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Reviewed provisional financial results, announcement of Nutritionals Business disposal and retraction of cautiionary
ASPEN PHARMACARE HOLDINGS LIMITED AND ITS SUBSIDIARIES ("Aspen" or the "Group")
(Registration number 1985/002935/06)
Share code: APN
ISIN: ZAE000066692
Reviewed provisional Group financial results for the year ended 30 June 2018, announcement of Nutritionals Business
disposal and retraction of cautionary announcement
COMMENTARY
DIVESTMENT OF GLOBAL NUTRITIONALS BUSINESS TO LACTALIS FOR EUR739,8 MILLION
With reference to Aspen's announcement of 29 January 2018, wherein Aspen advised that it had undertaken a strategic review of
its Global Nutritionals Business predominantly carried on in Latin America, Sub-Saharan Africa and Asia Pacific under the S-26,
Alula and Infacare brands ("Nutritionals Business") and its cautionary announcement of 11 September 2018, Aspen is pleased to
announce that it has concluded an agreement to divest of its Nutritionals Business to the Lactalis Group, a leading multinational
dairy corporation' based in Laval, France, for a fully funded cash consideration of EUR739,8 million/R12,9 billion
(translated at ZAR17,4/EUR) ("the Transaction").
The Lactalis Group is a privately owned, global leader in the dairy industry with revenue of EUR18,4 billion, sales in
over 200 countries, approximately 80 000 employees and 246 industrial plants in 47 different countries. Lactalis'
strategic intent is to develop a global infant nutritional business to complement their existing global product range.
The transaction is considered to be a compelling opportunity for the transferring Aspen employees, as well as the shareholders
of both Aspen and Lactalis.
In terms of the Transaction, the disposal of the Nutritionals Business will comprise the following elements:
- Intellectual property and any related goodwill presently owned by:
- Aspen Holdings and Pharmacare Limited in respect of the South African and Sub-Saharan Africa Nutritionals
Businesses; and
- Aspen Global Incorporated in respect of the Latin American and Asia Pacific Nutritionals Businesses;
- Tangible assets (including plant, leased immovable property, equipment, associated fixed assets and inventory)
presently owned by various Aspen Group companies in respect of the South African, Sub-Saharan Africa and Latin American
Nutritionals Businesses;
- Product registrations and retail registrations relating to Aspen's nutritional products;
- Shares in companies conducting Aspen's Nutritional Business across Asia Pacific (including the acquisition of shares
held by joint venture partners in New Zealand and Hong Kong); and
- Transfer of dedicated Nutritionals staff employed within each of the geographical regions.
Rationale
Aspen's disposal of the Nutritionals Business will allow the Aspen business units in Asia Pacific, Latin America and
Sub-Saharan Africa to dedicate all of their time and attention to their core pharmaceutical businesses. This heightened
focus is expected to drive increased business efficiency and performance.
Aspen believes that Lactalis' entrepreneurial spirit and commitment to develop a leading global position in infant
nutrition will provide the Nutritionals Business and the transferring Aspen employees with exciting future opportunities
for growth and development.
Financial information
The Global Nutritionals Business contributed ZAR3,091 billion to Group revenue and ZAR512 million to Group segmental
contribution profit for the year ended 30 June 2018.
The proceeds of EUR739,8 million will be reduced by approximately EUR62 million which will be utilised to buy-out
Aspen's joint venture partners in New Zealand and China.
The balance of the proceeds from the Transaction, after costs and taxes, will be utilised to reduce Aspen's gearing,
creating greater headroom and capacity.
Conditions precedent and completion
The Transaction is conditional upon the fulfilment of a number conditions precedent, the more material of which are
the following:
- Approval by the Mexican and South African Competition/Anti-Trust authorities;
- South African Reserve Bank approval to the extent required under the Exchange Control Regulations;
- New Zealand and Australian foreign investment approvals to the extent required;
- Signature by Aspen and Lactalis of implementation agreements, including certain regional asset purchase and share
purchase agreements with the various Aspen subsidiaries; and
- Signature or renewal of certain transitional service and other incidental agreements, some of which are with third
parties.
It is anticipated that the Transaction will be completed within six months of this announcement.
Categorisation of the Transaction
The Transaction is categorised as a Category 2 transaction in terms of the JSE Limited Listings Requirements.
Withdrawal of cautionary announcement
Shareholders are advised that following the release of the full details of the divestment of the Nutritionals
Business, shareholders no longer need to exercise caution when dealing in their Aspen securities in this regard.
GROUP PERFORMANCE
Aspen improved revenue by 3% to R42,6 billion and grew normalised headline earnings per share ("NHEPS") by 10% to
1 605 cents in the year ended 30 June 2018. At constant exchange rates ("CER") revenue was up 5% and NHEPS increased 10%.
The Group's performance was underpinned by strong operating cash flows with a conversion rate of operating profits to
cash of 105% being achieved.
Lower earnings in the second half of the year than in the first half were primarily influenced by the unfavourable
impact of the strengthened ZAR. At CER, revenue in the second half of the financial year was in line with that of the
first half. However, the stronger ZAR in the second half resulted in ZAR reported second half revenue being lower by
R1,3 billion.
Significant factors influencing performance for the year were as follows:
- Underlying positive growth in Commercial Pharmaceuticals;
- Strong growth in China in the first full year of operation in that country;
- The inclusion for the full year of the Anaesthetics portfolios acquired during the course of the prior year and the
margin benefit of the residual rights to the Astra Zeneca ("AZ") Anaesthetics acquired with effect from 1 November 2017;
- A decline in manufacturing revenue and profitability; and
- Additional operating expenditure related to the development of structures in China and Japan.
Relative movements in exchange rates had a net unfavourable impact on financial performance as is illustrated in the
table below which compares performance for the past year to performance in the prior year at previously reported exchange
rates and then at CER being a restatement of 2017 performance at 2018 average exchange rates.
Change at Change
Reported Reported reported CER 2018/2017
June 2018 June 2017 rates 2017 at CER
Years ended 30 June R'million R'million % R'billion %
Revenue 42 596 41 213 3 40 690 5
Normalised EBITDA* 12 031 11 416 5 11 427 5
NHEPS (cents) 1 605 1 463 10 1 462 10
* Operating profit before depreciation and amortisation adjusted for specific non-trading items as defined in the
Group's accounting policy.
From this point forward in the commentary, all 2017 revenue numbers are stated in CER and all percentage changes in
revenue between 2018 and 2017 are based on 2017 CER revenue in order to enhance the comparability of underlying
performance.
