Africa’s largest pharmaceutical manufacturer, Aspen Pharmacare on Monday reported a 235% increase in headline earnings per share from 185,5 cents to 144,7 cents for the year to the end of June.
The group’s operating profit increased by 96% to R968-million — on the back of a 23% growth in revenue to R3,449-billion.
This enabled the group to declare a capital distribution of 62 cents per ordinary share — 29% more than the 48 cents declared the previous year.
The results, however, were affected by a number of one-off transactions in both the prior and current year. Among the most material of these was a charge of R282,4-million in the prior year in respect of the Black Economic Empowerment transaction concluded by Aspen in June 2005.
The transactions also included the claiming of the Strategic Investment Project tax allowance under Section 12G of the Income Tax Act relating to the investment by Aspen in its Oral Solid Dosage facility.
This reduced the tax charge in the year under review by R31,9-million. Also included were costs relating to Aspen’s unsuccessful bid to acquire PLIVA dd, a Croatian-based generic pharmaceutical company, during the latter part of the year under review which amounted to R21,3-million.
After adjusting for the one-offs, “normalised” headline earnings per share increased by 32% to 182,1 cents (144,7cents).
Stephen Saad, group chief executive said “Aspen’s impressive performance was driven by organic volume growth, new product launches, a strong performance from the consumer division led by infant milk formulations and an increased contribution from anti-retrovirals (ARVs).
“This is a highly credible performance despite the three-year price freeze, an extremely competitive generic market, regulatory limitations placed on selected marketing activities and currency pressures.”
The South African business continued to deliver solid results. Revenue grew by 24% to R2,849-billion and EBITA was up 21% at R913-million.
These increases were achieved despite the disposal of 50% of Fine Chemicals Corporation to Matrix Laboratories Limited (Matrix) midway through the year.
On the international front, Aspen Australia recorded a 28% increase in revenue to R396-million while improving EBITA by 22% to R53-million.
The decline in operating margin percentage is a consequence of the full year effect of a long term distribution contract with Novartis, which is only expected to become profit-generating in the 2008 financial year.
United Kingdom-based Aspen Resources increased its intellectual property portfolio by the acquisition of the deodorant brands which are distributed by Aspen Australia. Aspen Resources increased EBITA by 12% to R41-million. The UK commodity generic market remained intensely competitive. Co-pharma reported a decline in revenue of 23% to R162-million and a reduction of 64% in EBITA to R3-million.
Aspen USA was incorporated during the year. “This operation is in its formative stage and is presently focused on developing strategic opportunities in the USA market for the group. No material trade took place during the year,” Aspen said.
Aspen acquired 50% of Indian-based Astrix Laboratories Limited in January 2006 for R233-million. Astrix is jointly owned with Matrix and provides vertical integration into the manufacture of active pharmaceutical ingredients used in the production of ARVs. As such, revenue and profits generated by Astrix in its transactions with Aspen are eliminated on consolidation.
Looking ahead, Aspen said that growth prospects were likely to be most strongly influenced by the extent of additional generic substitution that took place in the South African market, the market penetration achieved by new product launches which were driven by Aspen’s robust pipeline, the acceptance of price increases in the South African pharmaceutical market and demand patterns in the ARV markets serviced by Aspen.
“Aspen is investing in development and manufacturing capabilities in areas identified as potential future growth drivers. The group is committed to remaining at the forefront of the global generic ARV market. Significant further expansion of this market is anticipated as UNAids and the World Health Organisation seek to achieve universal access to ARVs by 2010,” it added. – I-Net Bridge