Recordati Industria Chimica e Farmaceutica S.p.A.

Ladies and gentlemen, I'm Andrea Ricordati, I'm the chairman of Ricordati, and I'm very pleased to be here today with you for Ricordati's full year, 2022 full year results and update of a three-year plan presentation. I know there's quite a lot of you here in the room with us today, but I would also like to acknowledge those of you that are connected by webcast and also by phone and welcome you all. Just wait for this. gentlemen and ladies to sit down. So as you all know, the group has carried my family's name for more than 95 years. And although this will be the first time that the three-year plan update will be provided by someone other than a recordati, as chairman, I would like to introduce the meeting and say a few short words. Shortly, I am very proud of the company or how the company has developed and continued to perform in the course of 2022. And I'm very supportive of the direction set for the next years, which is very much in keeping with the tradition and strategy of the company. As always, like in all plans that we presented in the past, some appropriate tweaks and evolution to ensure that we remain competitive and continue to deliver the same successful results that we have had delivering for decades. I'm extremely supportive of the management team, first of all of Rob, following a very smooth and successful handover and transition as a new CEO, and with whom the collaboration and alignment of strategic and operational matters continues and could not be better. and clearly also the rest of the team that was built in recent years to drive the business forward. Today, in addition to Rob, our CEO, and Luigi, our CFO, that you all know, you will also hear from Alberto Martinez, who leads our specialty in primary care business, who joined the company in January 2021, and from Scott Pescatore, who leads our rare disease business unit, and who joined the company in 2020. I will now leave the floor to Rob and the other gentlemen to take you for the presentations. But if anyone was in any doubt, I remain fully committed to support the continued success of the group, as I record that, as chairman and also as an investor. So thank you very much, gentlemen. I leave it to you.

Thank you, Andrea. And let me introduce the team here, although Andrea has already given a brief introduction. Like I said, you all know Luigi, who's been with us for some years now, being your constant face to the market and interaction, and will continue to do so. Alberto joined two years ago with a fairly extensive pharmaceutical background, European leader in pharma in different parts of Europe, of Europe and a fantastic track record. And Scott has joined three years ago, but only stepped up one year ago to his current role of heading our rare disease, brings an extensive commercial background, leadership background, and specifically also in the more niche type of markets, which is very appropriate for our rare disease. And so together we are happy to take you through our results of this year and show a little bit of what the future will bring for Recordati. And we continue our journey of profitable growth. And in doing so, we will evolve. much like this iconic sports car, high-performance car from 1963. Today, it is still very much the same car in terms of high quality, reliable, and being performant in an incredible way. But it's also today still that admired car that many people love because it's always staying on top of technology and having state-of-the-art technology and design. And this is very much what we intend to do with Recordati. In order to stay the same, you have to evolve. And in moving forward, and Recordati evolving to stay the same, to stay resilient, to stay growing and disciplined, and a company focused on patience and performance, that is very much the metaphor of the Porsche that we chose to... to give you some sort of picture on our strategic intent going forward. We'll kick off the presentation by looking at the 2022 results, which we're all convinced make a fantastic foundation for our future. But I'll hand over to Luigi to guide you through the 2022 results.

