Aspen increases revenue by 9% to R38,6 billion
Johannesburg - JSE Limited listed Aspen Pharmacare Holdings Limited (APN), a global multinational specialty pharmaceutical company, has announced reviewed provisional Group financial results for the year ended 30 June 2020. COMMENTARY RESHAPING OF THE GROUP The recently announced agreement to divest the assets related to the commercialisation of Aspen’s Thrombosis business in Europe to Mylan (refer SENS announcement of 8 September 2020) marks the end of the process to reshape the foundation of the Group. Following the completion of this transaction, Aspen’s Commercial Pharmaceuticals business will be heavily weighted towards territories where we have demonstrated capabilities and a strong performance record, largely in Emerging Markets. A higher proportion of our business will be exposed to the private sector and will be better positioned to benefit from the expanding middle classes in Emerging Markets, where our trusted and proven brands are well placed to support the increasing medical demands of these growing populations. The receipt of the proceeds from the aforementioned transaction with Mylan will again give us scope for acquisitive investment to support initiatives aimed at enhancing value in areas of strength. Our significant investment in capital expenditure to build our sterile manufacturing capacities has been slightly delayed by the COVID-19 pandemic. This investment is planned to peak in the year ahead before reducing rapidly in subsequent years as the projects reach their end. The complex and niche production capabilities installed will allow us to reduce cost of goods within our existing portfolio. It also allows us to leverage this sought after capacity, particularly with big pharma, to further expand our global presence in steriles thus enhancing our offering of quality, affordable medicines. As a result of our reshaping of the Group and our significant investment in sterile manufacturing, Aspen is highly differentiated from our peer group as it is the most Emerging Market-focused specialty pharmaceutical company and a global leader in the production of sterile products. COVID-19 IMPACT The COVID-19 pandemic has created great uncertainty and many challenges for people and companies across the globe. Despite this, Aspen’s business model has proven resilient. Our relevant product portfolio, effective business continuity plans and safety measures to protect our employees have enabled us to remain in full operation throughout this period. We are most proud of the commitment shown by all of Aspen’s employees, with special gratitude to those at the production sites, for ensuring we have been able to maintain the supply of essential medicines to COVID-19 and other patients around the world under these circumstances. The volatility associated with the pandemic has had an adverse impact on our results in the second half of the 2020 financial year. This impact has varied by timing and region. The hard lockdown in China significantly restricted sales of medicines there for at least three months. Conversely, early in the first wave we experienced a spike in demand for certain of our medicines, most notably in South Africa, Australia and Mexico. This was followed by the predicted drop in demand as the resultant abnormally high inventory in-market levels were normalised. In Europe, there was a significant need for our sterile products required to treat COVID-19 patients during the height of infections, but a decline in orders for products related to elective surgeries. The period after the first wave has been characterised by continued social distancing, leading to reduced infection rates in non-COVID-19 communicable diseases and a slow and uncoordinated resumption of elective surgeries which has adversely impacted our performance. Despite the many challenges experienced during the second half of the financial year, we have made great progress against each of our medium-term priorities, while maintaining the supply of our medicines to patients in need around the world. GROUP PERFORMANCE (CONTINUING OPERATIONS) Group revenue increased 9% to ZAR 38,6 billion and Normalised EBITDA increased 7% to ZAR 11,0 billion for the 12 months ended 30 June 2020. The increase in Group revenue was supported by growth from Commercial Pharmaceuticals (+6%), despite the difficult trading conditions, and a pleasing performance from Manufacturing (+22%). Normalised headline earnings per share (NHEPS) increased 9% to ZAR 14,65, favourably impacted by lower financing costs. Strong second half cash flows resulted in a positive cash inflow from working capital for the 12 months ended 30 June 2020 and supported a cash conversion rate of 142%. Net borrowings declined ZAR 3,8 billion to ZAR 35,2 billion. The strong cash generation was offset by ZAR 5,6 billion in unfavourable currency movements. The leverage ratio in terms of the Facilities Agreement of 2.89 times is comfortably below the covenant leverage ratio of 3.5 times. Testing of intangible and tangible assets for impairment has resulted in impairments of ZAR 1,5 billion arising primarily from a decline in the outlook for the affected products. Discontinued operations include the Nutritionals Business, the Asia Pacific non-core pharmaceutical portfolio, both divested in the 2019 financial year, as well as the Japanese Business and the Public Sector ARVs. The Japanese business divestment became effective on 31 January 2020. The South African Public sector ARV transaction with Laurus, a leading Indian producer of ARV APIs, became effective in June 2020. Material relative movements in exchange rates in the last four months of the financial year have had a positive impact on financial performance, as is illustrated in the table below (which compares performance in the prior comparable period at previously reported exchange rates and then