Picture: 123RF/SAMSONOVS
Picture: 123RF/SAMSONOVS

Debt-laden Ascendis Health plans to sell its bioscience business, which accounts for 12% of group revenues, as part of a new strategy to focus solely on core operations.

The bioscience unit, which makes pest-control products and plant-growth stimulants, contributed revenues of R933m in the year to June.

Ascendis’s total revenues grew 21% to R7.7bn during the year while normalised headline earnings rose 14% to R738m.

"Although biosciences has been performing well, we don’t see it as a part of our future so that’s why we see it as a logical next step to divest … once we find the right buyer for the right amount of money," new Ascendis CEO Thomas Thomsen said.

Ascendis has already sold its sports nutrition business in SA for R54m and its direct-selling unit for R50m. Thomsen said the group was also in the "final stages" of concluding a deal to sell its Isando factory.

As part of its new strategy, the group plans to focus on four main verticals: pharmaceuticals, consumer health care, medical and animal health.

Thomsen said it would use the proceeds from the four noncore business sales to reduce debt and invest in the remaining business. He said that while Ascendis had settled vendor debts worth R1.2bn in the year to June, the group’s net debt to earnings before interest, taxes, depreciation and amortisation (ebitda) ratio remained unchanged at 3.4 times.

This was partly because of fluctuating exchange rates, given that 70% of Ascendis’s debts are denominated in euros. About 48% of the group’s revenues come from outside SA.

The company will need to settle a number of deferred vendor liabilities over the next year, including a R228m payment due in the first quarter of 2019 and an R841m payment, related to the Remedica deal, due in August 2019. The latter obligation "will create a liquidity challenge", Ascendis said in a presentation posted on its website.

The group said it planned to refinance its debts, while Thomsen said it wanted to reduce net debt:ebitda to about 2.5 times.

Thomsen took over as CEO in March 2018, replacing founding CEO Karsten Wellner.

Ascendis’s share price closed 1% up at R10.60 on Tuesday. The stock has recovered slightly from a low of R8.65 in March.

hedleyn@businesslive.co.za