Aspen Pharmacare Hldgs

Good morning. A very warm welcome to everyone joining us in person online for Aspen's 2025 interim results presentation. To kick things off, we'll hear from Stephen, our group CEO, who will take us and give us an overview of our performance. Following that, we'll have Sean, our group CFO, who will run us through the financial review. Stephen will then return to discuss our strategy, prospects, and guidance. And then finally, we'll open up the floor for questions and answers. For those joining us on the webcast, please feel free to type in your questions, and I'll be happy to read them out. We'll also be taking questions for those present in the room. With that, I'll now hand over to Stephen. Stephen, over to you.

Good morning everyone and thank you for those that are here live and those that are online, welcome too. Interesting time and juncture that we've reached as Aspen. I'm trying to think, it might have been two or three presentations ago we gave you a presentation with green lines and red lines and the red with the headwinds and the green is where we hope to get to this point and financial year 25 was an important year for us. All the red lines came true. All the headwinds were there, and as is life, they all came true. But I'm also happy to tell you that our green lines, they also have come true. So where we stand today strategically, we have a commercial farmer business that has been de-risked, de-risked from a – let me see if we can get this thing going here, sorry – I'm trying to keep to the script, but I'm not very good at that, but de-risked from a perspective of we've dealt with China VBP, we've dealt with the issues within Russia, and so you're starting to see that base growth that we were talking about historically and without China in. And then we also said... So commercial farmers are about de-risking and getting organic-based rice. In manufacturing, we had a couple of key objectives here. One was to resolve heparin, and two was to start building on finished-dose form sterile contracts. I think we've achieved all of that. The heparin business, as you know, about this time last year, we managed to turn it into a toll model, so we weren't exposed to commodity risks. And the sterile contracts, as you can see, are building year on year. If I stand here today and tell you what are we really focused on, I think our key objectives going forward are already twofold. One, to keep building on the sterile contracts, particularly our South African contracts. We really need to deliver on those. And it's getting really close now. And, of course, the opportunities around the GLP-1 space, both commercially and manufacturing-wise. If we go straight down to the delivery in these six months, and I think you can see execution advancements across both what we expect to do in the six months and the opportunities we've created for the future. We had earlier delivery than planned on some of our, particularly our manufacturing contracts that were expected in H2. They've come into H1. And we've had very good operational delivery, double-digit growth in revenue in commercial farming, both revenue and EBITDA. And I'm talking at constant exchange level. We've had normalised EBITDA in manufacture more than double. And that's interesting because you'll see no growth in turnover. because the heparins are, but you see a doubling of the EBITDA. Of course, that's good for margins. And you see higher gross profits and normalized EBITDA percentages. We've spoken a bit about the commercial farmer business. We don't, you know, for at least three years, I kept saying, when this happens in China, if this happens in Russia, when this happens in China, at least we've stopped with the F then, and we can just deal with a base business that we're all more accustomed to in Aspen, which is really a post-patent base without... massive fall-offs or drops in a relatively steady growth path. When we look at our manufacturing finished dose form, which is some of our key areas now around manufacturing and the GLPs, you'll see the growth. We're realizing increased contract manufacturing, and the insulin transfer is progressing in South Africa. Important for us to pass the validation stages, and hopefully we anticipate some of this coming into financial year 2025. GLP-1 is a particularly exciting opportunity for us, and we see it as a very material opportunity for both commercial and manufacturing, and I'll talk to you later about how this is progressing. We're a lot further now than we were six months ago. Going forward, we expect to see double-digit CR growth in EBITDA, and operating cash flows is really a key focus for us as well, and for those of you that know us, we always have this weighting to the first half in terms of building stocks for a bigger second half, particularly in manufacturing, and we expect that again in this period, and operating cash flow conversion rates of forecast to exceed 100%. So with that, Sean, maybe you can take everyone through the numbers here, so thank you.

