Health and wellness group Ascendis Health reported steady growth in its first set of annual financial results as an investment holding company, after transitioning from a pharmaceutical conglomerate in July last year.
The shift aimed to simplify the group’s internal and operating structure, reducing overhead costs while giving more ownership to the managers of companies in which Ascendis was invested.
“Not long ago, the group was insolvent, largely written off as a lost cause and trading at a market cap of less than R370m,” said Ascendis on Thursday.
It is now valued at R544m on the JSE, having grown its net asset value (NAV) by 12% to about R660m in the year to end-December.
The company’s growth over the past year was primarily driven by its medical portfolio, which includes five businesses that provide “life-saving medical devices” to SA's public and private sector.
The medical portfolio posted a 16.5% increase in NAV in the second half, reaching R252m by year-end despite the group flagging delayed government payments as a growing challenge for this unit.
“All signs are there that Ascendis is back in the game following the successful turnaround of the company over the past two years,” said the company, which plans to focus on effective capital allocation.
The new operational structure had opened the door for more strategic acquisitions and disposals, both of which were being considered, it said.
The consumer portfolio is also expected to benefit from the reconfiguration, having delivered an improved performance since July. However, the portfolio only grew by 1% in the second half of last year under the weight of subdued consumer demand.
Under the group’s new accounting principles, its investments in subsidiaries are reported at fair value through profit or loss, which Ascendis hopes will attract more investment partners and help it make “smart financial decisions by assessing how profitable each business in its portfolio is”.
The group’s recent reconfiguration means that its latest interim financial statements are being prepared on a materially different basis compared to previous years. CEO Carl Neethling assured investors the company was well-placed for sustained growth.
“While some tough battles still lie ahead, smart plays — such as new product offerings, territory gains and key talent acquisitions — will keep us moving forward,” said Neethling.
“With ACN Capital appointed as fund manager, their strategic guidance, sophisticated capital allocation, and adept execution of financial projects further strengthen our prospects for long-term success.”
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