Aspen Pharmacare Hldgs

Good to see you all here today. And welcome to Aspen's full year financial results for the 2024 period. In today's program, we're going to have Stephen, who's going to start us off with the performance overview. Sean will then follow with the financial highlights and review. Stephen will then return, and he's going to give us the strategic review and some outlook. And then we'll move on to questions and answers. The attendees that are joining us online are requested to put their questions in the left-hand side of the screen, and that question box is already open. For our attendees in the room today, we'll be using a roving mic. Thank you all. Over to you, Stephen.

Good morning everyone, lovely to be here and thank you for your attendance and for, I believe there are many, many more online, so welcome to all that are listening. I think if we reflect on where we are and where we're going to, this second half was a really important half for Aspen. We flagged it over a year ago as being a critical inflection point for Aspen and indeed it was. We had some very, very important deliverables. know after the last seven to eight years we've we've had pretty much uh you know we building this and this might happen and if we operationalize successfully or take transfer then this will happen For the last few years, we've been flagging, for example, the VBP risks in China. So there were lots of risks. So it was always, this is where we're going, but these are potential threats to the business. I mean, to quantify these type of things, the commercial farmer business had a couple of billion rand, over a billion rand in gross margin at risk between China and Russia. And in fact, China was even worse. So that's a challenge we had to choose. We had to work out what we deal with. It's one thing dealing with the commercial challenge. I mean, the absolute number challenge. Probably the bigger concern from our perspective was what happens in China sustained because China is a good market for what Aspen does. But would we still have a model that could work in China after all of this? From a manufacturing perspective, You'll see that on the next slide when you'll see even geographically how we perform. If you looked at China, if you took Asia and you pulled it aside out there, you'll see we have double digit underlying growth in the business. And that just gives you, but it also gives you a sense of the geographical diversity. So yes, we didn't perform in Asia, but fortunately we performed in the Americas. in Africa, etc. So we have a very balanced product portfolios between injectables, steriles, and OTCs. And we also have a very good geographical balance as well. What you will see too here is that the Americas are now larger than Australasia. So that Latin American region is really an exciting region for Aspen. And for those that have watched you for a long time, we had to persevere, but we had We had problems worse than China in those initial days. And certainly I remember the board telling me, please exit Brazil. And I said, no, it will be an opportunity loss for Aspen. And we persevered and look where it is today. And it's really one of the most exciting, if not the most exciting region within the Aspen business at the moment. Russia, we took a big loss in the first half. So, yes, it's got an annualized decline, but it wasn't much in the second half. There's not much left, to be candid with you. What is heartening to see is that the European business and the Europe CIS is growing and continue to grow. And we've got a portfolio and a team in place that are delivering results across Europe. Prescription has been the biggest section for us now and it is the fastest growing. It's accelerated. In the half we were at 7%. We're now growing at 15%. So there's some strong growth in there. Some of it driven by currency. The difference between the 15% reported and 11% is currency related. Some of it is also the products required in Latin America. We've had good organic growth across most of the sections. And what you'll see in prescriptions and look at it when you see Australasia, these are products that are regulated. We have price cuts in the area and we battled a bit on the pricing in this period. And you'll see a decline here. What is worth looking at is when you turn over the page, you'll see that the OTC business in Australia is nearly now the same size as the prescription business, and it grows, and that's less regulated. So that business is shifting from being in a regulated space to being where we have some freedom with pricing around OTCs, et cetera, and it's now nearly a 50-50 split, which is, for those that followed us over the years, it's a massive jump. We're almost exclusively an Rx business. The South African business continues to deliver and the women's health products are also really assisting and the anesthetic creams in the European business. And we've got steady growth in OTCs across all the regions. And to do this, you need good teams of people. Of course, and because they've got to position them correctly on the shelf in the consumer's mind, but also the brands have really good brand equity and their brand equity builds where we grow. So you've got almost a good performance across the board in the OTC space. The injectables are where you'll see all the issues that we faced in Russia and China. You'll see how Asia's down 35%. It's a big decrease from the largest contributor towards injectables. And you'll see also that the decline in Europe is exclusively related to Russia. The positive, if you can see it like this, unfortunately it's not a good place to be, but we used to have a business in Russia that did a billion rand. It does very little now. So it no longer will have an impact on results, a downward impact. And we've had really good growth in Latin America and in South Africa. And this is an area that we've dropped a lot of turnover, and it's been the area that we had to address. And there's... There's some really good news coming into this section. And we'll talk about it when we talk about strategy and prospects. But aside from the obvious launch of Njaro in South Africa, there's some other wins that we've managed to achieve. And so this is an area that's going to bounce back strongly. Manufacturing was all about how we deliver on our sterile contracts. Finished dose for manufacture, which is where the steriles are, was sometimes the smallest or close to the smallest segment in here. And the value of those contracts coming through now shows you that it is, you'll see what a large, it's now become the largest contributor and will accelerate relative to the other sections over the next few years. And If you want to get a sense of how big the second half was, you'll see that we grew at 33% in finished dose form, which is a great number. However, we were only 10% up at the half. So understand how much we achieved in the second half. We had an onerous contract in the API business, which resulted in us getting lower revenue. Unfortunately, those concepts are beyond me. I mean, I think when I was a chartered accountant, we had one statement, so this is something that the accountants can explain. Heparin, we sustained the elevation, the elevated sales are explained by the unwind, the sale of the stock. And that's unwind as a permanent unwind. The future model is really working capital light. And effectively, we've got about a billion rand of stock on the old model that we really need to move. So the. The positive on that is that if we move that it's a billionaire and ultimately a billionaire and more reduction in our stock without needing to be replaced. But we also need to sell it over this period. And that's something that we that we need to work on is how we actually shift the stock out of our system so that everything relates to what is officially almost a consignment model in terms of sales. Oh, and that's it. So that's me for now on operations. I think it's a pretty simple story to tell. We've got good underlying growth in our commercial pharma. We've got some good kick-ups to come, and we had issues in injectables, and hopefully I'll show you how we can address those going forward. And manufacturing is really going to be something that powers us going forward. So with that, I hand over to you, Shawnee. Thank you, Steve.