at constant exchange rates (“CER”)). The CER results for the 12 months ended 30 June 2019 restate the performance for that period using the average exchange rates for the 12 months ended 30 June 2020. For the 12 months ended 30 June 2020 Continuing operations Reported FY 2020R'million Restated ReportedFY 2019^ R'million Change at reportedrates % Restated CER FY2019 ^ Change at CER % Revenue 38 647 35 514 9% 37 320 4% Normalised EBITDA * 10 968 10 277 7% 10 699 3% NHEPS ** (cents) 1 464,6 1 344,8 9% 1 397,7 5% ^ FY 2019 has been restated as a result of discontinued operations * Operating profit before depreciation and amortisation adjusted for specific non-trading items as defined in the Group’s accounting policy. ** NHEPS are HEPS adjusted for specific non-trading items, being transaction costs and other acquisition and disposal-related gains or losses, restructuring costs, settlement of product related litigation costs, net monetary adjustments and currency devaluations relating to hyperinflationary economies and significant once-off tax provision charges or credits arising from the resolution of prior year tax matters. SEGMENTAL PERFORMANCE (CONTINUING OPERATIONS AT CER) Commercial Pharmaceuticals Commercial Pharmaceuticals, which comprises Aspen’s Regional Brands and Sterile Focus Brands, grew 1% to ZAR 31,1 billion. Gross profit declined 3% to ZAR 17,1 billion on lower margins from Regional Brands (refer below). Regional Brands Regional Brands revenue increased 3% to ZAR 16,9 billion. Revenue was adversely impacted by reduced demand during the lockdown period. In these circumstances, Sub-Saharan Africa (+6%), Latin America (+10%) and MENA (+8%) all delivered excellent growth. Gross profit percentage was adversely impacted by the increased cost of doing business under COVID-19, the recall of Zantac in Australia and generic competition placing pricing pressure on the oncology portfolio in Europe CIS. Sterile Focus Brands Despite heightened demand for certain Anaesthetics Brands used in the clinical management of COVID-19 patients, the postponement of elective procedures negatively impacted the Sterile Focus Brands segment. Revenue from Sterile Focus Brands, comprising Anaesthetics and Thrombosis Brands, decreased 1% to ZAR 14,3 billion, primarily due to the lost sales in China during the hard lockdown period. Europe CIS revenue was flat while good growth was achieved in Latin America and MENA. Despite the adverse effect of the material slowdown in China and the higher cost of goods sold for Thrombosis Brands (as guided), the gross profit percentage remained stable. Manufacturing Manufacturing revenue increased 14% to ZAR 7,5 billion, benefitting from the increase in sale of heparin (+ZAR 668 million) and non-heparin based APIs to third parties. Gross profit percentage increased to 30,1% on improved production efficiencies. PROSPECTS While the underlying business has demonstrated good performance over the past year and is well positioned for this momentum to continue, the uncertainty created by the enduring unfavourable influence of COVID-19 is likely to impact results in the year ahead. As reported, the weakening of the ZAR against almost all of the basket of Aspen’s trading currencies has resulted in an uplift of our reported 2020 results. Should prevailing ZAR weakness persist, this uplift in earnings will be even more pronounced in the 2021 financial year. DIVIDEND TO SHAREHOLDERS Taking into account the uncertainty created by the current COVID-19 pandemic, notice is hereby given that the Board has decided that it would not be prudent to declare a dividend at this time. The Board will re-evaluate the circumstances regularly with a view to declaring a dividend when it is considered prudent to do so. The post Aspen increases revenue by 9% to R38,6 billion appeared first on Aspen Pharmacare.
Divestment of Aspen’s European Thrombosis Business to Mylan and withdrawal of cautionary
Johannesburg – Following the release of a cautionary announcement on 24 August 2020, Aspen is pleased to announce that, Aspen Global Incorporated (“AGI”), its wholly owned subsidiary incorporated in Mauritius, has concluded an agreement in terms of which Mylan Ireland Limited (“Mylan”) will acquire the commercialisation rights and related intellectual property relating to Aspen’s Thrombosis… The post Divestment of Aspen’s European Thrombosis Business to Mylan and withdrawal of cautionary appeared first on Aspen Pharmacare.
Aspen scoops prized Adam Smith Treasury Award
Michael Shuttleworth, Aspen Group Treasury Executive Aspen’s Group Treasury Team was recently recognised when they were awarded the highly acclaimed Adam Smith 2020 Best In Class Treasury Solution In Africa Award. Gus Attridge, Aspen Group Deputy Chief Executive, shared in the good news of the award and said, “Congratulations Michael, and the whole Group Treasury team, for this well-deserved recognition.” Aspen's Group Treasury Team (l-r): Hymie Shapiro, Michael Shuttleworth and Crispen Katsukunya Michael Shuttleworth, Group Treasury Executive said, “We knew from the start that this was an ambitious project and there were times when it seemed like we wouldn’t get there. Winning the Adam Smith 2020 Best In Class Treasury Solution in Africa award is a shining testament to the innovation, dedication and teamwork of the many talented people at Aspen Pharmacare and BNP Paribas who were and continue to remain involved in the conception, design, implementation and running of this solution. I am immensely proud of what we have achieved.” The Adam Smith Awards are now in their 13th year and are recognised throughout the globe as the ultimate benchmark of corporate achievement. The standard of submissions this year was of the very highest level, with 187 nominations spanning 24 countries. The post Aspen scoops prized Adam Smith Treasury Award appeared first on Aspen Pharmacare.
