Earnings call: Aspen Pharmacare reports solid growth amidst global challenges

In the recent earnings call, Aspen Pharmacare (OTC:APNHY) Holdings Limited (APN), a global pharmaceutical company, reported a strong performance for the full year of 2024, with significant growth and strategic advancements despite facing global challenges. The company's CEO, Stephen Saad, highlighted a 15% growth in revenue, driven by product demand in Latin America and favorable currency fluctuations.

Aspen also reported a balanced shift in their business model, with a focus on both prescription and over-the-counter products, particularly in Australia. Despite a slight decline in gross margins, the company anticipates steady or slightly increasing margins in the future.

Aspen's manufacturing business is expected to become the largest contributor to growth, with an emphasis on the sterile and GLP-1 markets for diabetes and weight loss products.

Key Takeaways

• Aspen reported a 15% increase in revenue, citing strong growth in Latin America and currency benefits.
• The company is transitioning to a balanced portfolio between prescription and over-the-counter products.
• Gross margins declined slightly but are expected to remain steady or increase slightly.
• Manufacturing, especially in sterile products, is projected to drive future growth.
• Aspen has secured a license agreement for GLP-1 products, anticipating significant revenue contributions from 2026.
• The company's net debt increased, but they achieved a positive free cash flow and expect to lower the leverage ratio below 2 in FY '25.
• Aspen is focusing on sustainability goals and renewable energy initiatives.

Company Outlook

• Aspen expects the manufacturing business to accelerate, becoming the largest contributor to growth.
• The company aims to maintain or lower the net working capital ratio and achieve a leverage ratio below 2 in FY '25.
• Aspen's strategy includes a focus on sterile products and emerging markets, with significant opportunities in the GLP-1 market.

Bearish Highlights

• Gross margins experienced a slight decline due to the mixed nature of prescriptions.
• Impairments increased by 49% due to the impact of Value-Based Pricing on specific products.
• The company acknowledges the unpredictability of the market and potential future price cuts in China and Australia.

Bullish Highlights

• Aspen reported strong revenue growth, particularly in Latin America, South Africa, and China.
• The company has a balanced portfolio and good geographical balance, with positive prospects in the manufacturing segment.
• Aspen's cash conversion rate surpassed 100%, indicating efficient capital management.

Misses

• The slight decline in gross margins was a miss, attributed to various factors including product mix.
• The normalized EBITDA grew by only 1%, a slower rate than in previous years.

Q&A Highlights

• CEO Stephen Saad discussed the company's plans to meet healthcare needs in Africa and obtain FDA approval for medication supply.
• Saad addressed the challenges of Value-Based Pricing and potential price cuts in China and Australia, emphasizing the company's resilience.

Additional Information

• Aspen's auto-injector product has a significant market potential, and the company plans to sell at a competitive price.
• The company is exploring expansion into pediatric vaccines and increasing insulin volumes.
• Aspen is committed to running a sustainable business with set goals across four pillars, including increasing renewable energy use.

Aspen Pharmacare's earnings call revealed a company navigating through global market challenges with strategic focus and solid growth prospects. The emphasis on a balanced portfolio and expansion into high-potential markets like GLP-1s positions Aspen for continued success. The company remains cautious about the impact of global economic factors but confident in its operational strategies and growth trajectory.

Full transcript - None (APNHF) Q4 2024:

Sibongakonke Nkosi: Good morning, everyone. It's 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 Steven, he's going to start us off with the performance overview. Sean will then follow with the financial highlights and review. Steven 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. [Operator Instructions] Thank you all. Over to you, Steven.