The synergy programme yielded benefits of approximately R0,5 billion during the year. This helped offset the impact of
Anaesthetics supply challenges and price cuts in Developed Markets.
SEGMENTAL PERFORMANCE
Therapeutic Focused Brands
Therapeutic Focused Brands comprising the Anaesthetics, Thrombosis and High Potency & Cytotoxic portfolios, recorded
revenue of R18,9 billion which amounted to 44% of Group revenue. Gross profit from Therapeutic Focused Brands of
R11,0 billion was at an improved gross margin percentage, primarily due to the benefits from the acquisition of the residual
rights to the AZ Anaesthetics and improvements in cost of goods of the Thrombosis portfolio.
Anaesthetics Brands
Anaesthetics delivered revenue of R8,3 billion, advancing 21%. The inclusion of this portfolio for the full year
following the acquisition of the products from AZ and GSK during the course of the prior year assisted to lift the rate of
growth. Emerging markets grew more quickly, led by a strong performance in China. The full potential of the portfolio was
not realised due to disruptions in supply from the AZ production network.
Thrombosis Brands
Revenue from the Thrombosis portfolio rose 12% to R6,4 billion supported by growth across all the brands in the
portfolio. The addition of Fraxiparine and Arixtra in China midway through the prior year assisted this outcome. China
produced pleasing half-on-half growth and was an important driver in the 18% advance in revenue in Emerging Markets.
Developed Markets recorded a satisfactory 7% improvement in revenue.
High Potency & Cytotoxic
Revenue from the High Potency & Cytotoxic Brands declined 9% to R4,2 billion. Increased generic presence in Developed
Europe had a negative influence on results and performance in other Developed Markets was generally down.
Other Pharmaceuticals
Other Pharmaceuticals comprising Regional Brands and Manufacturing, delivered 1% higher revenue of R20,6 billion at a
narrowing gross profit percentage due primarily to challenges in the manufacturing segment.
Regional Brands
Regional Brands comprise 34% of Group revenue with Sub-Saharan Africa ("SSA") and Australasia making up 80% of this category.
Revenue from Regional Brands increased by 5% to R14,3 billion. The absence of Hydroxyprogesterone Caproate ("HPC") sales during
the year resulted in reduced sales in the USA. Excluding HPC and various divestments/discontinuations from the results, the
underlying revenue growth in Regional Brands was 8%. SSA was the leading contributor to growth, supported by a 11% rise in revenue
from the South African business. Australasia produced solid results, raising revenue 2% despite the legislated price cuts imposed.
The Latam and Asian countries also performed well, growing by 17% and 27% respectively.
Manufacturing
Manufacturing revenue declined 5% to R6,2 billion. Active pharmaceutical ingredient revenue was stable. Finished dose
manufacturing revenue declined 22%, largely as a consequence of a major customer losing a tender for the supply of a
product in China.
Nutritionals
The brand transition to Aspen's new global infant formula brand, Alula, and the launch of Alula in China were
important milestones achieved during the year. Gross profit remained at prior year levels as initiatives to lower cost of goods
offset a revenue decline of 2%. Sub-Saharan Africa continued to grow revenue while Australasia and Latam were slightly
lower. Increased promotional spend was put behind the business to support the brand transition and the launch in China.
FUNDING
Borrowings, net of cash, increased by R9,6 billion to R46,8 billion. Operating cash generated of R7,0 billion was
offset by R14,3 billion of payments relating to acquisitions, other capital expenditure and dividends to shareholders.
Unfavourable exchange rate effects added a further R2,3 billion to the balance. Operating cash flow per share of 1 537 cents
represented a 105% rate of conversion of operating profit assisted by excellent second half cash generation. Net
interest paid was covered eight times by EBITDA.
In May 2018, Aspen announced the successful closing of a multi-currency syndicated facilities agreement with 28 lenders,
equivalent to approximately EUR 3,4 billion, which refinanced Aspen's existing term debt facilities. A significant
oversubscription allowed the facilities to be upsized.
PROSPECTS
The impending disposal of the Nutritionals Business is another step towards shaping Aspen into an enterprise that is
absolutely focused on its portfolio of valuable branded pharmaceuticals. The Group is a uniquely positioned multinational
with its weighting towards Emerging Markets and offers a portfolio of critical medicines with enduring global demand.
Emerging Markets are expected to continue to lead growth in Commercial Pharmaceuticals. Supply constraints are expected
to impact Anaesthetics at a similar level to that experienced in the past year.
Manufacturing revenue will be lower as limited availability of mucosa will prevent the Group from supplying third
parties with heparin and the full year effect is felt of the termination of the major supply contract referred to earlier.
The Nutritionals Business is well set to deliver a positive performance as benefits of many of the initiatives undertaken
in the last year begin to be realised although the contribution will clearly be limited to the period prior to
completion of the disposal.
The Group will continue its projects aimed at reducing cost of goods which have already proven successful in
protecting gross profit margins from the price erosion experienced in recent years. This includes the capital expenditure
programmes underway at the Port Elizabeth, Notre Dame de Bondeville and Bad Oldesloe sites targeted at bringing the manufacture
of a significant portion of the Anaesthetics portfolio into Aspen facilities. Complex manufacturing capabilities
represent a critical strategic advantage for the Group.
Strong operating cash flows are anticipated to continue although there will be additional investment in inventory
required to facilitate various planned changes in manufacturing sites aligned to the initiatives aimed at lowering the cost
of goods.
Foreign exchange rates will continue to be a factor affecting relative ZAR performance. Further divestments will be
considered where portfolios are identified which are no longer aligned to the Group's specific areas of focus.
Deleveraging the Aspen balance sheet will give headroom for other potential opportunities.
DIVIDEND TO SHAREHOLDERS
Taking into account the earnings and cash flow performance for the year ended 30 June 2018, existing debt service
commitments, the expected completion of the disposal of the Nutritionals Business, future proposed investments and funding
options, notice is hereby given that the Board has declared a gross dividend, which is paid from income reserves, of
315 cents per ordinary share to shareholders (or 252 cents net of a 20% dividend withholding tax, where this maximum rate of
tax applies) recorded in the share register of the Company at the close of business on 5 October 2018 (2017: dividend
of 287 cents per share). Shareholders should seek their own advice on the tax consequences associated with the dividend
and are particularly encouraged to ensure their records are up to date with Aspen so that the correct withholding tax is
applied to their dividend. The Company income tax number is 9325178714. The issued share capital of the Company is
456 451 541 ordinary shares.
