API slashes asset values by $131m.
After an extended trading halt on shares, Australian Pharmaceutical Industries Ltd (API) has just confirmed it will incur an asset impairment charge of $131m.
The announcement comes as API prepares to release its half year results on 30 Apr.
The non-cash charge is comprised of $15m for New Zealand manufacturing, which API says was due largely to foreign exchange movement, $20m for Clifford Hallam Healthcare (CH2) due to “continued underperformance”, with API saying CH2 was not “core” to its future strategy, $52m for pharmacy customers with long-term debts related to their bank refinancing arrangements and $44m for retail due to impairment modelling on store network growth rates.
The company’s board of directors expected to recommend payment of a fully franked dividend at six months for shareholders, and could maintain a final dividend as well, API said.
The company said notwithstanding the impairment charge, underlying business performance was strong, with net profit after tax expected to be up from $12.6m in the year on year period to $16.2m for the six months to the end of February.
This was driven by factors including like for like retail sales growth in Priceline and Priceline Pharmacy store numbers to 373, up 10 from the full year and the Sister Club loyalty program, which sat at 4.6m members, up from 4.3m.
Another factor included pharmacy distribution sales which saw growth of 8% and revenue growth of 2%, excluding PBS reforms, as did group supply chain volume at 6%, API said.
For more information, see Tuesday’s Pharmacy Daily.
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