Thank you, Stephen. As you can see, it's been a very busy first half in moving forward operationally and in executing on our strategic ambitions. So we are very pleased to talk to you about the first half results. And as we say in sport, the half-time score is good, but we've got to get to full-time. So that's where our focus is going to be. And Stephen will talk you through that after my section. So coming into just a brief overview of the highlights from a revenue perspective. We grew revenue in constant currency at 9% and 4% in reported. You'll note I'll keep talking between reported and constant because there was quite a big impact of currency, and I've got a separate slide I'll talk you through a bit later, but a good increase in our revenue, 9%, and we'll take you through the detail of the components there. If you look then forward to normalised EBITDA, from a CEO perspective, up 21%, 12% in reported, and that is significantly ahead of your revenue growth, and importantly, your gross margin growth is also above 20%, so 20% in gross margin and 21% in EBITDA. Moving forward to normalised headline earnings per share, a healthy growth of 17%. You will notice that that's lower than the growth in EBITDA, and the two big factors there have been the increase in our finance costs, which we did guide. We did guide that our interest rates would be higher in this first half, and also we've had an increase in our effective tax rates, and I'll take you through some of that detail in later slides. But overall, ending the half at $0.724 and a 17% growth for the half. So I think the big topic, and I think it's going to be a continual topic, is the currency impact. Quite a busy slide, so I'm going to ask you if you could direct your eyes to the bottom left graph first. And what we've done there is we've baselined the South African Rand as a June 23. and then compared all of our major trading currencies compared to that. So the ZAR is the dotted line, the blue dotted line, and all the trading currencies are the solid lines around that. So when looking to the graph on the left, you'll see this is for our FY24 12-month period. You'll see a very relatively stable position relative to all of our currencies, with the ZAR starting to strengthen, you can see, from about April, May and June. But if you look at our average exchange rates, half one to half two last year, they were very, very similar, almost identical. Someone could almost say we put numbers there, we made sure they looked the same, but they were actually the same. So from an average rate perspective, last year's first half and second half were almost identical in rate. If you then look to the graph on the right, that's our next six months, and that's effectively a continuum of the graph on the left. So again, we've rebased the RAND back to June 23. And you can see without fail, every single currency is below the blue dotted line. With particular emphasis, you can see the red line at the bottom is the Brazilian real, and the one above that, the blue line, is the Mexican peso. So a lot of weakness in those currencies relative to the RAND in this half. Those who are very astute and have good eyes will notice that we don't have the ruble in our top currencies anymore, and it's been replaced by the Colombian peso, obviously following our Viotra steel, and the fact that Russia's CIS has now become a fairly immaterial region in our overall sales. So if you look at the table in the top left, I've circled the reported numbers in red. and the CER numbers in green. You can see quite a big delta there, revenue of 5%. And as you go down the income statement, if you look at EBITDA as a 9% delta between reported and constant exchange rate, and it normalises earnings up to a 12% delta. Now, I know it's always easy to talk percentages, so I always like to give you an EBITDA perspective. So you'll notice in our financials we do present our numbers in constant exchange rate. And EBITDA last year for the full year was just under 11.3 billion. If you look at our constant exchange rate and restate that EBITDA at today's rates, it's 10.4. So nearly a billion rand, 900 million rand impact when you restate those numbers at a constant rate. So that's just to give you a bit of a value perspective that you can put to those percentages. Then moving on to our group revenue. As you saw in the first slide, group revenue has grown in constant exchange rate by 9%. You will recall, and I think Stephen briefly mentioned it in the first slide last year, we had the one-off benefit of the Heparin sales in our financial year, around about a billion rand in the first half, and that was converting the model to a toll manufacturing model, so it was a one-off sale with very little margin benefit. So if we sort of park that and put that to one side and say, let's forget about heparin because that is a distortive impact. If you look at the underlying growth of the group, the growth is actually at 15% relative to the nine. And if you look at manufacturing, you'll see that's at 0%. If you unpack or you exclude the heparin, the underlying growth in manufacturing is 20%. So overall growth, underlying growth in both segments, very, very strong and double-digit. On the commercial side, we've grown double-digit there at 13%. You'll see across all the segments, prescription, the injectables, and the OTC, all growing in constant exchange rate. You will note that OTC is the lowest growth there, but that is just really phasing, and we expect a strong recovery in the second half. And we've got detail on all of the segments in the appendix if you want to go through the detail of each of the underlying segments in commercial pharma OTC. Manufacturing, as I said, at the overall level at zero, but taking out heparin, you've grown at 20%. And if you look at the FDF growth, which is the key performer in the South, that's grown at 65% over the first half last year, and obviously a strong contributor to gross margin. Looking at our commercial pharma from a regional perspective, We've had solid growth across all the regions, aside from Australia. If you remember, Australia, we've been on a conscious strategy to increase our OTC as a segment relative to the prescription segment. Bear in mind, if you remember, the