The directors are of the opinion that the Company will, subsequent to the payment of the dividend, satisfy the
solvency and liquidity requirements in terms of sections 4 and 46 of the Companies Act, 2008.
Future distributions will continue to be decided on a year-to-year basis.
In compliance with IAS 10: Events After Balance Sheet Date, the dividend will be accounted for in the financial
statements in the year ended 30 June 2019.
Last day to trade cum dividend Tuesday, 2 October 2018
Shares commence trading ex dividend Wednesday, 3 October 2018
Record date Friday, 5 October 2018
Payment date Monday, 8 October 2018
Share certificates may not be dematerialised or rematerialised between Wednesday, 3 October 2018 and
Friday, 5 October 2018.
By order of the Board
K D Dlamini S B Saad
(Chairman) (Group Chief Executive)
Woodmead
13 September 2018
GROUP STATEMENT OF FINANCIAL POSITION
Reviewed Audited
at 30 June at 30 June
2018 2017
Notes R'million R'million
ASSETS
Non-current assets
Intangible assets I# 72 163 60 006
Property, plant and equipment 11 368 9 749
Goodwill 6 126 5 940
Deferred tax assets 966 987
Contingent environmental indemnification assets 802 747
Other non-current assets 1 189 801
Total non-current assets 92 614 78 230
Current assets
Inventories 14 496 13 611
Receivables and other current assets 14 421 13 592
Cash and cash equivalents 11 170 10 707
Total operating current assets 40 087 37 910
Assets classified as held-for-sale 135 200
Total current assets 40 222 38 110
Total assets 132 836 116 340
SHAREHOLDERS' EQUITY
Reserves 48 162 41 182
Share capital (including treasury shares) 1 905 1 929
Ordinary shareholders' equity 50 067 43 111
Non-controlling interests 28 27
Total shareholders' equity 50 095 43 138
LIABILITIES
Non-current liabilities
Borrowings 46 725 28 978
Other non-current liabilities 2 524 4 381
Unfavourable and onerous contracts 1 382 1 635
Deferred tax liabilities 2 213 2 085
Contingent environmental liabilities 890 747
Retirement and other employee benefits 635 570
Total non-current liabilities 54 369 38 396
Current liabilities
Borrowings* 11 225 18 860
Trade and other payables 10 414 10 257
Other current liabilities 6 359 5 341
Unfavourable and onerous contracts 374 348
Total current liabilities 28 372 34 806
Total liabilities 82 741 73 202
Total equity and liabilities 132 836 116 340
Number of shares in issue (net of treasury shares) ('000) 456,0 456,0
Net asset value per share (cents) 10 980,3 9 453,7
# See notes on Supplementary Information.
* Includes bank overdrafts.
GROUP STATEMENT OF COMPREHENSIVE INCOME
Reviewed Audited
year ended year ended
30 June 30 June
Change 2018 2017
Notes % R'million R'million
Revenue 3 42 596 41 213
Cost of sales (20 991) (21 317)
Gross profit 9 21 605 19 896
Selling and distribution expenses (7 460) (6 720)
Administrative expenses (3 103) (2 780)
Other operating income 419 345
Other operating expenses (2 224) (2 420)
Operating profit B# 11 9 237 8 321
Investment income C# 343 287
Financing costs D# (2 235) (2 369)
Operating profit after investment income and financing costs 7 345 6 239
Share of after-tax net profits of joint venture 51 13
Profit before tax 18 7 396 6 252
Tax (1 385) (1 124)
Profit for the year 17 6 011 5 128
OTHER COMPREHENSIVE INCOME, NET OF TAX*
Currency translation gains/(losses) E# 2 372 (3 521)
Net (losses)/gains from cash flow hedging in respect of
business acquisition (96) 188
Remeasurement of retirement and other employee benefits 1 44
Total comprehensive income 8 288 1 839
Profit for the year attributable to
Equity holders of the parent 6 010 5 128
Non-controlling interests 1 -
6 011 5 128
Total comprehensive income attributable to
Equity holders of the parent 8 287 1 839
Non-controlling interests 1 -
8 288 1 839
Weighted average number of shares in issue ('000) 456,5 456,4
Diluted weighted average number of shares in issue ('000) 456,5 456,4
EARNINGS PER SHARE
Basic earnings per share (cents) 17 1 316,6 1 123,4
Diluted earnings per share (cents) 17 1 316,6 1 123,4
# See notes on Supplementary Information.
* The annual remeasurement of retirement and other employee benefits will not be reclassified to profit or loss.
All other items in other comprehensive income may be reclassified to profit or loss.
GROUP STATEMENT OF HEADLINE EARNINGS
Reviewed Audited
year ended year ended
30 June 30 June
Change 2018 2017
% R'million R'million
HEADLINE EARNINGS^
Reconciliation of headline earnings
Profit attributable to equity holders of the parent 17 6 010 5 127
Adjusted for:
- Net impairment of property, plant and equipment (net of tax) 48 197
- Impairment of intangible assets (net of tax) 606 427
- Impairment of assets held for sale (net of tax) 37 -
- Loss on the sale of intangible assets (net of tax) 3 85
- Loss on the sale of property, plant and equipment (net of tax) - 25
- Loss on the sale of subsidiary (net of tax) - 70
13 6 704 5 931
HEADLINE EARNINGS PER SHARE
Headline earnings per share (cents) 13 1 468,8 1 299,5
Diluted headline earnings per share (cents) 13 1 468,8 1 299,5
NORMALISED HEADLINE EARNINGS
Reconciliation of normalised headline earnings
Headline earnings 13 6 704 5 931
Adjusted for:
- Restructuring costs (net of tax) 144 362
- Transaction costs (net of tax) 362 314
- Foreign exchange gain on acquisitions (net of tax) (178) (137)
- Product litigation costs (net of tax) 293 208
10 7 325 6 678
NORMALISED HEADLINE EARNINGS PER SHARE
Normalised headline earnings per share (cents) 10 1 604,9 1 463,2
Normalised diluted headline earnings per share (cents) 10 1 604,9 1 463,2
^ Headline earnings is disclosed net of income from non-controlling interests which are not material.