Thank you. Thank you, everyone. And thanks, Steve, for those performance insights. When I was sitting preparing my notes this morning, I looked out the window and I saw the Springbok bus on the other side. They definitely in our corner, but also made me feel very proud that we are a South African company. Our roots are global, but we're still firmly planted in the South African economy. And I think that's a really, really proud thing for Aspen. And I think similar for the Springboks, making us proud on the global stage. And we're hoping that we'll emulate them and make us all proud for many years to come as Aspen being a major global player. I'm going to kick off with two financial highlight slides, which will just give us a really high-level view of where we've performed. Some of it Stephen has covered already, so I won't sort of go through that again. But if we look at the first slide on the left, you'll see that our revenue is up 10%, and the big driver there is our manufacturing business growing 25%, commercial pharma growing 4%, and bearing in mind we had very strong growth in prescription and OTC to over – to offset the decline in injectables. So a good performance from commercial pharma withstanding the VBP impact. The standout performers, I think, from a half perspective are our normalized EBITDA and our normalized HEPs. And I promise we didn't do this on purpose, but both numbers you can see have grown by 17% in the second half, so quite a strong growth. You can see both in our EBITDA and our INEPS from half one to half two. And that really gives us the foundation in building momentum to go forward with our new strategy underpinned by our new de-risk commercial pharma business and also our sterile foray to fill our capacity. I think also important, if you look at the EBITDA up 1%, that's 1% after absorbing a billion rand, as Stephen mentioned, in the manufacturing side of the grant funding and the loss of vaccine, the last vaccine benefit in the prior year and some onerous contract, and also withstanding the impact of VBP. So we had to overcome all of that and grow by 1%, but you can see the second half is testimony to where we're aiming to go going forward. So standout performer for me, obviously on the finance side, our working capital. Big underpin there is the unwind of our Hepron inventory, which we dropped by $3 billion, which we did guide in the first half when we met that guidance. And I know a lot of you have always watched this ratio, but if you look at our working capital ratio as a percentage of sales in FY23 at 55%. At the half, we're at 49%, and we end the year at 45%, and we aim to keep that ratio at that level and perhaps down going forward. So a strong performance there. That obviously is a good segue into how we ended on our operating cash flow. We exceeded 100% cash conversion rate at 103%. Up from 88% in the prior year and if we go back previously FY22 we were at 81%. So a really nice trajectory back on a positive cash generation and supported by a permanent reduction in our working capital investment. On our normalised net financing cost, which is the third graph on this page, you'll see that in total we were relatively flat at $1.2 billion. but it is the tale of two stories. The one is, you can see in the dark blue, our interest has gone up from 800 to about 1.2 billion there, about 400 million up on interest, and that's driven by the higher interest rates, which we'll unpack in a later slide, and also our higher average debt levels. The counterbalance is that we have had a significant reduction in our foreign exchange losses this year. If you remember last year we took a hit of about 400 million on our foreign exchange losses because of the volatility in emerging market currencies and that has been squashed pretty much down to below 100 this year. So that counterbalances the impact of the increased interest cost and puts us in a pretty flat trajectory for the year. From a net debt perspective, net debt grew from 22.2 up to just under 27 billion, an increase of 4.7 billion. We'll unpack that in a later slide as well, but that's driven by our acquisitions during the year, the main one being the one in LATAM. And our leverage ratio ended at 2.3 times, slightly above what we guided, but very comfortable and still well within the range of 1.5 to 2.5, depending on where we are with our acquisition journey. On to gross profit percentage. On the gross profit percentage, if I start off with the commercial segments and I'll start off with prescription, prescription being our largest business segment, supported now with that Viatris Latam transaction that we did and was effective from last year, November. You'll see if I just sort of take you through the bars to navigate. We start with the FY23 margin on the left. We then talk you through the two halves, and then we show you the full year margin on the right. For prescription, you can see we ended the year pretty much in line with the prior year. There was a bit of mix between the two halves, but overall a pretty steady margin. And if you remember, that's after having us all price cuts in the Australian market, but we have got quite good margin benefit in our new Latam business. that's also helped to drive our margin for this year. We do anticipate the prescription margins are growing in the new year because we're going to have 12 full months of the late-term business. So I think from a guidance perspective, you can look at an increase in the prescription margins for the year ahead, a marginal increase there. On the OTC side, we ended last year at 58.2, this year at 58.7, so a nice trajectory there, a nice jump. Our enhanced portfolio sales mix has ensured that positive trend, and we obviously continue to refresh that portfolio and drive and optimize the gross margins. For OTC, we do see this margin staying pretty steady in FY25. So from a guidance perspective, you can take that as a steady margin going into the new year. Then we get to injectables, and there you can see the impact of VBP. We started the year at 59.7, 59 in the first half, and then with the prevent coming into the VBP net in the second half, our margin has dropped down to 57.3 with an overall full year margin of 58.2. We do anticipate that the half-two margin will be the margin that you can expect in the year ahead for the injectables, obviously as the VBP now is out of the system and that seems to be where we expect it to be in the new year. But the power of a diversified portfolio, I think Stephen spoke about it in his sales slide, where you've got a very even split, obviously more weighting to prescription and OTC now than injectables. Injectables is now number three in terms of segment size. When you put all of those three together and look at the... increased sterile contribution we do anticipate this margin lifting into the new year into the double digits uh we're going to have less you know your hip will be now at a much lower trajectory now that we've unwound into the toll model and obviously with the sterile contribution coming into play we do see quite strong margin growth coming from the manufacturing division in the new year um From an overall group perspective, you'll see that our margins have dropped from 46.2% ending there at 43.5. And that is predominantly a function of the mix of manufacturing being a much larger mix, a proportion of sales than commercial pharma. Because if you look at commercial pharma, if you recall, the margins are relatively flat year on year, and it's just really the mix of the business that's moved us into this lower margin trajectory. We do anticipate a gain for FY25 with the heparin now at its new lower level, the increased sterol contribution coming into play, the steady commercial farmer margins going into the new year with a slight increase potentially. We do anticipate that the gross margin for FY25 will at least get to what we were in FY23 and perhaps a little higher. Onto normalised EBITDA. I think maybe just to navigate this slide. So what we've got here, we've got revenue, gross profit going all the way down to normalised EBITDA and we're comparing our current year's performance versus FY23 at a reported and then on the far right at a constant exchange rate. So, first of all, I think we've unpacked the gross margin already, but you can see that our 10% revenue growth translated to only a 3% gross profit growth, and that was a function of the mix that we covered in the previous slide, and also some impact from the China VBP on the commercial farmer margins. Very proudly on the expenses line, if you look at it from a constant exchange rate perspective, we only grew our expenses at 4% relative to 5% of turnover growth in CER. And you can see our expense ratio running quite tightly there under 23% of sales. From a normalized EBITDA perspective, as we've already gone through, we've grown at 1%. You'll see our EBITDA margin is down at 25.2%. relative to FY23 of 27%, and that purely is a function of the increased manufacturing mix this year. For FY25, with the improved gross margin mix from sterols and the lower heparin sales mix, we do anticipate EBITDA margins returning back to the 23 EBITDA margin percentage levels of around 27-odd%. And I think just again to emphasize that this EBITDA being up at 1% is after having absorbed a billion impact from our manufacturing and another probably around a billion from the impact of VBP and Russia in the current year. So I think overall we've de-risked the business and I think we've got a solid platform going forward. On to finance costs. If we look to the right of the screen, you'll see the evolution of our interest rates over the last period of time. starting from 2023, half one, and you can see how it's jumped up 2.8 in 2023, first off, up to 3.6. We've then put the average for the year, so last year we ended at 3.2% average, and then you can see how it's hopped up this year to 4.4 at the half, up to 5% in the second half, and ending at 4.7%. If you remember, we did guide that our interest rates would go up between 120 and 150 basis points, and then we've pretty much come in on that guidance as we've As we said, going into the, going into the new year, we do anticipate our finance costs to, to, to increase. I know it sounds counterinsurative because we know that the interest rate cycles at a peak and we, are going to start seeing and we have started to see interest rate cuts but obviously going into the new year we still we've still got the residual carryover of the high interest rates from this year you can see that in half two we ended at five percent so that'll carry through into the new year and we'll only start to see interest rate benefit i think from fy 26 onwards in addition we've also started to repay the the ifc loan um that if you remember was at the zero percent base rate so we've We expect to pay 120 million euros of that back in the new year, and that will then be replaced by interest-bearing debt. So that will also put some pressure on the interest line. So from a guidance perspective, we expect interest rates to increase between 60 to 80 basis points from the FY24 closing interest rate. Very proud to announce, and I can see