prescription has always got the challenge of regulatory price cuts in that market. And I'm pleased to say that the OTC segment now is at the same size as the RX segment in Australia. So well poised for future growth and effectively going forward we're de-risking that Australia business. You'll start seeing that OTC starting to drive overall growth in that Australian region. Apart from Australia, strong growth in all the other regions contributing to our 13% constant exchange rate growth. Obviously a big growth driver there is the acquisition we did with Viatris in LATAM. And so what we did is we excluded that. What would be our underlying growth if we excluded that acquisition? And the underlying growth is still a very strong 8% excluding the acquisition in LATAM. If you look at the key region there, Africa, Middle East, a strong growth of 13%, and obviously the Lilly portfolio, including the exciting launch of Munjara in December, have driven that trajectory. And Asia and Europe have been impacted by the product swap transaction with Sandoz, and overall providing a net benefit, a positive benefit and a positive growth to the group. Interestingly, if you look at Europe and you take out the impact of that product swap, Europe's underlying growth is actually 10%. So very healthy growth across all the regions. Moving on to gross profit margins, if you look at the graph on the left, that's our commercial farmer margins. And you'll see we've got the three halves there, half 1.24, half 2.24, and half 1.25. A very steady 59% gross margin, so we're very comfortable that the margins in commercial pharma are steady and sustainable. Again, in the appendix, we've included the three segments, so you can go look at the underlying margins, and looking at those, you'll see also a very steady trend across the three sub-segments in commercial pharma. Manufacturing, the middle graph, you'll see a nice stepped improvement there. 5% in H1 last year, 12% in H2 and up to just under 16% in this half. So really good performance with FDF being the key contributor to that gross profit growth. When you put those two together and you look at overall group margins, we've ended the half at just under 48% with an increased mix in our commercial farmer business and the improved manufacturing gross margins driving that growth in the gross margins. And we do anticipate that that margin will be sustainable into the second half. Onto our normalised EBITDA, that's up 12% in reported and 21% in constant exchange rate. If we look at revenue and gross margin, And you look at the far right, you'll see revenue in constant exchange rate, as you remember, has grown at 9%. Gross profit has well exceeded that at 20%. And if you remember, if we stripped out heparin from our sales, our sales growth, underlying sales growth, is actually 15%. So 15%, let's call it apples with apples sales growth, and a 20% gross margin. So gross margin is still exceeding sales growth, even taking up the heparin impact. So that has driven a very strong performance in terms of the gross profit margins. and is a key driver of EBITDA growth. From an expense perspective, our expense ratio is a little bit elevated this half, impacted again by that Heparin reduction in revenue, and also by the fact that we've had to absorb the Sandos China expenses in this first half, and we are going into a reshape of China in the second half, and we should see the benefits of that integration coming through in this half too, and then obviously, more importantly, going with a very clean expense base into FY26 in our China business and with improved margins. From an overall EBITDA perspective, you'll note that the EBITDA margin has gone up just under 2%, from 24.6% to 26.5%, and that is driven predominantly by the improved gross margin, both from commercial pharma and manufacturing. In our other line, we have the absence of the one-off contribution or compensation in the prior half, which you haven't enjoyed this half, so that has slightly diluted the EBITDA growth. I think importantly to also note is that we have enhanced our segmental disclosure and I think I did see some of the cell site analysts comment on that in their commentary. So we've now been able to disclose our commercial farmer segment and our manufacturing segment right down to EBITDA level. So it makes it a lot easier for you to see the relative EBITDA contributions from each of those business segments. And you'll notice that manufacturing is also north of 20% in terms of EBITDA margin. So although it's got a gross margin of 16, looking at EBITDA, it's up at 20, I think it's 21.4% to be exact. From a finance cost perspective, we've ended the half with an effective interest rate of around 5%. We were of the view that that is now peaked, and we do anticipate interest rates coming down in the second half if we start to benefit from all of these rate cuts. And so we anticipate for the full year to be less than 30 basis points higher than the FY24 interest rate. And you'll notice as well the interest rate in this half is very similar to half to last year's interest rate of 5.1%, so really peaked. Just to bear in mind, I always have that pressure of when we're paying down the loan at the IFC, which was at a 0% base rate, and as we pay that down, I think it's about €120 million a year that we pay down, that gets replaced by interest-bearing debt. So we always have that in our base, but notwithstanding that, we do see a lowering of effective interest rates going forward. And on the foreign exchange losses side, fairly muted for this half relative to the prior half. On working capital, I think Stephen's also covered that up front, but we have had an elevated working capital in this first half. It's a seasonal elevation, and we do expect that to reduce in the second half. If you look at the graph on the right-hand side, that depicts our working capital as a percentage of revenue. And on the far right, you'll see we've ended the half with working capital being 50% of revenue. That is up 5% from financial year 2014. Closing position and about 1% up from the previous half one in FY24. The seasonal increase in manufacturing inventory levels is expected to reduce. We've obviously built up that stock in the first half to support our seasonal