Johannesburg – Ascendis Health, the South African-based international healthcare company, today announced the planned disposal of smaller local non-core businesses as part of a strategic business review.
MEDIA RELEASE – 25 June 2018
The strategic review, initiated by new CEO Thomas Thomsen on his appointment in March this year, is aimed at creating a sustainable market position for Ascendis, accelerating organic growth, improving cash generation and enhancing profitability.
The outcome of the strategic review and the new strategic focus of Ascendis will be announced in mid-September, along with the release of the group’s 2018 annual results.
“In the initial phase of our review we have identified three assets that are either non-core to the longer-term strategy or not performing optimally in the current group structure,” said Thomsen. “Sale processes are underway to dispose of the three assets and the proceeds will be reinvested to improve organic revenue growth and our financial metrics.”
“Following the review of our sports nutrition business, we have decided to focus solely on our biggest brand, Scitec, and will be divesting Ascendis Sports Nutrition in South Africa. Ascendis Sports Nutrition has a fragmented product portfolio in South Africa across the Evox, SSN, Supashape, Muscle Junkie and Nutrimax brands,” he said.
Hungary-based Scitec, which was acquired by Ascendis in 2016, is one of the leading sports nutrition brands in Europe and exports products to over 90 countries worldwide.
Ascendis Direct, the group’s direct selling and network marketing business operating in southern Africa and Nigeria, will also be sold. The business has limited integration with Ascendis and operates its own management structure, head office and supply chain, while the model is not applied anywhere else in the group.
The group will be consolidating its pharmaceutical manufacturing facilities in Gauteng and plans to sell its 23 000 m² production plant in Isando, Johannesburg. The manufacturing facility in Wynberg, Johannesburg, will be retained and management expects to generate cost savings and manufacturing synergies.
“In this strategic review process we have had to make difficult decisions but realise they are imperative to strengthen our market position and grow the company profitably. We are acutely aware of the impact of these decisions on our people and the affected employees will have the option to be transferred to the new owners to ensure job retention,” said Thomsen.
Commenting on his first 90 days as CEO, Thomsen said he observed that “clarifying the strategy will add significant value, divesting smaller non-core assets will simplify the operations and focus on the right areas, core capabilities need to be strengthened to deliver organic growth and we have several pockets of competitive advantage that we need to capitalise on. In addition, cash conversion is essential to fund reinvestment and service debt while enhancing systems will improve efficiency and business intelligence.”
The group also announced the appointment of Marnus Sonnekus as interim chief operating officer (COO) South Africa. Sonnekus has a strong background in private equity, management consulting and accounting, including eight years with global management consultancy McKinsey & Company.
“Following the retirement this month of Cliff Sampson, the managing director of the group’s South African operations, we have decided to appoint an interim COO to lead the local business. Our leadership structure will be finalised once the strategic review has been completed and any potential changes to the operating model or group structure have been adopted.”
Thomsen said significant progress has been made in recent months in improving cash generation. “Reducing gearing levels and improving cash generation are strategic priorities, and we are committed to achieving a cash conversion target of 75% for the 2018 financial year. At half year, the conversion ratio was 50%.”
Ascendis is also currently reviewing its capital structure to ensure it has capacity to meet future vendor debt liabilities. Thomsen stressed that the group will not be contemplating any form of equity capital raise.
Issued by Tier 1 Investor Relations on behalf of Ascendis Health
For further information kindly contact
Graeme Lillie, Tier 1 Investor Relations 082 468 1507