we've got one, we've got the IFC representation here, and thank you. We've managed to raise a secure funding of 500 million euros from the development finance institutions, of which IFC is one, Proparco, DFG and DEG. They've really been supportive, and this financing will be used to enhance our capital structure mix, and also it provides a lot of support and confidence in our sterile capacity journey in Africa for Africa. So we're very happy to have announced that, and it certainly puts us at a very strong position from an overall funding mix perspective. So thank you to the DFIs. for that support. And, you know, from an ESG perspective, a really big tick. We've got to go through a lot of hoops. You can't just get this funding and you've got to go through a lot of ESG hoops and commitments. And I think we've ticked all those boxes and worked in a very strong and collaborative way with the DFIs. So we're hoping to use that money wisely going forward. From a foreign exchange perspective, you'll see the drop in the foreign exchange losses from the $434 million down to the $64 million in the current year. So that's what's counterbalanced the high interest increase. And that little graph on the right, you can see how less volatile. I didn't put the previous year's one, but that looked like spaghetti compared to this year. If you look just towards May and June, you can see that little blue line, for example, and I think the... And the grey line is starting to pop up there at the end. And that's the PESA and the Brazilian Real starting to weaken against the Euro. So we do anticipate. And obviously, if you also notice, the Czar has also got stronger. In in the last period of time, so, you know, with the strongest, and we do anticipate there could be some weakening of our reported results. If the continues at that strength, and that would be the, that's the main underpin while all of our guidance has been provided in in so that we can give you proper guidance without the impact of currency volatility. On to, um, probably my favorite slide, the accountants. I love this slide, but it certainly was my least favorite slide for two years, but definitely my favorite slide now. So if we perhaps just look at the graph on the right, I think you saw it on the very first page, but just to show it in a little bit more detail, that depicts our networking capital as a percentage of revenue. You can see how we've dropped from FY23 down to half one to 49 to 45. And if you recall, our API business has got a much longer working capital cycle. So for those of you who want to benchmark us against other pharma, if you strip that out and exclude the API business, we're down at 36% at the end of the year. Still not where we want to be. We want to probably be below 35%, but certainly a big step. I mean, if you look at it from 36% from 44% last year, a big step in the right direction. If you look at the graph on the left, that's our operating cash conversion cycle. The light blue line there just shows what the ratios were in each of the halves. So you can see that in H222, we did 117. Last year, our first half was 58. We then came up to 115% in half two last year. 89 in the first half and now at 115%. The red line is our target of 100% cash conversion rate, but the most important line is that very dark blue line, and that takes our 12-month moving average of our cash relation. You'll see for the whole of this financial year, you'll see that dark blue line is above the red line, which means we've been over 100% on cash conversion for the full 12 months rolling for this financial year. The big underpins there, obviously, are the heparin unwind. We do also see further opportunity to reduce inventory levels. I think Stephen's mentioned that we've still got a billion rand of what's called old model heparin that we want to liquidate. And we've also got opportunities within the broader business, both in manufacturing and commercial pharma, to drop inventory levels further. So that will be an area we're going to focus on quite a lot in the new year. So I think the big takeaways from this slide are the operating cash conversion ratio exceeding 100% at 103% and the net working capital ratio returning to FY22 levels of 40-45%. From a guidance perspective, we expect to at least be at 45% next year and hopefully slightly lower. Onto net debt. Just to sort of talk you through the moving parts here. On the left is our net debt at the FY23 of $22.2 billion. And on the far right, we ended the year at $26.9 billion. If you look at the bridge between, we've generated operating cash flows of $8.3 billion. If you're wondering why that's different to what you're seeing in the operating cash flow, we have also funded $2.1 billion of the VRTIS transaction through operating cash flows. So what we do is we add that back in that block and we put the funding in the block on the right in the acquisitions block. So if you take the net of the 8.3 and our capex spend for the year 3.8, a positive free cash flow there of around 4.5 billion. We've obviously got our dividends, and then you can see the big outflow for the year is our acquisitions of 7.7, of which the big one is the Viatras Latam. We've obviously got Sandos in there, and we've got other smaller Bolton IP acquisitions sitting in there as well. From a leverage perspective, the... We ended the year, to be precise, 2.28 times, but we rounded it up to 2.3. And for FY25, based on the strong cash flows we're expecting, we do expect our leverage ratio to dip below 2 into the FY25 period. I think the other point to make on this slide is that we funded all the debt this year, but we haven't had the full benefit of those profits in this financial period. So that cash benefit will come through next year on the profit line as well. Onto intangible assets. You'll note that we have quite a big increase in our impairments for the year. It's gone up. If you look at the graph on the left, this is our net impairments, gross impairments, less reversal of impairments. And you can see in FY22, we were 1.2 billion of impairments, slightly down last year at 1.1, and that's gone up to 1.6 billion, a 49% increase in impairments. The big driver there is the VBP impact that we've picked up on Fraxi, Perrine and Dipravan, which was not anticipated either at the half or at the prior year. We knew we had VBP impact. We didn't anticipate the impact of it at this level. We have got future risk mitigation strategies in place, and if those come to fruition, then we do not see any further impairment risk. However, very unpredictable. If something does change in the market, then we'll have to look at our view on these impairments going forward. But just to put it into context, I mean, impairments at a total level are 2.2% of our net book value of 72 billion of IP, so only 2%. of our IP is impaired. The other thing to note is if you do a full valuation of your intangible assets, we've got 60% headroom above the $72 billion. But unfortunately, as accountants do, we can't write anything up. We can only write things down. So the focus is always on impairments and never on, you can only write things up to the original book value or original cost, but not above that. So just to bear in mind that, you know, if you look at our whole portfolio, we are well valued. It's just, unfortunately, you only look at negatives when you look at impairments. I think the positive is that we have, and probably similar to what I said in the interest rate slide, we do anticipate interest rate softening going forward, obviously, which means also risk-free rates and discount rates will start to soften. And so that will have a positive impact when we do our impairment assessments going forward. We do see that discount rate softening over the next two to three years. From an income tax perspective, we ended pretty much in the range we guided for the year for our normalized tax rate between 16 and 18 and our all-in tax rate of 22.9%. That went up because of the impairments, because impairments aren't tax deductible, so you do have that increase in your all-in rate. but certainly well within the guidance. Obviously, with the increase in our sterile contribution, we do anticipate tax rates lifting a little bit in the new year. And then we all, as everyone is, there's a lot of global uncertainty around BEPS pillar two and its impact on the business. So we're going to be going through a full assessment of that in FY25 and come back to you on that into the future. But it's certainly very uncertain at this stage. You speak to anyone about BEPS pillar two and they all got very different answers. From an ESG perspective, Aspen is fully committed to running a sustainable business in a very responsible manner. As one of our KPIs in FY24, we had to come up with goals. So we've put all of our sustainability objectives into a pot and we've come up with 16 sustainability goals, which we feel will give meaningful impact to the way we run the business into the new year. And we've put those in four pillars, patient pillars, our people, society, and environment. And within those, we've also started, we've set KPIs, which I think will be published in our integrated report, which comes out, I think, at the end of October. And so we will start to measure ourselves against these goals and also link it to remuneration outcomes. So we certainly are fully committed to sustainability and sustainability goals in terms of our overall balance scorecard approach to running the business in a profitable but a sustainable manner. Perhaps just a little snippet on our renewable energy projects. If you recall, we did guide you that we were going to be – launching our plastic waste to energy project early calendar year 25. I'm pleased to report that that is still on track. And following that, our Quebec site will be fully off the municipal grid. As we sit now, 18% of our electricity consumption is from renewable energy, which is up from 11 in the prior year. And obviously, this new project will have quite a big impact on that ratio into FY25. And you can imagine the benefits it's going to have on carbon emission as well. So we're very proud of the initiatives. And if you look at the far right picture there, you'll see all those solar panels. That's not in South Africa. That's at our NDB. You might have seen it there when you visited and it was snowing. But the sun does sometimes shine in France, and they also generate solar power in France when it's sunny. Certainly during the Olympic period, they had a lot of sun. Our projects across the globe are progressing to plan. We do have some nice slides in the appendix around how we're providing access to medicine for all of our patients and the journey that we've followed over many years. And we've got some little snippets there on how we've reduced our water consumption and electricity consumption, just to give you a sense of how we're going to be measuring ourselves going forward, but just overall fully committed to sustainability and all the objectives around it. So, on that note, I'm going to hand over to Steve for the most exciting part of the presentation, which is the strategic review. Thank you, Stephen. Thank you, Sean.