weighting of sales in half two. And we do anticipate and we're targeting to end the year at a 45% working capital to revenue ratio and ending in line with FY24. The other impact you'll notice in the appendix, we've also had a one-off impact from our working capital with taking on the Sandosh China business. We inherited a negative working capital balance. At the start, we did have cash from Sandos to cover that, but from a working capital and accounting perspective, we now had to unwind that working capital back to a normal level, and that was around just under half a billion outflow, which is also one-off in nature and has impacted our first-half working capital. If you look to the graph on the left-hand side, that light blue line, you'll see that's the half, each of the halves operating cash flow. You'll see in this half we ended at 63% on the far right relative to last year at 89%, and that's the impact of the inventory build. This half also last year, if you remember, we did benefit from the Heparin liquidation, which also supported the 89%. last year. But if you look at the second half, it's always over 100% and we're confident that trend will continue and we continue to target to achieve more than 100% cash operating ratio for the full year. Onto tax. Unfortunately, tax always falls right through to earnings, so we've had quite a big jump in our tax rate this half. We've ended the half on our normalised with the light blue line at 21.6. That's nearly four percentage points up. On the full year, 24%, and just under 95% up on the half year last year, as the tax rates were around 17% for the half last year. So quite a big jump in the normalised tax rate, and that also falls through to the overall group tax rates, which have gone from 23% up to 25%. The big impacts there, we have had an increase in our FDF sterile mix, which is in higher tax jurisdictions, and that's something we did guide everybody to in our FY24 results that tax rates would go up in this financial year. The other big driver is, and you'll hear this term a lot, BEPS, Base Erosion Profit Shifting, BEPS Pillar 2. legislation which was promulgated I think on the 3rd of January and just to spice it up they made it retrospective to January 2024. So we had no room to move. I think in our last guidance we thought this would only impact us in FY26 but unfortunately they made it retrospective and it's now impacting us in this financial year as well. That is a global minimum tax that has to be paid across the globe. It's not just a South African legislation, but SARS have gone for early implementation, and so we've had to account for that. I think important to note from a cash flow perspective, however, because this is very complex legislation, the first return is only due in December 26, so you can only see cash outflow from BEPS pillar 2, probably from early calendar year 27 when those returns have to be submitted. But from an accounting perspective, we've made provision for these taxes now. Last but not least, very importantly on our sustainability area, which is part of Aspen's DNA and a key part of our value proposition, you will remember that we published 16 sustainability goals in our 2024 integrated report. And those are all very important goals under the pillars of patience, people, society, and environment. And we've actually given them quite nice friendly names underneath. So for patience, we're talking about healthier populations. People, we're talking about inspiring our culture. Society, creating thriving communities. And on the environment, restoring the planet. So that gives it a little bit more of a human flavor rather than just the normal word that's being used at the top level. Out of those 16, we thought, look, we're going to drive all 16, very important, but we wanted to give focus to four goals and set ourselves KPIs to achieve those goals. So we selected four specific goals out of the 16 to focus on. So the first one being on healthier populations, and this is really the main mission of Aspen is to increase access of our medicines to patients. So our goal there is by 2030 to increase the number of patients reached for critical medicines, particularly in emerging markets over a baseline of FY24, and we'll obviously continue to measure and report on that metric going forward. So that's a key underpin for us, and access is part of our DNA, as I said before. On the culture side, we want to achieve diversity and inclusivity in our workforce. And so by 2030, we want to achieve gender balance in top management positions globally. We have gender balance at the overall workforce position, but not at top management. And just to give perspective, currently we're only sitting at 31%, so we've got to go from 31% to 50% by 2030. From a society perspective, we want to continue to maintain our high governance and ethical standards. And so each year we set ourselves goals in terms of our ethics and compliance programs and KPI there is to achieve 100% of those very tight goals and make sure that we have high ethics, high compliance and always staying on the right side of the regulators in the various markets. From an environmental and restoring planet perspective, in terms of reducing carbon emissions, We plan to reduce scope one and two, which is your direct carbon emissions, by 50% by 2030, and we're measuring ourselves against the baseline of 2020. At this stage, I think we're around a 30% carbon emission reduction. So it's some way to go, but we're comfortable with all of our initiatives that are underway that we're moving well in this target. You'll notice I haven't put up the usual slide about all our waste management conversion of waste to energy project. Those are all progressing very well and we'll keep you updated on progress on all of those in our various facilities. But not to detract, we're still focusing on all 16 goals, but these are the four that move the needle and in Aspen we like to choose things that move the needle and make a big difference to the company and to society and to our planet. So on that note, I'd like to hand you back to Stephen. He's going to take you through the strategic overview and then more importantly also the prospects and guidance for the years ahead. So thank you, Stephen. Over to you.

