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Trading statement for the year ended 30 June 2019 and renewal of cautionary announcement
Ascendis Health Limited
(Registration number 2008/005856/06)
(Incorporated in the Republic of South Africa)
Share code: ASC
ISIN: ZAE000185005
(“Ascendis Health” or “the Company”)
Trading statement for the year ended 30 June 2019 and renewal of cautionary announcement
Renewal and update on cautionary announcement
Ascendis Health is pleased to advise shareholders that negotiations with the preferred
bidder on the disposal of its Remedica business in Cyprus are at an advanced stage, and
the Company expects to make further announcements in due course.
Trading statement
The consolidated results of the Company and its subsidiaries (“the group”) for the year
ended 30 June 2019 (“the period”) were impacted by the adverse trading conditions in the
South African consumer market and the European sports nutrition business.
Lower sales in South Africa caused by liquidity constraints and related supply challenges
as well as the depressed consumer environment resulted in earnings declining in all
businesses except Animal Health. In Europe, Sun Wave Pharma performed well, but both
Scitec and Farmalider reported lower earnings.
As a result of the economic headwinds in South Africa and Europe, an extensive valuation
process was completed which resulted in a total impairment across goodwill, intangible
assets and property, plant and equipment of approximately R4.2 billion.
The group incurred considerable consulting and professional fees associated with the
restructuring of the senior lender debt, and other once-off costs.
As a result of these factors the group incurred a sizeable net loss after taxation for the year.
Ascendis shareholders are advised that the group’s earnings for the period are anticipated
to be within the following ranges:
Year ended Year Change - Year ended Change -
30 June 2019 ended expected range 30 June expected range
expected range 30 June based on restated 2018 based on reported
2018 results reported results
restated
Continuing
operations
Normalised headline (475) – (495) 100 (575) – (595) 738 (1 213) – (1 233)
(loss)/earnings (R’m)
Basic (loss)/earnings (982.2) – (983.7) 7.4 cents (989.6) – (991.1) 101.9 cents (1 084.1) – (1085.6)
per share (cents per cents cents cents
share)
Headline (121.8) – (124.5) 13.9 cents (135.7) – (138.4) 104.4 cents (226.2) – (228.9)
(loss)/earnings per cents cents cents
share (cents per share)
Normalised headline (98.0) – (102.1) 21.7 cents (119.7) – (123.8) 159.7 cents (257.7) – (261.8)
(loss)/earnings per cents cents cents
share (cents per share)
Total operations
Normalised headline (67) – (78) 411 (478) - (489) 628 (695) - (706)
(loss)/earnings (R’m)
Basic (loss)/earnings (958.5) – (969.1) 55.7 cents (1 014.2) – (1 024.8) 60.0 cents (1 018.5) – (1 029.1)
per share (cents per cents cents cents
share)
Headline (36.3) – (42.2) 78.5 cents (114.8) – (120.7) 78.0 cents (114.3) – (120.2)
(loss)/earnings per cents cents cents
share (cents per share)
Normalised headline (13.8) – (16.0) 89.0 cents (102.8) – (105.0) 136.0 cents (149.8) – (152.0)
(loss)/earnings per cents cents cents
share (cents per share)
Notes
a. The accounting policy for normalised headline earnings per share has been amended in the
current year, for the following:
i. now adding back costs incurred to restructure the debt and equity structure of the group;
ii. now adding back settlement of product-related litigation;
iii. no longer add back the amortisation of intangible assets that arise upon business
combinations; and
iv. no longer add back the operational profits or losses that will not form part of the future
of the group that have not been recognised as a discontinued operation in terms of
International Financial Reporting Standards (IFRS 5).
b. Normalised headline earnings per share from continuing operations comprise headline
earnings per share from continuing operations adjusted for once-off costs of approximately
R120 million (R37 million in the comparative year to June 2018). These once-off costs in the
current year include:
i. costs relating to the disposal of the Bioscience business unit and the proposed disposal
of Remedica totalling R26 million;
ii. restructuring of the group debt, including the costs of the proposed corporate bond issue
that was not launched R81 million; and
iii. other operational restructuring and retrenchment costs R13 million.
c. Shareholders are advised that prior year errors have resulted in the restatement of the
earnings per share and headline earnings per share attributable to total operations, which
has resulted in a reduction in earnings of R20 million. The restatement resulted in a decrease
in basic and diluted earnings per share of 4.1 cents per share. The restatements were as a
result of the following:
i. reclassification of demonstration medical device equipment placed in hospitals from
inventory to property, plant and equipment. This has resulted in an additional
depreciation charge of R3 million;
ii. increase in tax payable due to interest paid on term loans incorrectly claimed as a tax
deduction of R13 million;
iii. correction of accounting errors identified during the statutory audit of Farmalider in Spain
which is 49% owned by Ascendis of R4 million; and
iv. correction of incorrect adjustments for the put-option remeasurement in the prior year
as a headline earnings adjustment, relating to the balance of the shareholding of
Farmalider.
d. The group’s earnings per share measures have also been impacted by a 4.9% increase in
the weighted average number of shares in issue during the reporting period.
e. Discontinued operations: The following businesses have been classified as discontinued
operations, resulting in the restatement of the comparative information:
i. Ascendis Sports Nutrition South Africa sold effective 1 September 2018.
ii. Ascendis Direct Selling, where the original sale did not materialise, however
negotiations with a new potential buyer are continuing;
iii. Afrikelp, Efekto and Marltons businesses in the Biosciences division, with a sale
completed on 31 July 2019. The two remaining businesses in the division, Avima and
Klub M5, are being considered for divestment; and
iv. the Remedica business unit in Cyprus, where negotiations are at an advanced stage
and the group continues to operate under a cautionary statement ahead of the expected
sale of the business.
f. The results for the period include Kyron Laboratories for a full year compared to only four
months for the comparative period.
The financial information on which this trading statement is based has not been reviewed or
reported on by the group’s auditors.
Shareholders are advised to continue to exercise caution when dealing in the Company’s
securities until a further announcement is made.
Release of group financial year end results
The group’s financial results for the year ended 30 June 2019 will be released on SENS on
Wednesday, 30 October 2019. The investor presentation will be held on 31 October 2019 in the
form of a live webcast at 10:00 SA time and will be accessible at the following link:
www.corpcam.com/Ascendis31102019 .
22 October 2019
Bryanston
Sponsor
Questco Corporate Advisory Proprietary Limited
Date: 22/10/2019 09:00:00
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