Ascendis Health has given further information on the financial information of the businesses that form part of the proposed disposal plan.
As a refresher, Ascendis needs to sort out its balance sheet and emerge on a sustainable footing. The current proposal is to achieve this by disposing of three distinct businesses.
The first is Ascendis Medical, with a net asset value of R289 million and a loss after tax for the six months to December of R259 million. This business is earmarked for disposal to Apex Management Services (one of the holders of debt in Ascendis) for a R550 million base price, with downward adjustments for the backlog of capital expenditure (R200 million) and excess rental incurred of up to R25 million.
The second is Ascendis Pharma, with a net asset value of R117 million and profit after tax for the six months to December 2021 of R22 million. This business is to be disposed of to Pharma-Q (another debt holder in Ascendis) and Imperial Logistics for a total price of R375 million.
The third and final business is Nimue, with a net asset value of R32 million and profit after tax for the six months to December 2021 of R5 million. Nimue is being sold for R102 million to Amka Products.
Further details will be provided in the circular to shareholders, which is expected within 60 calendar days from the date of the first announcement regarding these disposals. That announcement was released on 1 February 2022.
If you plan to work out multiples on the above numbers, remember that profitability is always disclosed with reference to a period of time. To estimate a multiple, interim profit needs to be doubled or you are only taking half the earnings into account. In a perfect world, you would want the numbers for the second half of the previous financial year for these businesses, so that you can work out a “last twelve months” (LTM) multiple by combining the second half of the previous year with the first half of this year.
When working out a premium or discount to net asset value (NAV), remember that NAV is a balance sheet concept and is thus a snapshot of a point in time. You never double this, even when working with an interim financial report.