Good. Thank you, Sean. Well done. Thank you. In our strategic review, a couple of headlines we're going to focus on here. Commercial pharmaceuticals, we're going to talk at what goes on in LATAM. We're going to look at China, and we're going to look at what Monjara is doing in South Africa. We're going to talk about a capacity for... a little bit of better understanding about where we are with Novo, where we are with the pediatric vaccines, all in our South African facility, and the mRNA rollout in our French facility. And then we're going to try and unpack what GLP-1s mean for Aspen, which is the largest opportunity in global pharma, and our position in it, and why we think we're well positioned for sustainable success. and the benefits it has both on our commercial and manufacturing. So let's click straight into commercial pharma. We made an acquisition in Latin America. It was an important acquisition. It gave us critical mass in the region. But generally with acquisitions, the way it goes is that you acquire a whole lot of products, and by the time you transition reps and distributors, something falls. If you start with 100, you never quite get 100 in your one. You go below it, and then hopefully you try and build back up. But we're getting good at these now, and particularly our LATAM team, an incredibly seamless transition. And if the base sales were 100, we got more than 100 in period one. So a really great take on maybe one of the best that I can recall in Aspen's history and take-ons of acquisitions. And it was an important milestone for us. A lot of these products are lifestyle portfolio, and they've got enduring growth. They're post-patients. Whatever knocks they should have taken, they've taken. So to really start on the front foot growing, a great achievement by the team in Latin America. In China, we had told you we intended to reshape the business. We went through BBP and the Sandos portfolio as well. So we're putting them together and there was a need for a reshape. The environment in China was difficult and remains difficult. We don't see right now an obvious pathway to rebound in the short term. It's not going to be one of those markets that rebounds. That it's a big market and a strong market is a given, and it's a market that we see an important place for Aspen. But the restructuring that we've looked at, it's larger than we initially anticipated. It will need to be larger. We don't just want to go through death by a thousand cuts here. And so we have implemented a larger restructure, given what we've seen in the last period, and this will be fully implemented by the end of next month. The rollout of Monjaro, well, that's been the most exciting launch that I've been involved with in over 30 years in South African pharmaceuticals. To give you a sense, we put stock into wholesalers and distributors over December, January. We're having the launch. We only had the launch in the first week of February. Yet in January, unlaunched, it already had 18% of the market. So without a launch, it already, just by word of mouth, the scripts are generated. It's definitely going to be, in our opinion, the largest product ever in South African private sector. give you a sense of what we did. To bring it to market, we first put it in vials, just to get it to market, and just to give you a sense of Lilly and their commitment to us. We got these products ahead of markets like France and Spain and many other markets. We see this transitioning to PENS, so we see the market going to PENS. And the chronic weight management indication, we still don't have the chronic weight management. And so that's in with SAPRA for approval under review as well. And I think just having an alternative dose and, of course, having a broader population, which now you've got an obesity besides just diabetic population, will continue to grow this product that's doing incredibly well as we speak. If we look at the manufacturing capacity, here are some of our key priorities of our existing business or existing opportunities that you're aware of. Nova Insulin is very, very important to our South African business, and we are moving towards validation. Validation is you approve the process, and you can show the process that you've got works exactly like the product worked before effectively. And that is what will trigger committed volume off-takes for Aspen. We expect payments in this financial year. As we speak, we're going through the process of aseptic filling. I'm not going to bore you with return, but we're going through processes of filling and going into this validation progress. And our timing depends on how those batches are executed and what we achieve. Obviously, we've been working on it a very, very long time, and we've got a high degree of confidence around what we're doing there. I think you're going to start seeing, you know, a successful validation. Of course, you're going to get a bigger realization in financial 2026. And that increases all the way through 2028 as the volumes obviously annualize and we add an additional line to the process. We had some lights, you know, not great on patience and bureaucracy, but we had some light on the pathway for the Gabby vaccines, the pediatric vaccines. We see, you know, every time we want to ask to speed something up, we have to go through a process of priority review, which gives you a speeded-up process. But it does take time, and there is no certainty necessarily on it. There is legislation now, which is expected this year, that anyone who local manufactures has an automatic priority review. So that would be a real benefit for our South African facilities. And probably the most positive update is that to register to tender for GAVI, you first register with SAPRA, and