Wrap Text
Reviewed condensed consolidated financial statements for the year ended 30 June 2024
Ascendis Health Limited
(Registration number 2008/005856/06)
(Incorporated in the Republic of South Africa)
Share code: ASC
ISIN: ZAE000185005
("Ascendis Health" or "the Group")
REVIEWED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR
ENDED 30 JUNE 2024
SHORT-FORM ANNOUNCEMENT
Key features (continuing operations)
- Revenue: R1.472 billion (2023: R1.535 billion)
- Gross profit margin stable at 39.8%
- Total comparable operating expenses decreased by 21.3%
- Operating loss improved to marginal operating profit of R46.4 million
- Earnings per share from total operations declined by 25.8% to 9.2 cents (2023: 12.4 cents)
- Headline earnings per share from total operations improved to 1.1 cents (2023: -39.7 cents)
- Earnings per share from continuing operations improved to 6.6 cents (2023: - 47.2 cents)
- Headline earnings per share from continuing operations improved to -1.4 cents (2023: -41.5
cents)
- Tangible net asset value per share improved to 91 cents (2023: 81 cents)
Results Overview
The Group reported a marginal operating profit of R46.4 million for 2024. This shift to profitability
is a testament to the successful execution of various initiatives focused on reducing non-critical
costs, stabilizing operations, and driving optimisation through streamlined commercial and sales
functions.
Cost control remained a focal point in 2024, with significant reductions across various expense
categories.
The Group's balance sheet remains robust, with tangible net asset value growing by 15.8% to
R571 million (R493 million in the prior year). This growth is primarily attributed to the journal
entries relating to the reacquisition of control of Surgical Innovations. Despite the once-off
improvement in net asset value, several underlying portfolio companies presently remain unable
to generate an acceptable return on their assets.
From a liquidity perspective, cash generation remains a key concern for management with the
cash position of the Group worsening during the year despite having no external debt obligations.
The Group cash flow was impacted by several factors, including the decline in revenue, an
increase in net working capital following the acquisition of new agencies and significant delays in
the receipt of payments from government hospitals, as well as once-off cash costs related to the
proposed delisting transaction and the related, successful legal action taken against the Takeover
Regulation Panel. At year-end, the Group had no long-term borrowings and maintained a positive
cash balance with access to working capital facilities.
During the year under review, the restructuring and business rescue of Surgical Innovations was
successfully finalised, leading to material annualised savings in rental expense as well as once
off savings in historic interest and penalties imposed by SARS of more than R60 million. Whilst
the business still faces structural head winds, management is confident that it is better placed to
navigate these challenges going forward.
Delisting
Despite receiving overwhelming support from shareholders at the special general meeting held
on 23 April 2024, the proposed delisting transaction lapsed on 20 July 2024 following an extended
period of frustrating actions from a small group of minority shareholders. The offering consortium
and Ascendis Health exhausted all avenues to execute the transaction, including obtaining an
urgent court order against the Takeover Regulation Panel, which was found to have acted in a
procedurally unfair manner, but ultimately lost faith in the delisting process.
Unfortunately, the delisting process was mired by procedural technicalities, unprecedented
actions by the regulators and a lack of general pragmatism, despite the overwhelmingly clear
mandate from the Group's shareholders. This outcome is disappointing for the Group and the
vast majority of shareholders, given the material anticipated benefits of operating as a delisted
entity together with the prospects of a near term liquidity event for exiting shareholders.
Management and the board remain committed to exploring opportunities that will unlock value for
shareholders, encouraged by the support received from key shareholders during this process.
Transition to Investment Entity Reporting
Ascendis has transitioned from a conglomerate to a cost effective and decentralised investment
holding company and has undertaken extensive efforts to simplify its internal group and operating
structure. This has included the elimination of shared services and centralised functions as well
as instilling a culture of ownership and accountability within each business.
A key requirement as part of the transition to an investment holding company has been to appoint
an investment manager to perform the investment management functions. ACN Capital IHC (Pty)
Ltd (a related party), has been appointed as the investment manager of the Group ("Investment
Manager") on an interim basis until the next annual general meeting at which point the
appointment will be formalised. The total cost of the engagement does not exceed 0.25% of the
total market capitalisation of the Group.
Going forward the Group will receive strategic advice, financial support and management services
from the Investment Manager, in order to maximise the investment return received by the Group's
shareholders from the underlying investee companies.
The Investment Manager will furthermore assume responsibility for directing capital allocation and
will provide investment management and support services to shareholders of Ascendis under
supervision and guidance of the Board, with the ultimate objective being to invest, grow and
unlock value in the form of investment income and capital appreciation of its underlying investee
companies.
Accordingly, Ascendis will prospectively apply the investment entity exemption in terms of
IFRS10.30 from 1 July 2024 and will measure its investments in its subsidiaries at fair value
through profit or loss in accordance with IFRS 9. It is anticipated that this will simplify the
Group's internal financial reporting structures and further reduce costs.
Outlook
Ascendis Health's historic challenges have largely been addressed through immense and
concerted efforts on the part of the various subsidiary management teams working together with
Group management and the transition team (ACN Capital team) over the past few years. These
efforts have positioned the individual businesses and the Group as a whole to capitalise on future
growth and investment opportunities.
The Group will also continue to invest in its growing businesses where it is value-accretive and it
is considering select acquisition opportunities in line with its strategy. Maintaining a conservative
capital structure remains a priority, and the board may consider raising additional equity from
shareholders to capitalise on emerging opportunities in the near term.
No dividends were declared or paid during the current or prior reporting period.
Auditor's opinion
Nexia SAB&T have reviewed the condensed consolidated annual financial statements from which
this announcement has been derived and have expressed an unmodified review opinion on these
condensed consolidated annual financial statements in accordance with ISRE 2410 'Review of
Financial Information Performed by the Independent Auditor of the Entity'.
Going concern assessment
The Group annual financial statements have been prepared on a going concern basis.
The Group has sufficient liquidity and access to financing to meet its obligations as they fall due,
and the directors have no reason to believe that this will change in the foreseeable future.
The directors are satisfied that there are no longer any material uncertainties that cast significant
doubt on the Group's ability to continue as a going concern and the going concern assumption is
appropriate.
Ascendis Board
Sandton
3 September 2024
Directors' responsibility
This short-form announcement is the responsibility of the directors of Ascendis Health.
This announcement is only a summary of the information contained in the reviewed condensed
consolidated annual financial statements for the twelve months ended 30 June 2024 ("Results"),
which are available at https://senspdf.jse.co.za/documents/2024/JSE/ISSE/ASC/Con2024.pdf
and on the Company's website at https://ascendishealth.com/investor-relations/financial-results/.
Any investment decisions by investors and/or shareholders should be based on the Results as a
whole, as the information in this announcement does not provide full or complete details.
Directors: B Harie (Chairman)*, HA Nolte*, Dr K Wellner*, A Chetty*, T De Bruyn, AC Neethling
(CEO)
* Independent non-executive
www.ascendishealth.com
JSE Sponsor
Valeo Capital Proprietary Limited
Date: 03-09-2024 12:30:00
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