GROUP STATEMENT OF CHANGES IN EQUITY
Total
Share capital attributable
(including to equity Non-
treasury holders of controlling
shares) Reserves the parent interests Total
R'million R'million R'million R'million R'million
BALANCE AT 1 JULY 2016 1 938 40 571 42 509 27 42 536
Total comprehensive income - 1 839 1 839 - 1 839
Profit for the year - 5 128 5 128 - 5 128
Other comprehensive loss - (3 289) (3 289) - (3 289)
Dividends paid - (1 230) (1 230) - (1 230)
Treasury shares purchased (33) - (33) - (33)
Deferred incentive bonus shares exercised 24 (24) - - -
Share-based payment expenses - 26 26 - 26
BALANCE AT 30 JUNE 2017 1 929 41 182 43 111 27 43 138
Total comprehensive income - 8 287 8 287 1 8 288
Profit for the year - 6 010 6 010 1 6 011
Other comprehensive income - 2 277 2 277 - 2 277
Dividends paid - (1 313) (1 313) - (1 313)
Treasury shares purchased (44) - (44) - (44)
Deferred incentive bonus shares exercised 20 (20) - - -
Share-based payment expenses - 26 26 - 26
BALANCE AT 30 JUNE 2018 1 905 48 162 50 067 28 50 095
Distribution to shareholders
A dividend of 287,0 cents per share has been paid during the year (2017: 248,0 cents). The dividend to shareholders of 287,0 cents
relates to the dividend declared on 14 September 2017 and paid on 9 October 2017 (2017: the dividend of 248,0 cents relates to the
dividend declared on 14 September 2016 and paid on 10 October 2016).
GROUP STATEMENT OF CASH FLOWS
Reviewed Audited
year ended year ended
30 June 30 June
2018 2017
Notes Change R'million R'million
CASH FLOWS FROM OPERATING ACTIVITIES
Cash operating profit 11 907 10 817
Changes in working capital (1 579) (915)
Cash generated from operations 10 328 9 902
Net financing costs paid (1 816) (1 913)
Tax paid (1 495) (1 502)
Cash generated from operating activities 8 7 017 6 487
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditure - property, plant and equipment A# (2 145) (1 484)
Proceeds on the sale of property, plant and equipment 17 9
Capital expenditure - intangible assets A# (6 083) (1 147)
Additions to intangible assets (8 941) (1 147)
Consideration outstanding I# 2 858 -
Proceeds received on the sale of intangible assets 62 832
Acquisition of subsidiaries and businesses J# (152) (9 428)
Disposal of subsidiary - 45
Investment in joint venture - (52)
Proceeds received/(investment in) other non-current assets 50 (291)
Payment of deferred consideration relating to
prior year business acquisitions (4 599) (192)
Proceeds on the sale of assets classified as held-for-sale 37 91
Cash used in investing activities (12 813) (11 617)
CASH FLOWS FROM FINANCING ACTIVITIES
Net proceeds from borrowings 7 690 6 219
Dividends paid (1 313) (1 230)
Treasury shares purchased (44) (33)
Cash generated from financing activities 6 333 4 956
Movement in cash and cash equivalents before
currency translation movements 537 (174)
Currency translation movements 389 (526)
Movement in cash and cash equivalents 926 (700)
Cash and cash equivalents at the beginning of the year 7 188 7 888
Cash and cash equivalents at the end of the year 8 114 7 188
Operating cash flow per share (cents) 8 1 537,3 1 421,4
RECONCILIATION OF CASH AND CASH EQUIVALENTS
Cash and cash equivalents per the
statement of financial position 11 170 10 707
Less: bank overdrafts (3 056) (3 519)
8 114 7 188
For the purposes of the statement of cash flows, cash and cash equivalents comprise cash-on-hand plus deposits held on call
with banks less bank overdrafts.
# See notes on Supplementary Information.
GROUP SEGMENTAL ANALYSIS
Reviewed year ended 30 June 2018
Therapeutic
Focused Other Total
Brands Pharmaceuticals Pharmaceuticals Nutritionals Total
R'million R'million R'million R'million R'million
Revenue 18 934 20 571 39 505 3 091 42 596
Cost of sales (7 946) (11 348) (19 294) (1 697) (20 991)
Gross profit 10 988 9 223 20 211 1 394 21 605
Selling and distribution expenses (6 578) (882) (7 460)
Contribution profit 13 633 512 14 145
Administrative expenses (3 103)
Net other operating income 249
Depreciation 740
Normalised EBITDA* 12 031
Adjusted for:
Depreciation (740)
Amortisation (632)
Loss on sale of assets (4)
Net impairment of assets (742)
Restructuring costs (199)
Transaction costs (160)
Product litigation costs (317)
Operating profit 9 237
Gross profit (%) 58,0 44,8 51,2 45,1 50,7
Selling and distribution expenses (%) 16,7 28,5 17,5
Contribution profit (%) 34,5 16,6 33,2
Administrative expenses (%) 7,3
Normalised EBITDA (%) 28,2
Audited year ended 30 June 2017
Therapeutic
Focused Other Total
Brands Pharmaceuticals Pharmaceuticals Nutritionals Total
R'million R'million R'million R'million R'million
Revenue 17 417 20 572 37 989 3 224 41 213
Cost of sales (8 438) (11 047) (19 485) (1 832) (21 317)
Gross profit 8 979 9 525 18 504 1 392 19 896
Selling and distribution expenses (5 880) (840) (6 720)
Contribution profit 12 624 552 13 176
Administrative expenses (2 780)
Net other operating income 320
Depreciation 700
Normalised EBITDA* 11 416
Adjusted for:
Depreciation (700)
Amortisation (567)
Loss on sale of assets (196)
Net impairment of assets (722)
Restructuring costs (494)
Transaction costs (208)
Product litigation costs (208)
Operating profit 8 321
Gross profit (%) 51,6 46,3 48,7 43,2 48,3
Selling and distribution expenses (%) 15,5 26,1 16,3
Contribution profit (%) 33,2 17,1 32,0
Administrative expenses (%) 6,7
Normalised EBITDA (%) 27,7
* Normalised EBITDA represents operating profit before depreciation and amortisation adjusted for specific non-trading items as
defined in the Group's accounting policy.
Change
Therapeutic
Focused Other Total
Brands Pharmaceuticals Pharmaceuticals Nutritionals Total
% % % % %
Revenue 8,7 0,0 4,0 (4,1) 3,4
Cost of sales (5,8) 2,7 (1,0) (7,4) (1,5)
Gross profit 22,4 (3,2) 9,2 0,1 8,6
Selling and distribution expenses 11,9 5,0 11,0
Contribution profit 8,0 (7,1) 7,4
Administrative expenses 11,6
Net other operating income (22,0)
Depreciation 5,7
Normalised EBITDA * 5,4
* Normalised EBITDA represents operating profit before depreciation and amortisation adjusted for specific non-trading items as
defined in the Group's accounting policy.