Well done, Sean. I mean, for those of you that were doubting, I think Sean has proven that he really does have a black belt in budgetary control here. So, well done, Sean. Only advice I'll give you is if I go back 20 odd years in South Africa and Dragos, we did a one-off journal entry. We just wrote off that IP in one go. We got a tax deduction in those days. But I've got to give you that. It's got to be worth it. It's got to be better than all the theory we've got to go through here. And I know the auditors are cringing, but I have begged them a few times just to knock it off. Here we go, on to a strategic review. So in this review, you know, we find ourselves in a very sweet spot in the industry as Aspen. We're really well positioned with, you know, commercially and from a manufacturing base. And just to have a little bit of history here, you know, have we ended up here by accident? Was it just we're just fortunate? But I think just to tell you, just to give you some grounding as to how we got here, we've got a strong relationship and partnership with multinationals. Those of you that know, have worked with us over the decades, will know that that's been core and fundamental to our growth. Many of our transactions have come because we're good manufacturing, we fix factories, we're able to get commercial opportunities as well. What we noticed in Big Pharma was a big shift in their focus, and they were increasingly moving to high value per unit products, and many of these products were in the sterile space. What it does, of course, at those prices and those type of manufacturing, it made their businesses less relevant in emerging markets. So we decided to match the shift and to see where the gaps might come. And that's why we've spent a lot of money building up a sterile platform and we've built a strong commercial footprint focusing on emerging markets because we think these were the gaps and the opportunities will come. Filling our capacity really has a material impact on Aspen. It's been incredibly capital intensive. It's very resource, human capital, not just... It's human capital and it takes up a lot of resource and it's taken up years and years of time and effort, but it's all coming to fruition now. And I think we've managed to put ourselves in the forefront of the industry in terms of technologically and where it's going now. We can make mRNA, insulins, vaccines, GLP-1s. So when someone comes and says, can you make the Mpox vaccine? We get the dossier, we see what it is, and we say, yes, we can. Yes, we can make the Mpox vaccine. So we're in a situation where we have skills, capabilities to address many, if not most of the needs in the sterile business. Our emerging market footprint is a particularly valuable footprint for us, and it's given us access, once again, working with multinationals. You've seen the transactions that we've done with some of the largest multinationals around the world, and a lot of them have been regional. And I think what you should be aware of is we think this is something that we can keep building on. There are more opportunities out there. There's some further ones that are under discussion. And, you know, we'll announce them as they come around. But that footprint is definitely relevant. If you're unsure, you just have to look at the history of what's gone on and sit in the room when I'm there with people that are talking to me at a global level. There's real interest in what people can do with us on this footprint. So let's talk about the GLPs ones. This has been, I think, of the last six months since I've spoken to you, I've probably spent five months in this space. It's been a space that we've, as a group, have had... huge focus on and how we position ourselves important so let's understand a little bit about the industry which i'm sure a lot of you know but let's at least make sure we're all on the same base it's been the largest opportunity for global pharma you just have to see where the innovators in this space are they they're massive they're the biggest in the they're the biggest in america they're the biggest in europe just as a result of having this this uh having these products in the space They really have been breakthrough treatments, and they're finding more and more benefits way beyond diabetes and weight loss. There are many, many other things that are coming through with the latest results. However, there's a lot of complexity in manufacturing, and the capacity in these spaces globally is very limited and prohibitive to put in. The innovators themselves, and for those of you that have been in the market or trying to acquire these products, you simply can't get the products. The innovators have insufficient capacity, and they are building capacity at a rate to try and meet the capacity gap. And they themselves have stressed the global supply chains for these products at every level, whether it's API, whether it's devices, whether it's the manufacturing and the sterile fill. The markets are undersupplied, particularly, you know, even the US is undersupplied. And I say even the US because that's always the first port of call for these companies. And the products that are available are really, really, really prohibitively expensive. Yes, there's a portion of the market that can... afford them but but there's only a portion so you've got an undersupplied market and you have a price point so when you sit back as us and you say well you know what is the size of this market and it's very hard to call because you say to yourself if the market was supplied if the price point was was affordable what What size will this market be? Now, when you sit with the manufacturing hat on only, you're only thinking about volume. It doesn't matter whether you make for A and he's selling at a thousand and B who's selling at 50. You know, it's all about the volume because you're not, don't be confused. You're not getting a higher price by selling to A. You're going to get the same price. You've probably got more chance of selling at a higher price to B because that capacity is tightened further. So capacity is at a premium. And what you're seeing is that many generic companies are really battling to get access and the development companies to capacities that really the door just keeps shutting in terms of the capacity. It's a bit like aeroplane seats. We're now getting to the expensive ones. So there's been a flurry of activity in this space. And the reason there's a flurry of activity is that some of these GLPs are coming off in some key markets outside of the Europe and the US in 2026, calendar year 2026. And there's patent expirations that continue during 26 all the way through to, I think, 32 or so, 33. And some of these markets simply have got no patents even filed in them. But I just want to stress from that Europe and the USA are not early patent markets. So big markets, over $100 billion projected, etc. We don't know where the top and the bottom is. I've put two pictures on there for you. The first one is what we call an auto-injector. So you pull the top off, you don't see a needle. Now that's the type of product that we make in our French facility. The base of that product is a pre-filled syringe. At the bottom is a multi-dose pen. In that pen, Underneath there's a cartridge, which we make in our South African facility, and you do see a needle. So the one you sort of throw away, you use it once, one and done, and the second one is like a month's supply. So you take it, injection, you've got to take the needle off, throw it away, and then put the needle back on. So pretty similar to what people often see with insulin and insulin pens. But just so that you understand the difference between an auto-inject and a multi-dose pen. So what have we done? We've had a look at it, and what we've managed to achieve was a license agreement for IP to these early expiration companies. And there's both a commercial and a manufacturing opportunity. To date, we've only really spoken to you about manufacturing opportunities, and I'm going to explain the distinction now. And it includes both for multi-dose pins and auto-injectors. So manufacturing will impact both our South African and our French side. The IP around these GLP-1s is exceedingly complex to develop, and the license for us is a significant coup. It's not easy to get access to these products. The reason we did get access to these products is because of the manufacturing capabilities and the capacity we have, and that really has been the catalyst here. Without those capabilities, we wouldn't have had the opportunity commercially. And the opportunity commercial is effectively Aspen has its own brand to put into the market. And that, you know, those numbers could be pretty large. And we really are dependent. The values are, you can do it on a spreadsheet and, you know, you run out of zeros. But the reality is that you've got to have a regulatory pipeline. You've got to get the products registered. These products are limited. or peptides hormonal peptides they're not they don't have guaranteed pathways by country but it will get registered at some point and we have good ip and it's just with how closely we get to market formation interestingly from a manufacturing point of view and this was the quid pro quo to getting the commercial operation we the exclusive manufacturer to the license saw for total globe products so you've got a license saw that owns the ip they look for commercial partners around the world. And the licensure volumes for Aspen manufacturing will be supported by global generic players. And this will include the US and the European offtake. So what we see here is an opportunity to supply and to have continued supply and growing supply running right into the mid 30s into both our sites. And it's an exclusive supply agreement from us, so they will only buy from us. So they exclusively buy from us, and we in turn will supply them. We're not exclusive to them. We can manufacture where we want, but we will make all of their volumes, and we will also have access to the IP for selected markets. And those selected markets, there's a few exceptions, but are largely outside of Europe and the USA. So as I've told you, the opportunities not without risk, you know, regulatory timelines are never certain, but this is an Aspen has chosen to pursue this opportunity. And it's really, you've got to look at it and say the return per unit manufactured for the licensor, plus the opportunity for additional returns on commercial sales, effectively the profit on the products you sell by Aspen. And we had to take that and compare it with a finite long-term supply contract only with a lower per pen unit with higher with with per unit returns and higher volumes. So that's the balancing act that we've had to do. And I think When you cut through it all, what is our downside here? Our downside is it doesn't achieve what it's supposed to, but we've still got the manufacturing. And at that stage, it's tightened even further. So we don't lose the opportunity to manufacture or contractually manufacture, but we've got a potential opportunity here where we can harness maybe the biggest opportunity, Aspen's. could ever have been involved in, be involved in. So that was the sort of risk benefit we had in looking into GLPs. And I'll take you through it a bit more when we look at manufacturing. So commercial pharma, we spent a bit of time here already when I spoke to you at the start. Our revenue was up $3 billion, and that was before Russia and China decreases of $2 billion. Happy to say financial year 25 doesn't face the same challenges, and we've absorbed the impact of China, and we did a transaction with Sandoz, as you know, where we bought some products from them in China, sold some projects in Europe, and that's going to work well in terms of giving us some sustainability in China. None of their... All of their products were also with VBP impacted like ours. So we have no more exposure to VBP besides the annualizing of some things into the first half of the new year from the second half. But I think for your assumptions, you should assume no more VBP. We also don't have any more. Russia CIS is no longer a material problem. There's no turnover left to lose, really. We will have added impact from the annualization of the acquisitions. As Sean told you, you know, we've got we haven't had the full value. We've got the full debt burden. We don't have the value of those coming in, but that will also contribute to sales. And that includes the Lilly product portfolio and the products acquired in LATAM. We expect growth in all segments, injectables, prescription and OTC. And we also believe that if we're successful with the GLP-1, these will be big contributors to revenue from financial year 26, so in the calendar year 26 period, sorry, not financial year, as it unrolls. 