Johannesburg – JSE Limited listed Aspen Pharmacare Holdings Limited (APN), the sixth largest generic company in the world, has announced excellent results for the year ended 30 June 2015. These results benefitted from the contribution of acquisitions concluded during the prior year. GROUP PERFORMANCE Revenue increased by 22% to R36.1 billion. Operating profit rose by 14% to R8.4 billion. Normalised headline earnings, being headline earnings adjusted for specific non-trading items, increased by 15% to R5.6 billion. Normalised headline earnings per share improved by 15% to 1 219 cents. Borrowings, net of cash, increased R0.2 billion to R30.0 billion. R2.5 billion of this arose from unfavourable relative foreign exchange rate movements. Group operating cash flows remained strong and cash generated from operating activities increased by 26% to R4.8 billion. A capital distribution of 216 cents per ordinary share was declared. Stephen Saad, Aspen Group Chief Executive said, “The excellent results were led by the International business which remained the largest contributor to the Group, delivering 49% of gross revenue. Sales in Asia jumped 39% to R1.3 billion due to a combination of organic growth and recent acquisitions led by strong advances in Japan. The results were achieved despite an unfavourable exchange rate environment affecting the Group’s principal trading currencies, particularly relative to the US Dollar, which resulted in a devaluing of revenue flows and an increase in cost of goods. INTERNATIONAL BUSINESS In the International business, revenue climbed 46% to R18.6 billion and operating profit before amortisation, adjusted for specific non-trading items (“EBITA”), advanced 42% to R5.2 billion. The International business performance was assisted by the inclusion of the significant transactions completed during the prior year and contributed more than half of Group EBITA. The disposal of the rights to commercialise the fondaparinux products (being Arixtra and the authorised generic thereof) in the United States to Mylan, for a consideration of USD 300 million, became effective during the first half of the 2015 financial year with the consequential loss of contribution. Revenue from customers in Europe and the Commonwealth of Independent States (“Europe CIS”) increased 45% to R10.5 billion. Finished dose form pharmaceutical sales to healthcare providers comprised R6.9 billion of the total sales. The acquisition in the second half of the year of Mono-Embolex, an anti-coagulant with almost all of its sales in Germany, further strengthened Aspen’s offering in this therapeutic area. The largest part of the balance of the sales in the region was from active pharmaceutical ingredient (“API”) sales. Relative weakness of the Europe CIS currencies to the Rand reduced reported revenue from this region. Sales to customers in Latin America (excluding Venezuela) grew 44% to R3.4 billion, supported by the infant nutritionals acquisition in the prior year. Performance was constrained due to poor supply by contract manufacturers of certain key pharmaceutical products. In Venezuela, sales to customers were up 143% to R2.7 billion. The results in Venezuela have been influenced by the application of hyper inflationary accounting principles and a change in the rate of exchange applied in the translation of local currency results from the prior year. The net effect of these entries on EBITA is not significant. Sales to customers in the Rest of the World were down 10% to R1.6 billion, influenced by the disposal of the fondaparinux products for the United States to Mylan. Capital expenditure projects remain underway in the Netherlands at Aspen Oss (Netherlands) and in France at Aspen Notre Dame de Bondeville (“Aspen NDB”). At Aspen Oss, the projects are focused on the repurposing of facilities and at Aspen NDB, the addition of a new pre-filled syringe filling line is well advanced. SOUTH AFRICAN BUSINESS Revenue in the South African business increased by 16% to R8.6 billion. Private sector pharmaceutical sales improved 12% through a combination of organic growth and new product launches. Public sector sales grew 14% led by demand under the antiretroviral (“ARV”) tender. The consumer division raised revenue by 23% due to a strong performance from infant nutritionals, with Infacare making impressive gains in its share of this category. Revenue from manufacturing for third parties also showed a good increase. The increase in the ARV tender revenue coupled with the ongoing weakening of the Rand relative to the US Dollar and high wage and energy cost inflation has placed pressure on EBITA margins. Expansion projects continued at the Port Elizabeth finished dosage form manufacturing site and at the API manufacturing site in Cape Town (“Fine Chemicals”). In Port Elizabeth, the building of the high containment facility is nearing completion and manufacturing trials in the hormonal suite have commenced. The packing facility upgrade is complete. Construction of the additional specialist sterile manufacturing facility has commenced. At Fine Chemicals, production is underway in certain of the newly constructed suites, while other parts of this expansion and upgrade project remain in progress. ASIA PACIFIC BUSINESS Revenue in the Asia Pacific business was 5% lower at R8.1 billion and EBITA declined by 10% to R1.7 billion. In Australasia sales to customers were 8% lower at R7.2 billion. The key focus areas of branded pharmaceuticals and infant nutritionals both showed positive growth. This was, however, reversed by the effect of disposals as well as the termination of licenses and contract manufacturing arrangements in the second half of the prior financial year. These were undertaken in accordance with the strategy to achieve greater focus in this business. Cost of goods in Australia increased due to the weakening of the Australian Dollar against the US Dollar in which many input costs are denominated. Sales to customers in Asia accelerated by 39% to R1.3 billion through a combination of organic growth and recent acquisitions, led by strong advances in Japan. SUB-SAHARAN BUSINESS In Sub-Saharan Africa, revenue was 1% higher at R2.8 billion. A disappointing performance from the GSK Aspen Healthcare for Africa Collaboration, which was hampered by supply problems, limited performance in the region. Weakening in-market currencies contributed to narrowing margins and a reduction of 6% in EBITA to R313 million. PROSPECTS Strategically, the… Continue reading Aspen’s revenue increases 22% to R36 billion
