growth in the group's logistics business is seen as a very important part of the business as it helps with the business strategy to extract synergy.
   
Wellner said he is not happy with the -2.9% decline to R922m in revenue from Ascendis' consumer division. This is compared to an 83.9% increase in the pharma-med division to R2.3bn and a 13.1% increase in the phyto-vet division to R701m.

"We will grow consumer sales again. I do not think we will see a minus again. We have initiatives to launch Solal in Australia, for instance, and maybe in Spain, in order to have more export opportunities," said Wellner.

Nimue also has a new agent in Denmark and it is in the process of entry into new territories.

"Our success story lies in our bolt-on strategy. We build a platform and then look for bolt-on businesses so we can extract synergies from a product point of view," said Wellner.

He said Ascendis has about R600m for further acquisitions and will search for bolt-ons, but first it wants to integrate and extract synergies from its latest acquisitions.

"We want to integrate and create synergies. It does not come overnight, but we are confident that we can show the results in 2017. We will not stop with acquisitions, but will be a bit slower with it for now," said Wellner.

The 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.

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.

The largest acquisition in the past year was the R345m purchase of local pharmaceutical business Akacia Healthcare.

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