Ascendis puts acquisitions on back burner

ASCENDIS Health, which has grown on the back of a series of local and international acquisitions, is taking the foot off the acquisition pedal to concentrate on organic growth and bedding down new additions to the group, outgoing chief executive Karsten Wellner said yesterday.

Since its listing on the JSE in 2013, Ascendis has pursued an aggressive acquisition strategy that saw it get its foot into a number of new markets, including Spain, Cyprus, Hungary, Romania and Australia. As a result of the acquisitions, Ascendis has increased its international profile significantly. In the six months ended December 31, 48 percent of the company’s revenue was generated outside of South Africa.

The international acquisitions saw Ascendis diversify into hard currencies. At the end of the 2017 financial year, 60 percent of the company’s earnings were in hard currencies.

But in an interview after presenting his last financial results, Wellner yesterday said that the group’s focus was on organic growth and “focused synergistic growth”.

He said the focused synergistic growth entailed extracting value from recent acquisitions. “When you grow through acquisitions, there is likely to be overlapping. It is important to take time and see what works and what does not. (And) fix what does not work,” he said.

Wellner said the company would not make new acquisitions for 12 months in order to improve cash flows and to use that cash to reduce the company’s gearing.

Ascendis said it had initiated a strategic business review “to create a sustainable market position for Ascendis Health and to accelerate organic growth following the completion of several acquisitions locally and offshore since the company’s listing in 2013.

“The review is expected to be completed late in the 2018 financial year.”

Ascendis announced on Wednesday that Wellner will be leaving the health and care company this week and would be replaced by chief operating officer Thomas Thomsen.

Wellner became chief executive in 2011 and has been at the helm of the group during its intense growth phase. “I have full confidence in Thomas. I trust him fully and I am happy to hand over to him. I have my private wealth in Ascendis. I appreciate that the business needs a certain kind of focus to extract value,” he said.

He said he was pleased with the general performance of the assets the company has bought in the past few years. “The figures speak for themselves. What is important to remember is that all the acquisitions were (headline earnings per share) accretive from day one,” he said.

In the six months ended December 31, Ascendis reported a 27 percent increase in revenue to R4 billion. Operating profit for the half year increased by 28 percent to R602 million.

The normalised earnings before interest, tax, depreciation and amortisation rose 28 percent to R653m.

Normalised headline earnings increased by 20 percent to R353m, while normalised headline earnings per share were 7 percent higher at 75.8 cents a share.

The company did not declare an interim dividend. The group said it had decided to retain the cash in order to settle debt obligations.

Ascendis shares rose 15.53 percent on the JSE yesterday to close at R13.69.