Aspen celebrates a decade of participation in Mandela Day
Johannesburg - JSE Limited listed Aspen Pharmacare Holdings Limited (APN), a global multinational specialty pharmaceutical company, is celebrating its 10th year of participation in the annual Mandela International Day (Mandela Day) campaign. Stephen Saad, Aspen Group Chief Executive Stephen Saad, Aspen Group Chief Executive said, “We participated in our first initiative in 2011 when we partnered with the Rekopane Inclusive Development Centre based in Germiston, Gauteng. Through a multi-phased initiative we helped to improve the environment for the some 50 mentally and physically challenged children who were based at the Centre. Little were we to know at that time, that our annual Mandela Day initiative would gain such significant momentum and be implemented across our businesses in some 40 countries.” “Our employees continue to drive our Mandela Day campaign and it’s always encouraging to see their involvement and enthusiasm as we collectively strive to make a meaningful difference in the world. Every action, irrespective whether it is financial, physical, emotional or a gesture of sincere kindness, contributes toward uplifting someone who is less fortunate. Although participation is voluntary, it has been widely embraced and many employees have become active contributors to worthy causes in a personal capacity since being exposed to Mandela Day. This attitude is particularly pleasing as it is so closely aligned with our ethos of displaying respect while instilling a spirit of dignity in disadvantaged citizens and it speaks so closely to our credo of Healthcare. We Care.” Despite the global ravages of the COVID-19 pandemic, Aspen has continued with its Mandela Day efforts and is, dependent on whether circumstances allow, providing for activities to take place from July to December 2020. While COVID-19 may have limited direct social engagement with beneficiaries this has not stopped Aspen’s employees who have adopted alternative measures, some of which include blanket drives, food relief, blood donations, the provision of educational aids and many others. Aspen’s Mandela Day projects cover a broad spectrum of initiatives that include healthcare, nutrition, education, social enhancement and development, infrastructural improvements, animal wellbeing, preserving the environment, and providing employees with the opportunity to show kindness to citizens of all ages from all walks of life. Since 2001, Aspen has engaged in more than 580 projects in 40 countries which have impacted the lives of some 782 000 beneficiaries. Read more about Aspen’s Mandela Day activities at www.aspenmandeladay.com, follow us on FaceBook, Twitter or LinkedIn and engage on social media via #aspenmandeladay. The post Aspen celebrates a decade of participation in Mandela Day appeared first on Aspen Pharmacare.
Aspen debuts in the FTSE4Good Index Series
Jeanette EnglundAspen Group Risk Sustainability Manager The annual FTSE Russell Environmental, Social and Governance (ESG) Ratings have been published and Aspen has been included as a constituent member in the global FTSE4Good Index Series for the first time. Jeanette Englund Aspen Group Risk Sustainability Manager said, “We are delighted to be included in the global FTSE4Good Index Series for the first time. Results from the June 2020 assessment indicate that Aspen’s overall score improved significantly from 3.7 to 4.5 out of a possible 5. Inclusion in this Index Series has also resulted in Aspen being positioned in the Top 30 of the FTSE/JSE Responsible Investment Index as published at the end of June 2020. These outcomes are attributable to the committed team who have collaborated to ensure that Aspen’s ESG related strategies and programmes and related disclosures meet the expectations of various ESG stakeholders.” FTSE Russell uses the FTSE4Good Index Series as a multi-dimensional measure of the performance of companies demonstrating strong ESG exposure and practices. It provides the investment community with a tool for portfolio design and management to investigate ESG criteria, or as a framework for corporate engagement and stewardship. Reg Hamman, Aspen’s newly appointed Group Corporate Services Officer, congratulated the team on the inclusion and score improvement. He said, “This achievement sets the bar very high for future years KPIs and I’m confident that we can continue to strive to score admirably in the FTSE4Good Index Series.” FTSE Russell (the trading name of FTSE International Limited and Frank Russell Company) confirms that Aspen Pharmacare Holdings has been independently assessed according to the FTSE4Good criteria, and has satisfied the requirements to become a constituent of the FTSE4Good Index Series. Created by the global index provider FTSE Russell, the FTSE4Good Index Series is designed to measure the performance of companies demonstrating strong Environmental, Social and Governance (ESG) practices. The FTSE4Good indices are used by a wide variety of market participants to create and assess responsible investment funds and other products. The post Aspen debuts in the FTSE4Good Index Series appeared first on Aspen Pharmacare.