Ascendis Health, the drugs maker forced to restructure due to a debt crisis and shareholder revolt, managed to improve its operating loss of continuing operations by 32% to - R317 million in the year to June 30.
“We are extremely excited about the new financial year after the many changes and shifts over the past 12 months,” chairperson Harry Smit said in a telephone interview.
He said much of the impact of the changes would only be reflected in the new financial year’s results, and that the businesses that the group has been left with “have good bases that we can build on”, he said.
The taxed loss from continuing operations of R758m was much improved on the prior year’s R1.66 billion taxed loss, its results showed yesterday. The loss per share from continuing operations came to -157.3 cents (2021: -351.1c).
Over the past year Ascendis has gone from having mounting debt of almost R8bn and possibly facing business rescue to being recapitalised, and undertaking further debt restructuring and corporate activity, to enter the 2023 financial year with “a near complete debt solution”, directors said.
Revenue of total operations fell 68% to R3.5bn, the results show. In continuing operations, revenue fell 15% to R1.6bn. Profit on disposals amounted to R1.01bn during the year.
Revenue from existing operations – all three business units that were owned at year-end: Medical Devices, Consumer Health, Pharma and the head office function – increased 4% to R1.94bn.
A recapitalisation on October 21, 2021 included related disposals of Farmalider, Respiratory Care Africa and Animal Health. Ascendis Skin and Body was sold effective May 31, 2022.
These transactions enabled a substantial reduction of senior debt, with the closing balance at June 30, 2022 of R498m, compared to R7.6bn at June 30, 2021.
The transition of funders from L1 Health and Blantyre ultimately to Austell resulted in more favourable debt terms, with the interest rate of 16.62% (post recapitalisation) reducing to 12.41% by year-end.
At June 30 the group was left with three business segments – Pharma, Medical Devices and Consumer Health – but the disposal of Pharma was at an advanced stage, with shareholders scheduled to vote on it next month. Proceeds would be set off against the Austell facility.
Consumer Health was impacted by a reduction in vitamin and supplement sales following a solid performance during Covid-19.
The Scientific Group was negatively impacted by the change in use of NGO funding in the rest of Africa from Covid-19 related diagnostics.
Operating expenses fell 29% to R802.6m and include transaction-related once-off costs of R81.1m (R270.9m).
The transition from a global business with seven segments to a local group with three segments enabled further reductions in head office costs to R95.6m from R125m, on a like-for-like basis.
The improvement in the loss from continuing operations was driven predominantly by a reduction in once-off costs related to the various disposal and restructuring transactions as well as lower finance costs.
Some R101.53m was raised via rights issue in August.
“With the prospect of balance sheet stability being restored, the board’s focus will be to optimise current operations,” directors said.
Medical Devices has three operating businesses – The Scientific Group, Surgical Innovations and Ortho-Xact. The Consumer Health business is one of the largest vitamin, mineral and supplement suppliers in South Africa, with brands such as Solal, Vitaforce, Menacal, Bettaway and Junglevite.
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