GROUP REVENUE SEGMENTAL ANALYSIS
Reviewed Audited
June 2018 June 2017
R'million R'million Change
COMMERCIAL PHARMACEUTICALS BY CUSTOMER GEOGRAPHY 33 270 31 437 6
Sub-Saharan Africa 8 127 7 459 9
Developed Europe 7 434 6 817 9
Australasia 4 816 4 799 0
Latin America 2 929 2 722 8
Developing Europe & CIS 2 780 2 589 7
China 2 415 1 753 38
Japan 1 930 1 932 0
Other Asia 1 401 1 206 16
MENA 877 1 117 (21)
USA & Canada 561 1 043 (46)
MANUFACTURING REVENUE BY GEOGRAPHY OF MANUFACTURE
Manufacturing revenue - finished dose form 1 644 2 141 (23)
Australasia 464 472 (2)
Developed Europe 636 638 0
Sub-Saharan Africa 532 1 031 (48)
Latin America 12 - 100
Manufacturing revenue - active pharmaceutical ingredients 4 591 4 411 4
Developed Europe 4 259 3 976 7
Sub-Saharan Africa 332 435 (24)
Total manufacturing revenue 6 235 6 552 (5)
TOTAL PHARMACEUTICALS 39 505 37 989 4
NUTRITIONALS BY CUSTOMER GEOGRAPHY 3 091 3 224 (4)
Australasia 715 795 (10)
Sub-Saharan Africa 1 017 967 5
Latin America 1 290 1 462 (12)
MENA 4 - 100
China 65 - 100
TOTAL REVENUE 42 596 41 213 3
SUMMARY OF REGIONS
Sub-Saharan Africa 10 008 9 892 1
Developed Europe 12 329 11 431 8
Australasia 5 995 6 066 (1)
Latin America 4 231 4 184 1
Developing Europe & CIS 2 780 2 589 7
China 2 480 1 753 41
Japan 1 930 1 932 0
Other Asia 1 401 1 206 16
MENA 881 1 117 (21)
USA & Canada 561 1 043 (46)
TOTAL REVENUE 42 596 41 213 3
COMMERCIAL PHARMACEUTICALS THERAPEUTIC AREA ANALYSIS
Reviewed year ended 30 June 2018
High Potency Therapeutic
Anaesthetics Thrombosis & Cytotoxic Focused Regional
Brands Brands Brands Brands Brands Total
R'million R'million R'million R'million R'million R'million
BY CUSTOMER GEOGRAPHY
Commercial Pharmaceuticals
Sub-Saharan Africa 143 9 99 251 7 876 8 127
Developed Europe 2 170 3 471 1 417 7 058 376 7 434
Australasia 713 21 477 1 211 3 605 4 816
Latin America 762 71 790 1 623 1 306 2 929
Developing Europe & CIS 434 1 876 406 2 716 64 2 780
China 1 779 616 20 2 415 - 2 415
Japan 1 213 48 372 1 633 297 1 930
Other Asia 658 151 262 1 071 330 1 401
MENA 156 159 193 508 369 877
USA & Canada 304 8 136 448 113 561
Total Commercial Pharmaceuticals 8 332 6 430 4 172 18 934 14 336 33 270
Audited year ended 30 June 2017
High Potency Therapeutic
Anaesthetics Thrombosis & Cytotoxic Focused Regional
Brands Brands Brands Brands Brands Total
R'million R'million R'million R'million R'million R'million
BY CUSTOMER GEOGRAPHY
Commercial Pharmaceuticals
Sub-Saharan Africa 144 7 126 277 7 182 7 459
Developed Europe 1 700 3 168 1 472 6 340 477 6 817
Australasia 639 25 483 1 147 3 652 4 799
Latin America 605 92 838 1 535 1 187 2 722
Developing Europe & CIS 317 1 714 472 2 503 86 2 589
China 1 453 252 48 1 753 - 1 753
Japan 1 293 46 408 1 747 185 1 932
Other Asia 429 176 258 863 343 1 206
MENA 231 169 275 675 442 1 117
USA & Canada 254 16 307 577 466 1 043
Total Commercial Pharmaceuticals 7 065 5 665 4 687 17 417 14 020 31 437
Variances
High Potency Therapeutic
Anaesthetics Thrombosis & Cytotoxic Focused Regional
Brands Brands Brands Brands Brands Total
% % % % % %
BY CUSTOMER GEOGRAPHY
Commercial Pharmaceuticals
Sub-Saharan Africa (1) 29 (21) (9) 10 9
Developed Europe 28 10 (4) 11 (21) 9
Australasia 12 (16) (1) 6 (1) 0
Latin America 26 (23) (6) 6 10 8
Developing Europe & CIS 37 9 (14) 9 (26) 7
China 22 >100 (58) 38 0 38
Japan (6) 4 (9) (7) 61 0
Other Asia 53 (14) 2 24 (4) 16
MENA (32) (6) (30) (25) (17) (21)
USA & Canada 20 (50) (56) (22) (76) (46)
Total Commercial Pharmaceuticals 18 14 (11) 9 2 6
GROUP SUPPLEMENTARY INFORMATION
Reviewed Audited
year ended year ended
30 June 30 June
2018 2017
R'million R'million
A. CAPITAL EXPENDITURE
Incurred 8 228 2 631
- Property, plant and equipment 2 145 1 484
- Intangible assets 6 083 1 147
Contracted 1 812 818
- Property, plant and equipment 1 786 735
- Intangible assets 26 83
Authorised but not contracted for 4 184 5 967
- Property, plant and equipment 3 829 5 573
- Intangible assets 355 394
B. OPERATING PROFIT HAS BEEN ARRIVED AT AFTER CHARGING/(CREDITING)
Depreciation of property, plant and equipment 740 700
Amortisation of intangible assets 632 567
Net impairment of tangible and intangible assets 742 722
Net impairment of tangible assets 68 278
Net impairment of intangible assets 623 444
Impairment of assets classified as held-for-sale 51 -
Loss on the sale of tangible and intangible assets 4 126
Transaction costs 160 208
Restructuring costs 199 494
Product litigation costs 317 208
Loss on sale of subsidiary - 70
C. INVESTMENT INCOME
Interest received 343 287
D. FINANCING COSTS
Interest paid (1 884) (1 818)
Debt raising fees on acquisitions (209) (112)
Net gains/(losses) on financial instruments 88 (237)
Foreign exchange (losses) (16) (200)
Fair value gains/(losses) on financial instruments 104 (37)
Notional interest on financial instruments (408) (339)
Foreign exchange gain on acquisitions 178 137
(2 235) (2 369)
E. CURRENCY TRANSLATION GAINS/(LOSSES)
Currency translation gains/(losses) on the translation of the offshore
businesses are as a result of the difference between the weighted average
exchange rate used for trading results and the opening and closing exchange
rates applied in the statement of financial position. For the year the
weaker closing Rand translation rate has increased the Group net asset value 2 372 (3 521)
F. GUARANTEES TO FINANCIAL INSTITUTIONS
Material guarantees given by Group companies for indebtedness of subsidiaries
to financial institutions 73 561 55 119
G. POTENTIAL DISPUTED MATTER - EUROPEAN COMPETITION COMMISSION
In May 2017 the European Commission ("the Commission") instituted an investigation of Aspen Pharmacare Holdings Limited
and certain of its indirect wholly owned subsidiaries under Article 102 of the Treaty on the Functioning of the
European Union ("Article 102") in respect of the molecules (i) Chlorambucil; (ii) Melphalan; (iii) Mercaptopurine;
(iv) Thioguanine; and (v) Busulfan, for (a) alleged setting of unfair and excessive pricing in the form of significant
price increases; (b) alleged unfair/abusive negotiating practices; (c) alleged stock allocation strategies designed to
reduce supply; and (d) alleged practices hindering parallel trade, in the European Economic Area (excluding Italy).