Thank you, Rob, and good afternoon, good morning, everyone. Rob Andrea said you all know me. Today I'm the warm-up act, going through our preliminary 2022 results, where I know everyone's focus is possibly on the theory plan. But actually, from my side, I'm really excited and really proud of the result that the group has delivered over the course of 2022. I won't go through the usual details, but just hit the highlights. And as you see from the summary slide, Hopefully you will agree the group has delivered once again a very, very solid set of financial results. Net revenue of $1,853,000,000 was an increase of over 17%. Clearly that includes the benefit of the consolidation of EUSA as of Q2, which very much in line with the legacy of the company, We integrate it quickly and very effectively in the organization and it's performing, as you know, ahead of a plan. But it reflects also a very, very solid performance of all of our businesses across our network with organic growth of just over 8%. Revenue growth plus our usual cost discipline have helped us deliver, once again, also a very solid set of bottom-line results, EBITDA and adjusted income, both growing by over 11%, respectively 36.3% and 25.5% of revenue. But this year, we didn't just deliver the results. We also delivered on a number of milestones, which we feel really positioned the group well for the future, beyond the integration of EUSA. You see them listed on the slide. We said we would aim to achieve this year reimbursement for Easter ESA across the main EU markets and very happy to confirm we've done that. Following Germany and Spain, Easter ESA is now – the reimbursement is approved already in Italy and will be shortly in France. Eligar new device was approved by the central authorities in Europe. You will hear more from Scott and Rob on the new opportunities that we have identified in terms of lifecycle management and new indications. And we've also, in the month of December, closed a very small business acquisition that will strengthen our urology franchise in Italy. And not mentioned on the slide, but equally exciting, just for extra fun, if this wasn't enough, we went live with a new SAP system in Italy as of January 2023. And so far, the business has not missed a beat. So we're very proud of that as well. Very proud also of our continued performance in terms of cash flow. $439 million, once again north of 90% of adjusted net income. And finally, as we've been commenting throughout the year, our P&L reflects a number of non-recurring items and some noise from implementation of IS-29 for Turkey, and I'll try and unpick those as we get to the P&L. Alberto and Scott will go through the business in more detail, so I'll just provide one summary on this. Our usual slide on sales performance of our key products. which hopefully shows two things. Number one, once again, very resilient revenue of our key legacy mature products. You see them on the top of the slide. You know, small decline in Zanidip, Zanipress, which we expected. We flagged at the beginning of the year due to lower sales to China. Nice to see, on the other hand, Pitavastatin showing a little bit of growth there. Aligard, of course, Alberto will talk to, growing 22% or just over 8% on a like-for-like basis. And in SPC, other corporate products are growing by close to 10% on the back of the rebound of cough and cold, the strong performance of our gastro portfolio and our broader OTC portfolio. And finally, rare disease clearly showing very, very strong growth. 55% now represents close to one-third of group revenue. Clearly, this reflects 136 million contribution from EUSA, clearly ahead of what we had anticipated at the start of the year. But with very, very strong growth, continued growth of the endocrinology franchise, with continued strong uptake of Easter ESA and double-digit growth of Signifor, noteworthy metabolic portfolio also growing double-digit in the year, driven by panimetins, Easter drops, and even Carboglu, despite first generic entries in the U.S. at the beginning of 2022. So we clearly go into 2023 with a very strong momentum, and you will have seen from the press release on the back of that momentum, we've also increased our peak sales guidance for both our onco and endocrinology franchise. So where does that take us in terms of P&L? The revenue growth, as mentioned, and the cost discipline helped us deliver results which were north of the targets we set at the start of 2022 for each of revenue, EBITDA, and adjusted net income. allowing for the small adjustments due to hyperinflation accounting, you know, we would have been very much in line with our margin objectives as well. Personally, very, very proud. I think we are very proud of, you know, the resilience of our margin, particularly at the gross profit level. You know, small decline versus last year really being at the level of adjusted gross profit growth. really been driven, again, as I said, by the hyperinflation impact in 22 and the slight enhancement in the margin because of the Aligarh transition in 21. SG&A and R&D costs growing in 2022 as a result, obviously, of the EUSA consolidation, the investment behind our growth drivers, a resumption of activities post-COVID. And finally, also on the R&D line, additional 26 million of amortization, you know, following the EUSA acquisition. I said earlier, you know, the 57 million of other expenses is mainly the non-recurring costs, which were around 50 million, 20 of that being EUSA, and 23 million from the right-sizing in SPC. And this came in slightly higher than anticipated at the beginning of the year because of an acceleration of that rise sizing, and Alberto will speak to that. On the other hand, financial expenses coming below the expectation that we set at Q3, as due to the weakness of ruble and dollar at the end of the year, many of the effects losses we incurred in the first half unwound. So once again, very solid results that position us well for 2023. And to finish from my side, one other key area of strength of the group, our ability to continue to deliver strong cash flow, free cash flow, $439 million. north of 90% of adjusted income, which is a very strong result if you consider the growth of the business, which drove, obviously, an increase in working capital, and particularly of stock levels, and the fact that we absorbed some of those non-recurring costs that we incurred in the year. This performance, we closed the year with net debt just over, just marginally over two times EBITDA. But once again, we feel a very strong foundation to continue on our journey of profitable growth. You'll find the usual slides in the backup, including a reconciliation between reported and adjusted earnings. And with that, I will turn over to Rob.