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APN
APN
Aspen Pharmacare Holdings Limited - Press Release
Aspen Pharmacare Holdings Limited
(Incorporated in the Republic of South Africa)
(Registration Number 1985/002935/06)
(Share code APN & ISIN: ZAE000066692)
("Aspen")
Aspen records 45% increase in HEPS
Johannesburg - JSE listed Aspen (APN), Africa"s largest pharmaceutical
manufacturer, has recorded impressive interim results for the period ended
December 2005.
Headline earnings per share (HEPS) increased 45 percent to 86.3 cents (59.4
cents).
Revenue increased by 27 percent to R1,687 billion (R1.4 billion).
Operating profit rose 34 percent from R355 million to R474 million.
These results are reported under International Financial Reporting Standards for
the first time.
Stephen Saad, Aspen Group Chief Executive said "the pleasing results were
underpinned by the good performance delivered by the South African Operations.
This was achieved despite the ongoing legislated price freeze for the private
market. The consumer division fared well primarily due to the excellent
performance by infant nutritionals."
South African Operations
The South African business delivered a strong performance. Revenue increased by
27% and earnings before interest, investment income, tax and amortization
("EBITA") recorded growth of 25%.
Revenue contribution from the Pharmaceutical Division increased by 24% with
finished dosage forms ("FDFs") up 25% and active pharmaceutical ingredients
("APIs") up 23%. The growth in FDFs was achieved despite sustained downward
pressure on prices. The growth in the API business was export driven at
attractive margins.
In the present deflationary environment growth has been achieved through
increased volumes significantly bolstered by the contribution from new products.
Twenty new molecules were launched by Aspen during the six months. Aspen has
derived more revenue from new product launches in the private market than any
other company over the previous one and two year periods, the most active new
product launch period in the Group"s history.
Revenue from anti-retroviral ("ARV") products increased materially. Total sales
from the South African private and public sectors together with exports into
Africa exceeded R100 million.
Aspen Two
Revenue from the Consumer Division rose by 32% delivering an increased
contribution to Group earnings.
The primary driver was the excellent performance by infant nutritionals which
also benefited from supply problems experienced by the market leader in this
area. Infant nutritional margins widened as Aspen successfully took over
production of the complete range, substituting more expensive imports with local
production.
Aspen"s manufacturing facilities continue to operate at high production levels.
The oral solid dosage ("OSD") facility is being used substantially for the
manufacture of ARVs and is still in the process of building its capacity
capabilities. Previously reported difficulties in maintaining optimum inventory
levels and in service delivery are again being experienced as the escalating
demand for ARVs is prioritised. The capacity of the OSD facility will be
enhanced by approximately 40% with the commissioning of a second integrated
granulation suite in the forthcoming months.
The production capabilities of the sterile facility in the process of
construction in Port Elizabeth have been expanded to cater for increased
volumes. Consequently the project time frame has been extended with initial
production scheduled for the beginning of 2008. The expected capital cost of
the enlarged plant has increased to R295 million.
International Operations
Aspen Australia increased revenue by 50% to R208 million. However, R50 million
of the increase in revenue is attributable to a distribution agreement with
Novartis which will only begin to contribute to earnings in 2008. EBITA of R27
million was up 11%.
In the UK, Aspen Resources increased EBITA by 19% to R21,8 million whilst Co-
pharma"s EBITA declined from R3,1 million to R2,4 million on flat revenue.
Prospects
Growth in the use of generic medicines in the South African market as well as
the performance of the new product launches are expected to be key drivers to
Aspen"s growth over the remainder of the financial year. Greater legislative
certainty may also emerge during this period. The strong increase in sales of
ARV products should continue, particularly in export markets, albeit at
significantly lower margins to the balance of the business. Unlocking production
capacity to match demand growth will remain a focus.
Investments completed and currently under negotiation are planned to
strategically position Aspen for continued growth. The joint ventures with
Matrix and Lupin will help place Aspen as a leader in fighting infectious
disease.
The construction of the sterile manufacturing facility and the development of
sterile products will create a domestic and international presence for Aspen in
a specialist product area. Opportunities in existing and new territories
continue to be evaluated for strategic fit with the Group.
Aspen Three Last
It is anticipated that growth in HEPS for the full year will be significant, but
the percentage growth for the second 6 months will not match that of the first 6
months.
\ends
Issued by: Shauneen Beukes, Shauneen Beukes Communications
Tel: (012) 661-8467
Fax: (088) (012) 6618467
Cell: 082 389 8900
On Behalf Of: Stephen Saad, Aspen Holdings Group Chief Executive
Tel: (031) 580-8602
Cell: 083 303 4833
Gus Attridge, Aspen Holdings Deputy Group Chief Executive
Tel: (031) 580-8604
Cell: 083 628 8813
23 February 2005
Johannesburg
Sponsor
Investec Bank Limited
Date: 27/02/2006 12:30:06 PM Produced by the JSE SENS Department
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