The Commission's investigation is continuing and Aspen and its advisers are fully co-operating with the Commission in
its investigation. The Commission's decision whether to formally open a case is likely only to be made during the
first quarter of 2019 after conclusion of its investigation.
The outcome of the Commission matter is unknown at this stage and therefore no liability has been raised in the
statement of financial position.
H. POTENTIAL DISPUTED MATTER - UK COMPETITION AND MARKETS AUTHORITY
In October 2017 the UK Competition and Markets Authority ("CMA") opened an investigation of Aspen in respect of
alleged anti-competitive conduct and pricing practices in relation to the supply of fludrocortisone acetate
0,1mg tablets and dexamethasone 2mg tablets in the UK. The CMA has subsequently advised that it will not be
proceeding with its investigation in relation to dexametazone 2mg tablets.
A high level of co-operation and diligence is being afforded to the investigation team by Aspen and its advisers.
The CMA's decision whether to formally open a case is only likely to be made by November 2018 after conclusion of
its investigation.
The outcome of the CMA matter is unknown at this stage and therefore no liability has been raised in the
statement of financial position.
I. ACQUISITION OF residual rights relating to AZ anaesthetics portfolio
On 1 September 2016, Aspen Global Incorporated ("AGI") acquired the exclusive rights to commercialise the
anaesthetics portfolio of AstraZeneca globally (excluding the USA) ("the AZ anaesthetics"). With effect from
1 November 2017, AGI acquired the remaining rights to the intellectual property and manufacturing know-how
related to the AZ anaesthetics ("the Residual Rights"). The transaction has been classified as an intangible
asset acquisition and not a business combination. The fair value of the Residual Rights is R8 060 million and
R5 206 million of the consideration has been paid in the current financial year. The balance of R2 858 million
comprises the present value of future deferred fixed and performance-related milestone payments.
J. Acquisition of subsidiaries and businesses
With effect from 12 June 2018, Aspen Pharmacare acquired 100% of the share capital of Alphamed for a consideration
of R164'million.
The estimated post-acquisition operating profits is not material to the Group.
Due to Alphamed being a standalone company, incorporating manufacturing and development operations, Aspen is accounting
for its acquisition as a business combination. Due to the timing of the transaction Aspen has not yet completed the
detailed exercise to identify and value the separately identifiable intangible assets acquired and thereafter the goodwill,
if any, arising as a result of the transaction. This will be completed as part of the finalisation of the accounting for
the acquisition.
Total
R'million
Fair value of assets and liabilities acquired
Property, plant and equipment 85
Non-current financial receivables 1
Inventories 18
Receivables and prepayments 33
Cash and cash equivalents at acquisition 2
Non-current borrowings (3)
Deferred tax liabilities (3)
Trade and other payables (41)
Current borrowings (7)
Fair value of net assets acquired 85
Goodwill 78
Cash and cash equivalents at acquisition (2)
Consideration outstanding at year end (9)
Cash outflow on acquisition 152
June 2017
The business combinations set out below were finalised by December 2017. The cash flow movements for the
business combinations were as follows:
Fraxiparine
and Arixtra
AstraZeneca in China, GSK
anaesthetics Pakistan anaesthetics
portfolio and India portfolio Total
R'million R'million R'million R'million
Fair value of assets and liabilities acquired
Intangible assets 11 062 731 4 387 16 180
Deferred tax liabilities (331) (22) (132) (485)
Fair value of net assets acquired 10 731 709 4 255 15 695
Goodwill acquired 331 22 132 485
Net gains from cash flow hedging in respect of
business acquisition - (40) (167) (207)
Deferred and contingent consideration (5 045) - (1 500) (6 545)
Cash outflow on acquisition 6 017 691 2 720 9 428
K. ILLUSTRATIVE CONSTANT EXCHANGE RATE REPORT ON SELECTED FINANCIAL DATA
The Group has presented selected line items from the consolidated statement of comprehensive income and certain
trading profit metrics on a constant exchange rate basis in the tables below.
The pro forma constant exchange rate information is presented to demonstrate the impact of fluctuations in currency
exchange rates on the Group's reported results. The constant exchange rate report is the responsibility of the Group's
Board of Directors and is presented for illustrative purposes only. Due to the nature of this information, it may not
fairly present the Group's financial position, changes in equity and results of operations or cash flows. The pro forma
information has been compiled in terms of the JSE Listings Requirements and the Revised Guide on Pro Forma Information
by SAICA and the accounting policies of the Group as at 30 June 2018. The illustrative constant exchange rate report
on selected financial data has been derived from the audited financial information and has been reported on by Aspen's
auditors in an assurance report, which is available for inspection at the Company's registered office.
The Group's financial performance is impacted by numerous currencies which underlie the reported trading results,
where even within geographic segments, the Group trades in multiple currencies ("source currencies"). The constant
exchange rate restatement has been calculated by adjusting the prior year's reported results at the current year's
reported average exchange rates. Restating the prior year's numbers provides illustrative comparability with the
current year's reported performance by adjusting the estimated effect of source currency movements.