2026 is a big period for patent expirations. And we're working on further bolts on transactions, and we're hoping to leverage the footprint, which I discussed with you earlier. Let's look at the different segments. Injectable revenue gains projected to recover to around financial 2023 level. So that's a big comment. We've got to get around about 10% odd in injectables. And we expect to pull that off. We pull that back. We've got organic growth, which we've shown in the previous period as well. And we've got products that we've acquired in China. And then there'll be some offset for what we've sold in Europe. But the net impact will be that we get injectables back to the levels before. South Africa, it depends on the Manjaro launch, we're hoping to launch at the end of this calendar year, so in the next two or three months or so, and that will also positively impact the injectable business. The OTC business is really steady and it's sort of shown growth year on year for those of you that followed us, and there's strong brand recognition and we don't think it's going to do much different, it's going to keep growing. Prescriptions, which is our highest section, that business will have very strong revenue growth. It has organic growth, but it'll be boosted by the product acquisitions, particularly around LATAM South Africa and what we've achieved in China. And we expect the revenue growth in double digits. So that's what we're targeting to do and constant exchange rate. If we now move to manufacturing, finished dose form is really where we want to spend time here. It's a main contributor to revenue and it's an absolutely core growth driver. Just to give you a sense of how one sells capacity and the volumes of capacity. So what do we do in a site? We fill a product and then we pack it. Fill it means you put the liquid into that pre-filled syringe and then packing it means you put it into, you simply put the label on or put the device around the product in those devices that you saw like the pins and that's called packing and they've got a sort of equal value and someone says what do you say you say x for this and x for that when you get very high volume filling so someone that comes to you and says hey I want to take a whole line and I want it for my innovative product and I want the whole line and you say what do you want to do they say we just want to fill with you we've got all our own auto injector packing capability we've got our own device we want to do it separately you say fine and you'll get a really nice number. It's X, and it's a big number, but you've now got packing capacity that's unutilized, and you will never utilize it because they've taken so much of your filling, so you're not going to have anything to pack. If you get, for example, someone who says, we can take your whole line, we want 150 million units from you, et cetera, and we'll fill and pack with you, you literally get double. your overheads aren't that much more you've got a few extra people in the packing area so that's much better and then you've got someone in the middle that says i can't give you 150 million we can give you 50 million but we'll fill and pack with you and there your opportunity is is three times the value you get for three times So you've got to decide where you want to be here. Manufacturing people, if you just speak to the manufacturing team, wow, we just want the second option because no tech transfers, easy to make, we haven't got lots of changeovers, and it's easier to... If you sit next to Sean, he says to you, no, I want you to do the bottom one. I want to know where we make the most profitability. And our focus now is going to be in that section. I'm not saying we won't do work in the first two, but our focus is going to be there. It does maximize value. And particularly if Aspen can get its own offtakes through here, we have certainty on offtakes and sustainability. And for those of you that followed us over the years when we built our big facilities in South Africa, we started with third party manufacturing predominantly to full capacity and ultimately moved to our own products. Obviously, it would be utopia for us to be making for ourselves only. And that's certainly hopefully it's the first step in achieving some of that. GLP-1 manufacturing presents opportunity for both South Africa and France. We've reserved 50 million units of pre-filled syringe capacity for our own use, and we're the exclusive supplier to the licensor for the GLP volumes. And we have further manufacturing and commercial contracts under discussion. Sorry, I'm just jumping around here. Sorry. And we'll talk about where those are and where we have some capacities. If you look at where we're going in terms of our projection, in terms of capacity and capacity full, at the moment, our capacity is very, very weighted towards our French facility. With South African facility to come through in a second wave. So that's the impetus in the second wave, I think. really starts to hit its straps, financial 26, 27, 28. And I think the GLP opportunity will be pretty big for the South African facility as well, because South Africa will be making pins and pins are likely to be cheaper or more cost effective than single dose. And so volumes are likely to be there. Now the timing is dependent on, so we've got key contracts. We've got Novo contract to come online still and Serum contract. And here we are very dependent on the regulator. So people say, how much are you gonna do in H1 or H2? Quite hard to tell you when you've got a regulator out there who can delay by six months, nine months. So we've done really, really well with the tech transfers. We can do all these products. There's insulin lying in the factory at the moment or on the line as they are on the pediatric vaccines. We are very dependent on being given a priority review. by SAPRA, the South African regulator. And there's been some really good progress. You'll see the talk around localization and the importance of priority reviews for local manufacturers. And that's a critical step for us. And we're positive that that's where it's going to go. And that brings your, and if given the shortages of insulin in the country, hopefully that also has a really speedy review. And if we have a speedy review, you know we we're selling um we're selling insulins at the very least you know towards the end of beginning of next year if it's not as speedy as we like you could wait another six months so it's very hard for us to give you exact dates on everything what we can tell you is we will get it all it's just it's just the timing depends on the regulator The GLP manufacturing will be for both South Africa and France. And there's been so many questions yesterday around contribution and numbers, etc. So I just thought, let's just put it out there and understand what we did. So before we gave you guidance on contribution. Contribution which we said converted to 70% of EBITDA. So we didn't change any numbers. The contribution we said to you was in financial year 26 was R4 billion. If you take 70% of R4 billion, it's R2.8 billion. We've already achieved over R500 million actually in the first half. At 70% of R500, it's R350 million. So that is why we've said to you that what we guided previously was effectively 2.8 billion. We've realized 350. So we have 2.4 billion, 2.5 odd billion that we will be that we still as incremental on this year that we expect by financial year 2026. And that also takes into account all the regulatory noise, etc. That could be there. But that's the very least. And we've assumed very little of serum in there because over and above regulatory, we've got Gavi, etc. So we're trying to keep this to where we're very certain. So the current gardens, and I've told you through that, so that gardens I want to let you know hasn't changed. It's been maintained. And how much we get in 25 and how much we get in 26 is dependent on the timing. And I'll give you some views on timing a little later when I give gardens. But yeah. Of course, if the GLPs come in in 26 and other contracts come online, they may impact generally financial year 26 more positively and give us more certainty to give you 27, 28, etc. From financial year 27 and calendar year 27, which will impact our financial year 28, we expect a really big uptake from the GLP-1 volumes. And that alone, if we achieve what we hope to achieve, could be a material contributor to just closing our total gap beyond the $4 billion. We've told you before that we could get up to $8 billion of contribution, and we think that could be a material contributor to getting us to that number and above. So that's a story on commercial. So in commercial pharma, we've told you we're expecting constant exchange rate, double-digit growth, giving you pretty specific guidance around manufacturing, and there are some opportunities in GLP-1s which we see upside on. So let me start on the commercial pharma business. We've given you the guidance, as I said, on revenue, and it's really underpinned by the organic growth which we see continuing and the acquisitions. uh the revenue impact of vbp has been absorbed and it's out it's really off the picture and our ship focuses really to integration integration is an important uh is very important just we have been successful now we We're putting two teams together in China and integrating those teams and shaping the team, shaping the numbers of the teams. And important for Aspen to get that right as well, because that will also improve profitability. And we expect growth in all three segments. And the footprint we've got in emerging markets, these are well positioned. And that could also impact the years if we do transactions in the year where people want to put product on our footprint. The manufacturing revenue is expected to decline in financial year 25. Most people don't like to see that. I'm quite happy to see that because it's a reflection of the fact that the heparin turnover will decline by 2.5 billion rand as we transition to the toll model, and that's why Sean is guided on the higher margins, et cetera. We do expect double-digit growth to continue in finished dose form, and it's going to be And we hope this is something that we build over the next year and the next five to 10 years is the increased sterile contribution, heavy seasonal weighting. Some of these are winter products. So there's seasonal weighting. It is an H2, and I'll come to that as well. And we've told you what we expect the EBITDA to increase by and the risks around timings. And the best estimate that we can give you is that we will get at least 50% or over 50% in the first year of that 2.5 million and the balance into financial year 26. We're obviously hoping, you know, with the priority review and earlier registrations around insulins, et cetera, we can get to a much higher percentage than 50%. That percentage probably approaches 70% or more. So when we look at the gross margin and EBITDA margin percentages, they're both set to increase. The commercial farmer percentage should be relatively steady. Sean's guided to a little bit of growth, but then it gives you the manufacturing will increase simply because of the change in mix, lower low margin heparin, higher sterols. And you remember sterols is very high contributions. We pay for very few components. The incremental business is very working capital light as well. The EBITDA growth will be driven by absolute increases. And what are those absolute? You've got commercial pharma. We've told you double digits. We've told you gross margins are steady. So the EBITDA logically will follow. Commercial pharma will follow. And we've given you very good splits, I believe, in terms of how you can model your manufacturing. Seasonality. I mean, these things are very hard to call. You know, it depends. Sometimes you get early off takes on vaccine. Sometimes you don't. But the best guess we can give you now, the best guidance we can give you now is that our splits likely to be 45-55, H1 to H2. Um, Sean's taken you through the interest rates, the carryover of interest rates, uh, the tax rate and the tax rates that are likely to, to increase as we have more profitability and manufacturing, uh, on a relative basis in the business. We do see the operating cash conversion, uh, expected to exceed a hundred percent again. So some of that is, is, is further liquidation of some of our stocks. Um, and just generally where our run rate is, and not having the uncertainty of, you know, heparin volatility in there. And, of course, that all leads to lower leverage ratios going forward, and that ratio of less than two is anticipated. And currency is something we don't call, it's very hard, and it will impact results, whichever way it goes. And, you know, when our reported is higher than constant currency then you know the rand has had this the rand has weakened relative and when it strains relative then our constant exchange rate will be higher than reported but that's our story it's been a really really busy time a busy time fixing making sure we can operationalize those sterile contracts i think that was the really the single biggest uh goal for Aspen to pick one thing for us. That was the one thing that gave us some confidence that we've got something really exciting in sterile manufacturing. But a tremendous amount of work has gone into GLPs and GLP-1 strategies. Not that you can fit it on a single slide or two slides, but it's been a long process and a really thought through process of how we get here and if we can get it even half right. We'll have an unbelievable kick in commercial farm. And I think a lot of our manufacturing will be spoken for. So, yeah, and I think that's it. So we into to Q&A. Hopefully that was understandable. And as I said, the one thing that you'll pick up in the strategy, there's not if this happens and showing you pictures of sales teams in China and what we can and can't do and and what we hope to achieve one day in sterile. So a pretty, pretty. It's pretty understandable, I hope, completely understandable we'll be going in commercial pharma, understandable we'll be going in manufacturing, and it's just the relative upside on the GLPs that we get. But that we'll get upside, I think, is a given.

