Annual Report for the year ended 30 June 2009
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Group Chief Executive’s report  
Stephen Saad
Group Chief Executive
photographed at the
Sterile Facility, Port Elizabeth (left)


The financial crisis and the related fall-out in the markets was the dominant feature of the business environment during the last financial year. During this period Aspen has performed strongly, demonstrating the resilience of the Group in difficult times and confirming that the strategies adopted have been effective.


Revenue grew 80% to R8,5 billion with all segments of the business contributing positively to this achievement. The overall results of the Group were favourably impacted by the international expansion. However, this was also supported by good growth in long-established businesses, most notably in South Africa and Australia. Operating profit of R2,2 billion was up 82%. The operating profit was underpinned by excellent cash generation with cash generated from operations also reaching R2,2 billion, more than double the prior year. These results are an endorsement of the strategies the Group has pursued and demonstrates Aspen’s ability to succeed in difficult market conditions.


Despite the increase in the Group’s international business, the South African operations contributed more than half of revenue and of profits. The South African private pharmaceutical sector grew at 15% in value terms over the year to June 2009 to R19,8 billion while Aspen grew at 20%. The private sector is subject to price controls administered through the Single Exit Pricing ("SEP") legislation. The Department of Health ("DoH") announced a 13,2% increase in the SEP in February 2009 which only found its way into the market in the fourth quarter of the financial year. It is thus apparent that the market as a whole, and more particularly Aspen, recorded robust volume growth over the period. Market growth has been stimulated by the demographics of a growing population, an expanding middle class and an unfortunately large number of young people who are suffering with infectious diseases such as HIV/AIDS and Tuberculosis. Revenue in the pharmaceutical division was up 34%.

The revenue increase of 16% recorded by the consumer division was a notable achievement given the depressed retail sector. The Group’s strong focus on medicinal products and IMFs as the leading brands in the consumer offering proved effective in growing the consumer business under testing market conditions.


The Group has invested heavily in capital projects in South Africa over the last five years in order to establish world class manufacturing technologies and production standards of the highest international quality. The manufacturing capacities and capabilities which will result from this programme have secured the Group’s domestic manufacturing sustainability and created a catalyst for international expansion. A number of the projects have recently been completed or will be completed in the year ahead turning these investments into productive assets. During the second half of the year, further Oral Solid Dosage ("OSD") manufacturing capacity came on line in Port Elizabeth with the completion of the capital project to add more packing lines.

This relieved production pressure which had arisen primarily as a consequence of unscheduled increases in demand from the public health sector. Further OSD capacity will be unlocked before the end of 2009 with the completion of the new tabletting production plant which is presently being validated.

The eye drop suite in the Sterile Facility was also completed during the past year and exports of Clear Eyes and Murine have commenced to Prestige Brands Inc in the United States. Trials have been initiated in the hormonal suite of the Sterile Facility.


Aspen’s international business showed a quantum increase in contribution to the Group as the benefits of the purchase of a portfolio of global brands as well as the acquisition of interests in businesses in Latin America and East Africa flowed into the results. Revenue increased from R1,1 billion to R3,9 billion while operating profit improved from R0,2 billion to R1,0 billion. Growth was also supported by another strong showing from the Australian business which raised revenue 29% to R915 million despite a challenging legislative environment.



Success amidst challenges
The Group has invested heavily in capital projects over the past five years in
order to establish world-class manufacturing technologies and production
capabilities of the highest international standards.
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