| Thu 3 Mar 2011, 13:52 | | APN - Aspen - Press Release - Revised |
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APN
APN
APN - Aspen - Press Release - Revised
Aspen Pharmacare Holdings Limited ("Aspen")
(Incorporated in the Republic of South Africa)
(Registration Number 1985/002935/06)
(Share code APN ISIN: ZAE000066692)
MARCH 3, 2011
Aspen increases revenue by 33 percent
Johannesburg - JSE Ltd listed Aspen Pharmacare Holdings Limited (Apn), Africa`s
largest pharmaceutical manufacturer, has announced pleasing results for the
interim period ended 31 December 2010.
Group Performance:
- Headline earnings from continuing operations increased by 35 percent to
R1.147 billion.
- Revenue from continuing operations rose by 33 percent to R5.990 billion
(R4.519 billion).
- Operating profit from continuing operations improved by 28 percent to
R1.614 billion (R1.260 billion).
- Headline earnings per share (HEPS) from continuing operations increased by
15 percent to 265.3 cents (230.8 cents).
The rise in headline earnings per share was diluted by an increase in the
weighted average number of shares in issue as a consequence of the issue of
shares on 1 December 2009 in settlement of the transaction with GlaxoSmithKline
("GSK") concluded on that date.
Stephen Saad, Aspen Group Chief Executive said, "The South African
pharmaceutical division`s consistently good performance ensured that Aspen
retained it position as the leader in the South African pharmaceutical market.
The successful integration of the GSK business has further contributed and Aspen
is now also ranked first in the branded product segment. Aspen`s international
and sub-Saharan Africa businesses also performed well, delivering increased
revenue and operating profit across the Group".
South African Business
The South African business increased revenue by 29% to R3.300 billion and
improved operating profit by 23% to R0.996 billion. The pharmaceutical division
led the growth in revenue raising sales by 36% to R2.682 billion. Consumer
division sales were up 8% to R0.618 billion. Profit margins benefited from
production efficiencies, procurement savings and the strength of the Rand. The
higher insurance compensation received in the prior period inflated the
comparative profit margin for that period.
Aspen two
The pharmaceutical business grew ahead of the market in the private sector,
increasing Aspen`s share as measured by IMS to 16.7%. Sales of the GSK products
for the six months to 31 December 2010 were R463 million against R53 million
from one month of sales in the prior period. In the recently adjudicated anti-
retroviral ("ARV") tender, Aspen was awarded 41% by value of the anticipated ARV
requirements of the South African government over a two-year period. This
validates the cost competitiveness of the Group`s production capabilities.
There has been ongoing investment in the manufacturing capabilities of the Group
in South Africa. Most capital projects are well advanced. The focus of these
projects has been adding capacity, enhancing technical standards and improving
efficiency.
Sub-Saharan Africa Business
Revenue in the sub-Saharan Africa business more than doubled from R279 million
to R666 million due to the full period contribution from the GSK Aspen
Healthcare for Africa collaboration. Operating profit followed a similar trend,
growing from R41 million to R119 million. Performance at Shelys, Aspen`s 60%
owned subsidiary in East Africa, improved on the unsatisfactory showing in the
second half of the 2010 financial year.
International Business
The international business increased revenue by 39% to R2.423 billion. Revenue
benefited by R600 million (2009: R108 million) from the inclusion of the brands
and the German-based Bad Oldesloe production facility acquired from GSK in
December 2009 for the full period. Asia Pacific revenue was up 28% to R957
million, Latin America revenue increased 20% to R599 million and revenue in the
Rest of the World region rose 76% to R867 million. Operating profit before
amortisation and once-off items was up 27% to R551 million.
The AUD 900 million (approximately R6.3 billion) acquisition of the
pharmaceutical business of Sigma, Australia`s largest listed pharmaceutical
company, completed on 31 January 2011. Integration of this business with Aspen
Australia is well underway and is progressing to plan.
Prospects
The South African pharmaceutical business has strengthened its position as the
market leader over the past period. Performance in the second half of the year
will however be affected by the reduced value of the recent ARV tender award.
The Minister of Health has announced that no consideration will be given to an
increase in the Single Exit Price before the end of 2011.
Aspen three last
The South African consumer business will be adversely affected by the ending in
April 2011 of the Pfizer infant milk license agreement, which generated annual
sales of approximately R250 million. Pfizer has taken the decision to enter the
South African market itself following the acquisition of the infant milk
franchise as part of its take-over of Wyeth. Aspen has expanded its own infant
milk offering with the introduction of the Infacare Gold range in order to
replace the Pfizer brands.
The sub-Saharan Africa business is on a firm footing and the positive
performance of the first half of the year should be maintained in the second
half.
The Asia Pacific region of the International business is set for strong growth
as the Sigma pharmaceutical business is integrated into Aspen Australia. The
earnings per share impact for this financial year is likely to be close to
neutral due to the expensing of transaction fees, stamp duties and restructuring
costs expected to exceed R100 million. In years thereafter the transaction is
anticipated to be earnings accretive as synergistic benefits are realised.
The International business will continue to transition products acquired from
GSK to the Aspen global distribution network. Once complete, the Group will be
well positioned to realise procurement and marketing opportunities with these
brands.
The Group remains well placed for growth into the medium term. The launch of new
products from the extensive product pipeline will provide organic growth across
all major markets. The expanded business in the Asia Pacific region is expected
to provide further growth momentum. Latin America remains a core focus area for
the Group as a region with great potential. Opportunities to add to the
portfolio of global brands will be actively pursued.
ends
Issued by: Shauneen Beukes, SBC
Tel: +27 (012) 661-8467 : Cell: +27 82 389 8900
On Behalf Of: Stephen Saad, Aspen Group Chief Executive
Tel: +27 (031) 580-8603
Gus Attridge, Aspen Deputy Group Chief Executive
Tel: +27 (031) 580-8605
Roshni Gajjar, Aspen Investor Relations
Tel: +27 (031) 580-8649 : Cell: +27 82 879 1826
Date: 03/03/2011 13:52:00 Produced by the JSE SENS Department.
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