AFT to book one-off non-cash gain on Pascomer(R) assets

Market and Media release 4 November 2019


AFT to book one-off non-cash gain on Pascomer
®
assets
AFT Pharmaceuticals (NZX.AFT, ASX.AFP) announces it expects to book a one-
off non-cash gain of $9.8 million following its previously-announced acquisition
of full control of its Pascomer assets.

AFT’s forecast of underlying operating profits before this accounting change is
$9m to $12m for the year to 31 March 2020. However, the one-off gain now lifts
that forecast to between $18.8m and $21.8m.

As part of a series of agreements announced on 5 July 2019 this year, AFT
acquired the outstanding 50% share in its DSLP partnership, which was set up
for the development of Pascomer, a topical treatment for Facial
Angiofibromas in Tuberous Sclerosis.

Prior to this acquisition AFT accounted for its 50% stake in DSLP using the
principles of equity accounting and the asset was held as an investment in
AFT’s balance sheet at a valuation of $2.7 million.

The acquisition now requires AFT to account for DSLP using the principles of NZ
IFRS 3 Business Combinations, which requires AFT to account for the business
combination using the acquisition method.

Under this accounting principle, the Pascomer IP assets are now required to be
carried at fair value. AFT has recently received an independent valuation
report which it has used in conjunction with its own analysis of fair value and
other publicly available valuations. As a result, it has assessed the fair value of
DSLP at $12.5m, all of which is now carried on the AFT balance sheet.

For more information:

Investors Media
Malcolm Tubby Richard Inder
CFO, AFT Pharmaceuticals Ltd The Project
Phone: +64 9 488 0232 Phone: 021 645 643
Email: malcolm@aftpharm.com Email: richard@theproject.co.nz

About AFT Pharmaceuticals
AFT is a growing multinational pharmaceutical company that develops,
markets and distributes a broad portfolio of pharmaceutical products across a
wide range of therapeutic categories which are distributed across all major
pharmaceutical distribution channels: over-the-counter (OTC), prescription
and hospital. Our product portfolio comprises both proprietary and in-licensed
products, and includes patented, branded and generic drugs. Our business
model is to develop and in-license products for sale by our own dedicated
sales teams in our home markets of Australia and New Zealand and in certain
Southeast Asian markets, and to out-license our products to local licensees
and distributors to the rest of the world. For more information:
https://www.aftpharm.com/