The listing of average exchange rates against the Rand for the currencies contributing materially to the impact of
exchange rate movements are set out below:
2018 2017
average average
rates rates
EUR - Euro 15,326 14,840
AUD - Australian Dollar 9,965 10,261
USD - US Dollar 12,856 13,612
CNY - Chinese Yuan Renminbi 1,975 1,999
JPY - Japanese Yen 0,116 0,125
MXN - Mexican Peso 0,686 0,700
BRL - Brazilian Real 3,867 4,198
GBP - British Pound 17,291 17,271
CAD - Canadian Dollar 10,126 10,262
RUB - Russian Ruble 0,218 0,224
PLN - Polish Zloty 3,620 3,440
Revenue, other income, cost of sales and expenses
For purposes of the constant exchange rate report the prior year's source currency revenue, cost of sales and expenses
have been restated from the prior year's relevant average exchange rate to the current year's relevant reported
average exchange rate.
Interest paid net of investment income
Net interest paid is directly linked to the source currency of the borrowing on which it is levied and is restated
from the prior year's relevant reported average exchange rate to the current year's relevant reported average exchange rate.
Tax
The tax charge for purposes of the constant currency report has been recomputed by applying the actual effective tax rate
to the restated profit before tax.
Key constant exchange rate indicators Illustrative
Reported Reported constant
June 2018 June 2017 exchange
(June 2018 (June 2017 Change at rates Change in
at 2018 at 2017 reported (June 2017 constant
average average exchange at 2018 exchange
rates) rates) rates average rates) rates
R'million R'million % R'million %
Revenue 42 596 41 213 3 40 690 5
Gross profit 21 605 19 896 9 19 777 9
Normalised EBITDA 12 031 11 416 5 11 427 5
Operating profit 9 237 8 321 11 8 342 11
Normalised headline earnings 7 325 6 678 10 6 675 10
Earnings per share (cents) 1 316,6 1 123,4 17 1 116,2 18
Headline per share (cents) 1 468,8 1 299,5 13 1 288,1 14
Normalised headline earnings per share (cents) 1 604,9 1 463,2 10 1 462,5 10
Reported Reported
June 2018 June 2017
(At 2018 (At 2017
average average
rates) rates)
% %
Revenue currency mix
EUR - Euro 27 26
ZAR - South African Rand 20 20
AUD - Australian Dollar 13 14
USD - US Dollar 7 11
CNY - Chinese Yuan Renminbi 6 4
JPY - Japanese Yen 5 5
MXN - Mexican Peso 3 3
BRL - Brazilian Real 3 3
GBP - British Pound 2 2
CAD - Canadian Dollar 1 1
RUB - Russian Ruble 1 2
PLN - Polish Zloty 1 1
Other currencies 11 8
Total 100 100
GROUP REVENUE SEGMENTAL ANALYSIS
Illustrative
Reported Reported constant
June 2018 June 2017 exchange rate
(June 2018 (June 2017 June 2017 Change at
at 2018 at 2017 (June 2017 constant
average average at 2018 exchange
rates) rates) average rates) rates
R'million R'million R'million %
COMMERCIAL PHARMACEUTICALS BY CUSTOMER GEOGRAPHY 33 270 31 437 30 947 8
Sub-Saharan Africa 8 127 7 459 7 402 10
Developed Europe 7 434 6 817 6 941 7
Australasia 4 816 4 799 4 658 3
Latin America 2 929 2 722 2 577 14
Developing Europe & CIS 2 780 2 589 2 611 6
China 2 415 1 753 1 748 38
Japan 1 930 1 932 1 812 7
Other Asia 1 401 1 206 1 148 22
MENA 877 1 117 1 049 (16)
USA & Canada 561 1 043 1 001 (44)
MANUFACTURING REVENUE BY GEOGRAPHY OF MANUFACTURE
Manufacturing revenue - finished dose form 1 644 2 141 2 100 (22)
Sub-Saharan Africa 464 472 975 (52)
Developed Europe 636 638 667 (5)
Australasia 532 1 031 458 16
Latin America 12 - - 100
Manufacturing revenue - active pharmaceutical ingredients 4 591 4 411 4 480 2
Developed Europe 4 259 3 976 4 263 0
Sub-Saharan Africa 332 435 217 53
Total manufacturing revenue 6 235 6 552 6 580 (5)
TOTAL PHARMACEUTICALS 39 505 37 989 37 527 5
NUTRITIONALS BY CUSTOMER GEOGRAPHY 3 091 3 224 3 163 (2)
Australasia 715 795 772 (7)
Sub-Saharan Africa 1 017 967 977 4
Latin America 1 290 1 462 1 414 (9)
MENA 4 - - 100
China 65 - - 100
Total revenue 42 596 41 213 40 690 5
SUMMARY OF REGIONS
Sub-Saharan Africa 10 008 9 892 9 571 5
Developed Europe 12 329 11 431 11 871 4
Australasia 5 995 6 066 5 888 2
Latin America 4 231 4 184 3 991 6
Developing Europe & CIS 2 780 2 589 2 611 6
China 2 480 1 753 1 748 42
Japan 1 930 1 932 1 812 7
Other Asia 1 401 1 206 1 148 22
MENA 881 1 117 1 049 (16)
USA & Canada 561 1 043 1 001 (44)
Total revenue 42 596 41 213 40 690 5
Commercial Pharmaceuticals therapeutic area analysis
Reported June 2018 (June 2018 at 2018 average rates)
High Potency Therapeutic
Anaesthetics Thrombosis & Cytotoxic Focused Regional
Brands Brands Brands Brands Brands Total
R'million R'million R'million R'million R'million R'million
BY CUSTOMER GEOGRAPHY
Commercial Pharmaceuticals
Sub-Saharan Africa 143 9 99 251 7 876 8 127
Developed Europe 2 170 3 471 1 417 7 058 376 7 434
Australasia 713 21 477 1 211 3 605 4 816
Latin America 762 71 790 1 623 1 306 2 929
Developing Europe & CIS 434 1 876 406 2 716 64 2 780
China 1 779 616 20 2 415 - 2 415
Japan 1 213 48 372 1 633 297 1 930
Other Asia 658 151 262 1 071 330 1 401
MENA 156 159 193 508 369 877
USA & Canada 304 8 136 448 113 561
Total Commercial Pharmaceuticals 8 332 6 430 4 172 18 934 14 336 33 270
Reported June 2017 (June 2017 at 2017 average rates)
High Potency Therapeutic
Anaesthetics Thrombosis & Cytotoxic Focused Regional
Brands Brands Brands Brands Brands Total
R'million R'million R'million R'million R'million R'million
BY CUSTOMER GEOGRAPHY
Commercial Pharmaceuticals
Sub-Saharan Africa 144 7 126 277 7 182 7 459
Developed Europe 1 700 3 168 1 472 6 340 477 6 817
Australasia 639 25 483 1 147 3 652 4 799
Latin America 605 92 838 1 535 1 187 2 722
Developing Europe & CIS 317 1 714 472 2 503 86 2 589
China 1 453 252 48 1 753 - 1 753
Japan 1 293 46 408 1 747 185 1 932
Other Asia 429 176 258 863 343 1 206
MENA 231 169 275 675 442 1 117
USA & Canada 254 16 307 577 466 1 043