that's a long process, and then you've got to go to WHO, and that's another process before you can tender. And WHO and SAPRA started to work together. They're using some of our products as a pilot project. where they will review the dossier jointly rather than sequentially. So that will accelerate the timeline and we can now apply for what they call WHOPQ or pre-qualification earlier. And as soon as you have your application in, you've got the right to tend. And then there's a period for registration. If your registration is decent and good, it could take as little as six months. And so our best estimate right now is that we will have some commercial sales in calendar year 2026. The final area I'd like to talk about is the mRNA rollout in Aspen. And for those of you that follow the markets generally, the COVID market and respiratory market, RSV market, volumes are declining and manufacturers are being rationalized. I mean, that's all in the public domain. Bigger players are rationalizing. Just to remind you all, Aspen has a capacity reservation agreement, so there's a commitment to volume off-takes. Aspen is really a preferred manufacturing partner, and we expect the... One of the exciting opportunities coming into this respiratory field is a COVID and flu combination, which we see as an opportunity to really grow volume. So right now, those people that go for a flu shot have a flu shot, and those that go for COVID go for COVID. And here's an opportunity to combine them. And so it saves lots of up and down. And so people who were just going for a flu shot might also have elect to take a COVID vaccine as well. So I think that will definitely grow that market and that opportunity. And Aspen's well positioned for that opportunity. GLP-1s, this has been something we've been working on really, really hard, and it's got ramifications all the way through our business, from our development teams, manufacturing teams, commercial teams. So let's understand how we see the opportunity and why we think this is a transformative opportunity. What we have seen is unprecedented offtake of GLP-1s, If you just look at the innovators, Novo and Lilly, the estimated sales are over $35 billion in sales. When you look at who's this patient pool, you've got people with type 2 diabetes. and obesity. There are lots of people who have both. And if you look at that pool, it's probably over a billion patients. Now, of course, not all billion patients are going to ever have access to all of these products. But when we reverse calculate how many patients are being serviced by the branded products, there's only 15 to 20 million out of the billion that are currently treated. So you say, why is there such a large delta between the patient pool and the number of patients? And we're going to deal with three key factors here. So firstly is supply. There's a global capacity shortage. I think you can read that at every turn. There's massive backlogs at suppliers. I'm referring particularly at equipment suppliers, device suppliers, et cetera. And when you think about it, this whole supply chain has been stretched to just deal with 15 to 20 million patients. So to have supply in an environment which has got a big market but is already strained at a fraction of a percent, it gives you a sense of how important supply is going to be here. Then even if you had all the supply in the world, at $500, $1,000, $300 a month. It's just that price point is really high for many patients. So there's an affordability factor. If you add to that, if insurers will pay, they'll pay for type 2 diabetes generally. But obesity is generally not paid for by insurers. So even if price much lower, many would still not be able to afford the treatment. So what's the market opportunity? And this falls into everything Aspen's done over the last nearly 30 years, the market opportunities. If we can bring out a quality product affordably and products that people can pay, even if they can pay out of pocket, We think that is where a really big chunk of the population that's not in the 15 to 20 million can come from. So, yes, there are people within there, but there's a bigger market opportunity. And we see a surge in global volumes. And normally when you go and do something, you say, okay, this is a branded product. The tablet does 100. If I'm a generic and I'm first to market, I can get 30. Here, the market's undefined. The market... we would forecast sometimes beyond what the volumes are in the market, simply not supplied. Or not accessible because of the price. So we see a surge in global volumes as patients access increases by multiples, really. But to access this market, there's three critical things you need to have here. Intellectual property, manufacturing, sterile manufacturing capacities and capabilities, and ability to get to patients. particularly across some of the early markets. So those are the three key factors, and that's what we've been working really hard on. And we looked at Aspen's position in this market, and we think Aspen ticks all the boxes. So pillars for success, owning and controlling your intellectual property and your sterile manufacturing, and having market reach to commercialize the product. Now, why is owning manufacturing and intellectual property important? If you license intellectual property, there's markups along the way. If you're manufacturing with a third party, there are markups. So to be absolutely sure of sustainability in this high-volume market, really good if you control your IP and you control your manufacturing. So where are we with intellectual property? And this is where we've made our biggest advances since we last spoke to you six months ago. We have started submitting dossiers globally. And what happens, you submit