Thank you very much, Stephen. And thank you very much, Sean. We will now move on to the question and answer portion of the presentation. And we'll take questions first from the audience in the building.

So has any of that changed?

No, no. I said to you in the presentation that we've really put no, we sort of give out guidance without serum. yes there's that and also just bear in mind we've always told you our contribution is at least eight billion at full capacity a lot depends on the pricing what we're seeing is higher pricing than we thought before but i don't want to over guide you or under guide you but it we do we do have at these rates we do have more capacity available than we we we value of capacity, the same volume units, but I think the selling prices at the moment looks a little higher than what we had budgeted before. But Serum, it's very hard to give you guidance. You know, I hate giving, you know, it's easy on a take or pay contract when you get it from a third party, you know, multinational, whatever, and you put it in and you've got set But, you know, there are lots of regulatory hoops that one has to jump through here. I do think we're in the end phase of it. And I'm really hopeful that the insulins will come online soon and ultimately serum will follow thereafter. So let's see. But we are dependent on, you know, not one. We've got to get a priority review from SAPRA. SAPRA have to align with WHO. These are big organizations. And then you've got to go to GAVI and get an order. Now, there is a commitment to buy from Africa. But, you know, the speed with which people work during COVID in these organizations relative to the speed you get now is different. That's just I can't say it any other way.