Total Commercial Pharmaceuticals 7 065 5 665 4 687 17 417 14 020 31 437
Illustrative constant exchange rate June 2017 (June 2017 at 2018 average rates)
High Potency Therapeutic
Anaesthetics Thrombosis & Cytotoxic Focused Regional
Brands Brands Brands Brands Brands Total
R'million R'million R'million R'million R'million R'million
BY CUSTOMER GEOGRAPHY
Commercial Pharmaceuticals
Sub-Saharan Africa 145 7 126 278 7 124 7 402
Developed Europe 1 732 3 204 1 529 6 465 476 6 941
Australasia 621 25 467 1 113 3 545 4 658
Latin America 571 87 803 1 461 1 116 2 577
Developing Europe & CIS 307 1 760 464 2 531 80 2 611
China 1 435 266 47 1 748 - 1 748
Japan 1 204 57 379 1 640 172 1 812
Other Asia 412 166 246 824 324 1 148
MENA 228 166 242 636 413 1 049
USA & Canada 251 15 293 559 442 1 001
Total Commercial Pharmaceuticals 6 906 5 753 4 596 17 255 13 692 30 947
% change constant exchange rates
High Potency Therapeutic
Anaesthetics Thrombosis & Cytotoxic Focused Regional
Brands Brands Brands Brands Brands Total
% % % % % %
BY CUSTOMER GEOGRAPHY
Commercial Pharmaceuticals
Sub-Saharan Africa (1) 29 (21) (10) 11 10
Developed Europe 25 8 (7) 9 (21) 7
Australasia 15 (16) 2 9 2 3
Latin America 34 (18) (2) 11 17 14
Developing Europe & CIS 41 7 (13) 7 (20) 6
China 24 >100 (57) 38 0 38
Japan 1 (16) (2) 0 73 7
Other Asia 60 (9) 7 30 2 22
MENA (32) (4) (20) (20) (11) (16)
USA & Canada 21 (47) (54) (20) (74) (44)
Total Commercial Pharmaceuticals 21 12 (9) 10 5 8
BASIS OF ACCOUNTING
The reviewed provisional Group financial results have been prepared in accordance with International Financial
Reporting Standards, IFRIC interpretations, the Listings Requirements of the JSE Limited, South African Companies Act, 2008 and
the presentation and disclosure requirements of IAS 34: Interim Reporting.
The accounting policies applied in the preparation of these provisional Group financial results are in terms of
International Financial Reporting Standards and are consistent with those used in the annual financial statements for the year
ended 30 June 2017.
The provisional Group financial results have been reported in Rand millions in the current year to augment effective
financial analysis. This has changed from the previous year where the financial results were reported in Rand billions.
These provisional Group financial results have been prepared under the supervision of the Deputy Group Chief
executive, MG Attridge CA(SA) and approved by the Board of Directors.
AUDIT REVIEW
These results have been reviewed by Aspen's auditors, PricewaterhouseCoopers Inc. Their unmodified review conclusion
is available for inspection at the Company's registered office. Any reference to future financial performance included in
this announcement, has not been reviewed or reported on by the Company's auditors.
The illustrative constant exchange rate report on selected financial data has been derived from the audited financial
information and has been reported on by Aspen's auditors in an assurance report which is available for inspection at the
Company's registered office. This information has been prepared for illustrative purposes only and is the
responsibility of the Group's Board of Directors.
SUBSEQUENT EVENT
Post year end Aspen concluded an agreement to divest of its Nutritionals Business to the Lactalis Group, a leading
multinational dairy corporation based in Laval, France, for a fully funded cash consideration of EUR739,8 million/R12,9 billion
(translated at ZAR17,4/EUR). This transaction includes all assets and liabilities included in the Nutritionals segment.
DIRECTORS
K D Dlamini (Chairman)*, R C Andersen*, M G Attridge, L De Beer*, C N Mortimer*, B Ngonyama*, D S Redfern*,
S B Saad, S V Zilwa*
*Non-executive director
L De Beer was appointed on 31 July 2018 and J F Buchanan retired on 31 July 2018.
COMPANY SECRETARY
R Verster
REGISTERED OFFICE
Building Number 8, Healthcare Park, Woodlands Drive, Woodmead
PO Box 1587, Gallo Manor, 2052
Telephone +27 11 239 6100
Telefax +27 11 239 6144
SPONSOR
Investec Bank Limited
TRANSFER SECRETARY
Link Market Services South Africa (Pty) Ltd
13th Floor, 19 Ameshoff Street, Braamfontein, 2001
PO Box 4844, Johannesburg, 2000
DISCLAIMER
We may make statements that are not historical facts and relate to analyses and other information based on forecasts
of future results and estimates of amounts not yet determinable. These are forward looking statements as defined in the
U.S. Private Securities Litigation Reform Act of 1995. Words such as "prospects", "believe", "anticipate", "expect",
"intend", "seek", "will", "plan", "indicate", "could", "may", "endeavour" and "project" and similar expressions are intended
to identify such forward looking statements, but are not the exclusive means of identifying such statements. By their
very nature, forward looking statements involve inherent risks and uncertainties, both general and specific, and there
are risks that predictions, forecasts, projections and other forward looking statements will not be achieved. If one or
more of these risks materialise, or should underlying assumptions prove incorrect, actual results may be very different
from those anticipated. The factors that could cause our actual results to differ materially from the plans, objectives,
expectations, estimates and intentions expressed in such forward looking statements are discussed in each year's annual
report. Forward looking statements apply only as of the date on which they are made, and we do not undertake other than
in terms of the Listings Requirements of the JSE Limited, any obligation to update or revise any of them, whether as a
result of new information, future events or otherwise. All profit forecasts published in this report are unaudited.
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