and then an authority comes back to you with what they call a deficiency letter saying we'd like you to explain this or we'd like you to do more work here. We've already had responses, already received from a really stringent regulator saying, Obviously there's lots of confidentiality around it from our perspective and just competitive advantage, but a very stringent regulator. And where we are now versus before is we've now had feedback on what we think our IP is good, but we've got confidence now in both the quality and acceptability of the dossier, and we expect to achieve entry for market formation. So we expect to be up there with the first launches in the market. And that's a massive, massive shift from where we were before we told you we had some licenses we're doing. That's a big shift for us. In terms of sterile manufacturing, I hope I don't have to spend too much time on this with you, so those that have seen our facilities and know what we do, we've got capacity and proven capabilities, and we've got credibility around proven supply, reliable supply. And given what I told you earlier, that is probably a key factor in terms of access. In terms of market reach, the early markets here are largely across emerging markets. The only exception being Canada. So you've got Canada and the emerging markets. Europe and the U.S. will come later. And we have that reach, you know, the core to our commercial success because you're going to need to cover many, many health care providers. So for all of those good reasons, we felt we were in a great position and we ticked all the boxes for what is a very important opportunity, global opportunity for Aspen. With that, I'm going to go into our prospects and guidance. On our prospects, we're advancing positively in commercial and manufacturing, and as Sean demonstrated, our commercial farm has both organic and inorganic growth, and it's cleared of material risks. The manufacturing capacity for rollout is rolling out, and finished dose form is delivering. We expect strong growth in H2 with increased manufacturing rollout, and then from financial 26 onwards, we expect the additional contracts that we've made you aware of around insulins and pediatrics. We are still in discussions with others, but those ones are clear. When I say near term, I'm not talking next week, but I'm talking there will be opportunities in the years ahead. I think the GLP-1 opportunity, as I said to you earlier, was a strong contributor to future growth. I think we have a very competitive and compelling global platform. With the confidence and our IP endorsed by the positive feedback from the regulator and the opportunity for early market, we've really got great optionality for standalone or with partners. And when you approach a partner and say, oh, I've got this and it's a year away or two years away and I've had no feedback, it's worth X to anybody. But as you get closer and you do better and better, yes, you've taken the risks along the way, but your value of that IP increases significantly and your negotiating leverage improves as well. We expect the first revenues in financial year 26 with a positive impact on the FDF manufacturing. We have guided in the past EBITDA in the period 24 to 26 CR EBITDA. We guided it at $2.8 billion incremental, which was $4 billion of contribution. So it was 70% of contribution. And so we do see that as potentially positively impacting that revenue and maybe raising the guidance in that contribution if we achieve the launches as and when we hope to. And, of course, as it goes on after that, you're going to get the annualization of the previous year, but also, importantly, more and more markets coming online. So some regulators can approve this thing in six months, some in one year, some in two years, some in three years. So as we register, we expect more and more products to come online. So for all of you that analyze Aspen, I think this slide, and try and get your numbers right, we've tried to give ourselves really good guidance, the best we can with what we see at the moment. We've got strong CER growth in EBITDA. It's just over a billion. $700 million came from manufacturing, $500 from commercial pharma, and the negative $200 was that we'd had the compensation in the previous period that didn't repeat in this period. Commercial pharma, double-digit CR growth in sales and normalized EBITDA. And we're going to have high restructuring costs, largely relating to China in this period. And we expect two relatively even halves from commercial pharma. So a really good first half, and we intend to replicate it in the second half. Our manufacturing, we expect the growth to be sustained. I remind you we had a very good second half last year in this area. The API will rebound to a much stronger H2, and we're targeting similar absolute CER growth in normalised EBITDA as achieved in H1 2025. If we take broader financial guidance, gross margins and normalised EBITDA percentages to increase H2, The CR normalized EBITDA in H2 to exceed H1 and double-digit CR growth over H2-24 projected. We expect H225, as Sean guided you to, to have slightly lower interest rates than H1, and we expect the increased effect of tax from two areas, from higher sterile contribution, the global minimum tax, which Sean also talked you through earlier, and the operating cash flow is expected to exceed 100%, so good, strong operating cash flow in this heart. And, of course, currency will continue to impact reported results. Currency, unfortunately, so we always talk to you in constant exchange rate. That's something we simply can't manage. And I think that's our story. So that's it. So from there we can move to Q&A, Sunny. So thank you. Thanks, everyone. And hopefully it was clear.