Thanks and just on the one, so. There's been a lot of litigation trying to move that pageants from 26 to later, especially. Are you not worried about a risk here that the countries which you are hoping for. X, you might have, um, patents extended to do litigation.

I think that is a risk. I think that is a risk. But I think that there's also been some pretty clear guidance from some of the big countries and the courts as to when they see patent expirations. And it's going through, you know, some of those things are going through now. Some have been made really clear, like in Brazil. This is where we are. And some of the countries just don't have patents at all. It was quite astounding to us as we went through the IP on it. Yeah, and there's some pretty large countries that have that. But yes, there's always risk. Bear in mind, though, that is what I said earlier. Although people are pushing right now the first to market in the U.S. for 2026, and the court case at the moment stands where you can't claim obesity, but you can only claim obesity. They can only go forward. They have like an early entry mechanism. And they're trying to push for 2026 and trying to say with a diabetes indication. I'm not sure those will succeed. We haven't assumed any of that or those volumes. And the courts will come out on that. But I think that on many of the emerging markets, it's pretty clear cut that there's a pathway. Quite hard to defend something if you're not supplying something. I mean, that's another story, isn't it?

Thank you. How's it, Steve? Firstly, it's very commendable to see the balance of your product portfolio and similarly the balance in your geographic portfolio. Although your profit is pretty flat on a normalized basis, I feel you've got a very solid platform with this fixed dose form. I really think this is the great opportunity. And my question is around this license agreement. How much of the capacity does the licensor take of your capacity? Obviously, they want to take 100 because that's ideal, but your profitability will be obviously linked more towards your own products. So what is the strategy around that?

I think it's obviously the profits weighted towards our products because we have global volumes and our products will have certain volume and the global products that would come into manufacturing. and global volumes. And that would depend on their forecast. So they have offtakes from the people that they supply, and it would depend on how quickly patent expirations are online. But also regulatory pathways. This is not these peptides. There's one or two examples I can think of the past in terms of regulatory pathways. But you have all of these regulators with the regulatory pathway and how they're going to deal with that. with these products is uh is going to be interesting by market and i think it's going to be challenging although i think they they are developing pathways i've sort of seen the canadian market there's there are pathways coming through but even if it's delayed or deferred by a bit just the volumes are still there the volumes will still be there it's just against a matter of timing um how much volume will you know the there's eight billion people in the world billion people could do with this drug at least a billion um that's what the who is from the who it's how many people are just in the obese category as well so so there's a billion people and that you know and we're not taking there's a whole lot of people that are also on these products um or diabetes, et cetera. And so there's a big market out there, and it's what percentage. You just need a very small percentage of that population to utilize your capacity. To give you a very simple answer, a simple example, on a single dose, an auto-injector, the one I showed you we make in France, for every million patients, every patient needs, once a week, just say around 50 injections a year. So a million patients is 50 million units. That's what it is. In the US, they're selling a unit at $100 to $150 a unit for obesity. So it's a big market in value and you're never gonna sell it for $100 because that's the reason you're never gonna get the volumes. You're gonna sell it for a fraction of that. But you only need a million patients globally to do 50 million pre-filled syringes. you have a million patients on the pen, then you'll get 12 pens per person, which would be 12 million units. Those are pretty big units to do, and that's how we look and work through it. And we'll deal with the full costs as they come, and it will depend market by market and how the people, but I'm pretty sure All I am sure of is that a registered product will sell volumes and decent volumes, and we have global rights to those volumes, exclusive rights to those volumes and many more. So that's our focus. Our focus in Aspen is also to try and sell our own product and our own volumes across the globe. But there is a very big uptake that will also come once the EU and the US patents fall.

Thanks, Steve. Congratulations to yourselves on the good results. My question is around more beyond GLP, right? So you have a high fixed cost in these plants. How will you utilize the capacity beyond just cerium and GLP?

Yeah, so I think that in the South African... Well, first of all, Ken, thank you so much for your support. And I'm glad that you were able to afford a bow tie for the occasion. You're looking the business up front here. First interest payment. So we've... We've got lots of opportunities out there. I think the, as I said, I think the French factory is on its way and we can see a pathway there to increasing, hopefully increasing MRNA, increasing GLP volumes. And I think that will be quite a big capacity for that site. The real kicker for us after that period is in our South African facility. We've got, as you say, the serum, the insulins, and can we increase the insulins, you know, the insulin volumes? There's opportunities to increase the number of pediatric vaccines. So existing base to expand. Beyond that, to give you an example, Ken, the other example that we have now is people have come to us on Mpox. Okay, good. So, you know, we like to do good in the world, but we sort of don't want to be the only ones doing good without support. And you also like to learn your lessons once in life. And so given the experience we had with COVID, we said, yes, we can make it. It's not an easy vaccine to make. It's a live attenuated vaccine. So there's things that move in the bag. But there's two preconditions. One, whatever volume you give us, you take. I don't care about the 1.2 billion units we promised for COVID and we got zero. It's a take or pay. It's a very expensive and costly process to move this production into your facility. And, you know, will CEPI and will people fund that tech transfer? I just don't think Aspen can afford to go out on a limb anymore, given the experiences that we've had with pandemics. And we had MPOCs there. So just to answer your question, there's many, many, many more opportunities where Aspen can assist. And of course, you know, our South African facility is so well positioned for access, for global access. And that is a key and core focus for Aspen. And GLP-1s at the right price, for example, in a multi-dose vial, could be a fraction of that price and would be unbelievable for access as well. So if you speak to Francois Fenta, who's a top guy in South Africa, he was a top HIV guy, And he's saying this, everybody should be on a GLP-1, but it's just the affordability. And those are the volumes, too, that we can have. So don't just think about GLP-1s, you know, people have got views of, you know, these Kardashians on the stage, or maybe I should use Sardashians with all my daughters, but there's a whole lot of people bumming around on that stuff, and that's why they're using it. There's a real medical need for it that you'll never, ever sort at $100 a bottle. And those products can be made for substantially less than that. There's been interesting pathways around the API that have been found, synthetic pathways around it, which I think will give it a lot of affordability going on.

Okay, we'll take some questions from the online audience. The first question comes from Peter Cromberg from Merger Market. Can you speak to the tenure and terms of the new DFI funding package?

Ken?

That's a seven-year tenure and amortizing the first two years, only repayment from year three onwards.

Thank you, Sean. The next question comes from Keith McClellan from Integral Asset Management. And he's got two questions. Can you speak through the rationale for Sandos to sell you their Chinese business and buy the EU assets? Why were they exiting China? Why sell them the EU assets?

Yeah, so the... Yeah, a very good question. So the Sandoz business found the, I mean, I can't really speak for them, but I can only tell you what we worked out along the way with them is that their business faced all the same problems that we had. They had a couple of big products, also went on to VBP and their view was, you know, they've got this big sales team. you know how do you support it now with these major products under pressure which was the same the same questions we had to ask ourselves on a standalone basis what you do what you have got is if you put their products post vbp and ours together you get back to where we started from so if they were if they were at a hundred and we were at a hundred we had 200 together You know, we both halved, but if we put it all in one basket, we get back to 200 if we take the Sandoz business on as well. So that then gave us an ability to keep our rep teams in place and representation. And I think that's going to be key going forward because many people are facing these hurdles. And we've now got a business that doesn't have their bumps, but we have similar turnover levels. And it's really about, you know, what infrastructure we put behind it. In terms of the in terms of the it really was effectively a swap on a few products. It wasn't very material. The product was about 12 million euros of sales. It was 12 million euros of sales in Europe in areas where they thought they could perform better than us. And it really, it helped. It was a real offset for the Chinese deal. And that was it. It's not a material, not really material numbers from the European side, but certainly just helped with, you know, being able to do the swap in terms of not really outlaying a lot of cash to do this transaction at all and save our Chinese business. It was one of the It was really a very good transaction for Espen.

Next question comes from Steve Mina from ABAX. Semiclutides are to lose patent protection in China in 2026, and Sandoz plans to launch a generic in Canada then. You've done a number of deals with Sandoz. Is this your contract?

That's a hell of a question. I'm sure I would have put it in the presentation if I could have answered that one. I really can't comment on that. But it's interesting that they've raised markets like Canada, for example. That alone is a $2 billion market, just to give you sense on that.

The next question comes from Gail Daniel from 91. How does the pricing work on GLPs? As the sales price of end products come down, how will this impact Aspen?

I think Aspen would like to be responsible for that sale price coming down. And we have, those are all our assumptions. I think the reality is that even if you keep the sale price where it is, you will not access the volumes of patients and you won't get to patients. So right now, as I told you, these markets are undersupplied already. But I think even with that value, you will not get to the population that you're looking for. And Africa's got very high obesity rates. I mean, South Africa's up there amongst the... The heavyweights globally. And so it's very important to be able to get access. And so pricing is a key driver here of volumes. I think volumes, I think pricing has to come down, not will it come down or how will it impact you. Every assumption we've made is around a significant reduction in pricing.

Then we've got an access to medicine question from Moriti saying, how is Aspen ensuring sustainable medicine supply on the African continent, i.e. SADC for coming present in near future? Any plans in the pipeline?

So we work tirelessly on that. It's sort of what helps you get up every morning in a positive way is what we can do and how we can do what we do and how lucky we are to have the capacities and capabilities to be able to answer so many of the problems. And it's something we're working really hard on. I don't think I really want to embellish what I think all of you already know. But also to mention, you know, we're working now, we sort of PEPFAR and people who are buying, for example, ARVs are saying to us, look, you do a good job in South Africa. Will you guys do, can you do a job for us in Africa as well? We want to buy locally in ARVs. So once again, we're working on getting the FDA dossiers in place to be able to cover, and they're talking about 2 million lives that they'd like covered out of Africa. With respect, we're probably one of the few companies, if not the only one, that could one, make those type of volumes on the continent and two, be able to get the accreditation because to supply those programs, you have to be FDA approved.

Thanks, Stephen. And then the next question, we've got two questions coming from Roy Campbell from RMB Morgan Stanley. What drove the VBP impact being higher than management's expectations? That's the first question. Is this any indication that China could continue to see negative regulatory impacts? Second question.

You know, these markets are quite opaque. It's quite hard to be able to call them all. The The negative for us was we have had a history. So the way it works, just so that we, they say, okay, there's four generic players, generally all Chinese players, and they have what you call a tender system. And that tender system gets allocated 50 or 60% of the volume. And those prices can drop 80 or 90%. We don't enter that process of tender. We stay out of the process, but that tender price drops, and those volumes are lost. And it can be 40%. It can be 60%. It depends where the product's positioned. Retail products drop a little bit less. And then you get a price drop, which is, as an innovator, even though you haven't got involved in the tender, they will tell you your price drops. Now we've had price drops of 5% enforced on us. It's not a safe process. We've never had one of more than 20 until we got to roundabout to prevent, which was a 30%. Now, the problem with price decreases is I don't have to tell you that goes all to profitability. Lose volume, at least you lose the cost of sales as well. We had the highest percentage drop in price. And so are things tougher in China? Yeah, they are tough in China. It's not always clear where there is, but once you've absorbed that, the big advantage of China relative to other markets is Aspen buys products post-patent generally across the world. And we get the growth rate, you see 3%, 4%, 5%, 2%. with our commercial footprints. We've got thousands of reps we've grown. In China, that process is faster. There's a bigger growth rate in that post-patent environment. So I think where we've got the products now is where Aspen ideally wants to buy a product. We don't want to buy a product a day before patent. But in China, no one respects, not respects patents. No one wants to buy the generic product. They only want to buy the innovator. So even though there's the day after patent, there's no impact on the sales. In fact, the innovator product keeps growing. And that is why they had to put VBP in, which was saying, we're going to take half the volume straight away and we're going to do a price decrease. Whereas markets, for example, in South Africa, The product goes post-patent, Aspen launches a product at half the price. People might still say, I want the brand, I don't want the Aspen product. Then you get people like the insurance companies come in and say, if you don't buy the Aspen product, you will co-pay 50 bucks or 100 bucks, and the volumes drop. Here, people are a little cautious about moving to a local generic company from a branded international company. So that is why when I say VBP, you should think about pre-patent. It's not when Aspen tends to buy products. It's just the way the system works in China that we end up getting these products pre-patent effectively.

Okay, next question comes from Rendani from APSA CRB. Firstly, congratulations, Stephen, on your results. Can you speak about your outlook for price cuts in Australia? Is there a risk of further impact in the near term? And then secondly, also just to confirm that post-VBP, does the pricing remain stable or just a smaller price erosion but more than offset by volumes?

Yeah, so Australia, so... So we talk about China and we say it's opaque. Australia, they just speak with a nice accent until it's not going to happen and you understand them and you beat them up at rugby, so it's okay. But it's no different, really. It's no different. they can tell you there won't be any more price cuts, but they do come. And so we've got to learn from past behaviors. And so I do believe that the risk of price cuts in the Australian market is something that we as a company in prescription, as a group in prescription medicines, make an assumption on. We've got an unbelievable team and a great business in Australia. And, Our long-term strategy was to go from 100% prescription, 0% OTC, and now you'll see with the growing balance that we nearly had a 50-50 split between OTC and prescription. Maybe the price cuts won't happen. But we had some pretty serious ones over the last period. We're hopeful that they will be at a lower rate, but it's only a hope. We do factor in price cuts. I can't tell you that it's going to get any easier. I can't second guess any of the regulators. Different prices, change in government. We're in a very political space, so we have those impacts. It has the impacts, but it's much easier when you're selling... when you're selling OTC products and somebody's got a headache and they want to go buy your product from the shelf and et cetera. What was the second question? Oh, VBP. The VBP, absolutely. The volume and you've taken your price hits and your volume, there might be slight modifications in price, but it will be more than compensated by volume increases.

Thank you, Stephen.

That's it. The presentation was that easy. Good. Thank you. I hope it was understandable, and I really thank everyone who's listening, but particularly those of you in the room. It's really nice to be able to actually see people face-to-face. I don't think I'm one of those that can do a presentation looking at a wall. So thank you. Thank you for keeping us presenting in person. It's much appreciated. Thank you. Be well. Thank you, everybody.