Thanks a lot, Stephen and Sean. We'll start off with questions in the rooms. So before you ask your question, please just wait for Jolene to pass you the mic, and then we'll move over to the webcast questions. Any questions in the room? All right, so we can move over to the webcast questions. The first question is from Ken from ISV. I'll ask it in two parts. Stephen, Sean, congratulations to yourselves and the Weiner Aspen team on the strong operational and financial performance. Going forward, how does the contribution margin from insulin and other GLP-1 products compare to other manufacturing products?

So, Ken, firstly, you can start deferring those IFC paybacks because that will help our interest line. So that would be a good start. In terms of insulins, it's an all-in contract. By that I mean we simply do the labour and overheads. All components and API materials are provided by NOVA. For GLP-1s, it's likely to be different. If we sell those products ourselves, we will carry the cost of working capital. So that's a difference there.

And then your second part of the question, also any commentary on the statuses of the TRIC transfer for vaccine manufacturing products from the Ferrum Institute? When do you anticipate those transfers reflecting in turnover and EBITDA?

Okay, I think I'll answer that in the presentation.

All right, the next question is from Lidrojo from Southall. He wants to know about the GLP-1s. What is the company's view on oral indications? These are expected to alleviate supply shortages for injectables over the long term.

I'm not sure that you can make a statement like that, that you can say it's expected to alleviate. They first need to be approved. The cost of manufacturing an oral tablet and the relative efficacy are things to think about. and because you've got a lot more chemical in them, there is hope for it, but there's always going to be a big space for the injectable products that work really well. And you'll see that even the leading players with oral registrations are also registering many or have many injectable products in registration as well. So there's a place for both. It's not a simple switch necessarily. Thanks, John.

Stephen? And then Shubnam from Aspen.

So just to give you an example, in semaglutides, there's both tablets and injectables, and the tablets are very small, very small percentage. So semaglutides are things like a Zempek and Wigodi. They've got a tablet called Ribus, and it's a very, very small percentage of the or the semi-glutite cells.

I think the other point you make is that they all come with patent protection, so the price point of those will also be quite high.

That's a very good point, Sean. I mean, anything that arrives now is going to be expensive because it's been developed and patent is going to be very expensive. the market that we intend attacking is at a lower price point because we want to get to particularly people with out-of-pocket or insurance will say, I'll pay for your first X and you must pay your own. We want to try and be at X. So I think that's it. Thanks, Sean. That was a point well made.

Thank you. The next question is from Shubnam from Aspen. Will Aspen consider or investigate insulin device manufacturing, considering our public sector patients, especially pediatric, elderly, visually impaired, etc.?

Sorry, I didn't get that. Are we going to make devices?

Yes, insulin devices.

Oh, insulin devices.

Yes.

Look, I mean, we're not a device manufacturer, but would we consider making insulin in pens? Yes, we will ultimately have the capabilities to make it in pens, but it's not our decision. It would have to be the IP holder's decision on whether we make products in pens or not. Right now, our capacities are in vials, but pens will come in on 2027.

Thank you. The next question is from Roy. His question is, 1.3 billion allocated to GLP-1 in H1. What are the future cash flow obligations in this regard? Actual interest expense is lower than H1 2024, despite higher debt. Is this a currency impact alone?

Okay, well, Sean's going to answer the last one. The first one is we've spent... most of what we need to spend. I think there might be $300 million left in GLP-1s. So we spent what we needed to spend on GLP-1s. We've done a lot of work, a lot of effort over this period, but there's not a lot left. Sean, you're the man on interest.

Yeah, I think a lot of that would be currency because it's a stronger end, this half relative to last half.

All right, thank you. And the next question is from Stephen. It's from Aspen. Where do you see investment of GLP-1 usage beyond diabetes and weight management?

I think I don't know any more than what I read in the public domain. Good for cardio, but you read all sorts of things. Sleep apnea, gambling, addictions. You get all sorts of stories. So I think let's just wait and see what indications... what indications follow. But I must say, with this particular category, you always wait to read something very negative. Oh my God, it had this bad effect on people. And everything that's come out so far has been positive. It's quite amazing. Generally positive.

Thank you. That's it from the webcast.

Is there a question in the room? Good morning, thanks. Just with the regulator or stringent regulator looking at the GLP-1 dossier, does that mean you've got secured supply of peptides for your capacity?

So a regulator doesn't look to see what your supply is. They look to see that what you're using... for supply meets certain profiles. So it might be an impurity profile, how the body reacts. Supply and what we do is our issues. We've got a supply. We then send the product to them and we say this is what it looks like. These are the things that ask you to defer the test. They check the test, and they come back and say to you, we're not happy with this peak here or there. And so, you know, you could go back and fix this. And that could be, oh, my goodness, I've got to redevelop a dossier, or I've got to generate six months more data, or this is something I can do in a week or two with an explanation. So it depends. And so you always wait for that. I can say, sure, what's going to come back here? And nothing that they've come back with makes us feeling comfortable that we can't answer it. No one's asking us to redo something. We don't like your, I think you might have used API or whatever it was, or peptide.

Any more questions?

Okay, lovely. Thank you. Thanks, everyone. I appreciate your time. Thank you.