Stephen Saad: 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, the 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. Now after the last 7 to 8 years, we've had pretty much -- we're building this and this might happen. And if we operationalize successfully or tech 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. 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 pharma business had a couple of billion rand, over ZAR1 billion in gross margin at risk between China and Russia; and in fact, China was even worse. But that was -- 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? And from the manufacturing, we’ve taken a big bet on sterile manufacturing; we took a big bet years ago. This is 7 or 8 years ago that we took; we made the decisions to invest. And so, it was -- you know, have we made the right strategic decisions to go into sterile manufacturing? Can we even if we’ve made the good decisions operationalize these things? And can we do the very difficult tech transfers that are required across all our facilities? And then, from a -- just a year-to-year perspective, in the prior year we had income funding for our vaccines in South Africa. We had COVID -- some residual COVID vaccine [ph] and onerous contract; all of which had a ZAR1 billion of margin attached to it. So, there was a ZAR1 billion at risk in commercial pharma; a ZAR1 billion that we had to pull back in manufacturing before we even started. All of this we told you before. And then of course, we had working capital issues that were quite hard to control given the hit from the volatility and the hit from process [ph]. So these all things that we’ve been telling over the last couple of years, and it’s how we manage them, and this was the half to manage them. You will see this presentation from a strategic point-of-view is a lot shorter than in the past. And it’s not because we’ve got less to say; I’d like to think it’s because there is less hoax and bobs [ph] and there is less health warnings that we’ve had to give you, and we’re very clearly -- you will see, we’re very clearly on the front foot. So that's what we've had to deal with in the past. Going forward, we've also see what opportunities are there for us; and without a doubt, the single biggest opportunity that exists in the industry. And then -- and the related sterile industry is what you do with GLP-1s. Now, what are GLP-1s? They are the products that people are using for diabetes or weight loss, etcetera. And it was an important that Aspen take into this market, obviously, because it's a big commercial opportunity but also it was a very big manufacturing opportunity as well. And given the shortage of manufacturing, where would Aspen and how would Aspen position ourselves. And we'll discuss that pathway and where we are. And the idea really is for Aspen to be a participant, we really -- we're hoping that we can be a party to assisting the patients around affordability and helping people slim down a bit. What we weren't expecting was that people would take the opportunity to slim the Aspen share price down a bit. So that was a bit of a curveball. We have got commercial solutions regionally. With those of you who know, we are about to launch Mounjaro in South Africa, that we hope to do in still in this calendar year over the next few months. So that's the commercial but we didn't have a commercial, we don't really have a commercial plan for the rest of the world. We certainly had a manufacturing plan. We've had opportunities and we had to decide which opportunities to take. We'll talk about those. And we're really -- at the end of this year, we are in a pretty good space. We're pretty excited now about where we are. Business has been derisked and a clear path forward. But in life, as I've always said to you, rest is rust and firmly believe it and you want to -- we've got to be very careful sometimes when you're at the top of the mountain. We don't want to end up like the All Blacks and just not finishing the game in the last 20 minutes. So we enter closure at this point. So let's move forward and let's look at the different results and where we are. I've discussed the importance of this year and the derisking of our commercial business. I mean, it was -- it's been derisked, albeit that the VBP impacts in China were larger than we thought, particularly on Diprivan, 1 of our key products. We have successfully integrated some regional transactions and we've got a platform set. So we've got -- we no longer talk about what if in our base. The base is the base and now we move forward. There's no more -- what other major threats are that we don't have these type of threats in the business. As you know, Aspen has a very diverse portfolio of products and we had a couple of really big products in China which effectively were almost pre-patent because I see VBP as a patent cliff in China. Manufacturing, this is probably the -- when you sit inside the business, it's all things work nicely on an Excel spreadsheet. But this is where the rubber really hits the road. Have you got the skills in your group? Can you really do all these -- can you keep things frozen, isolators? Can you keep all your machines running? And this would probably be the most important internal delivery for ourselves was to show that what we built, we can operationalize. As I told you, we had ZAR1 billion of risk in there that's related to grant income, COVID vaccines, etcetera. And you also noticed that we've had a sustained unlined of Heparin stock. I think it was nearly ZAR3 billion of stock there. So getting there. And hopefully, we've received some cash for this year but hopefully, Sean will show you there's some more cash coming in next year. And then on the financial highlights, we had to achieve our -- just to get to where we hope to get to. We had to get our highest EBITDA in the second half. Our business will always be second half weighted because a lot of the vaccines in manufacturing is sort of Northern Hemisphere winter. So they're seasonal. We had very good operating cash conversion which was really important for us. And as I discussed, the Heparin turnover came down. If we look at the group revenue, we had 10% growth in revenue. We had a strong manufacturing performance and it was led by the finished dose form and the heparin unwind. There's a couple of billion rand in there that relates to heparin that is really a stock unwind rather than any profitability attached to it. The Commercial Pharma business grew at 4%. The constant currency, we were relatively flat. I'd point out you at the half, it was minus 3. So we had to have some growth in this half in spite of the VBP just to get back to where we've got to. So it gives you a trend that the business now is moving forward from a negative into positive. So I'm showing you what can kick in there. And you'll see that the injectables which is where we had the Russian and the VBP risk and I'll talk to you other areas that are impacted but the prescription and OTC business, a nice weighting between prescription, OTC and injectables means we've got a balanced portfolio of products and they more than offset what happened in injectables. And we'll see that on the next slide when you'll see even geographically how we perform. If you look at China, if you took Asia and you pulled at our side out there, you'll see we have double-digit underlying growth in the business. And that was -- 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 Americas, in Africa, etcetera. So, it's -- 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 to 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 a bit. 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 1 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 in 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. The -- 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 will see in prescriptions and look at it when you see Australasia, we have -- we -- these are products that are regulated, we have [indiscernible] in the area and we’ve 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 a less regulated. So, that business is shifting from being in a regulated space to being where we have some freedom with pricing around OTCs, etcetera and it's now nearly a 50-50 split which is -- for those who have 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 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 consumers' mind but also the brands have really good brand equity but we used to have a business in Russia that did ZAR1 billion. 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 some really good news coming into this section. It's not -- it's -- and we'll talk about it when we talk about strategy and prospects. But aside from the obvious launch of Mounjaro 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 steroids are, was sometimes the smallest or close to the smaller segment in here and the value of those contracts coming through now shows you that it is -- you will 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, I understand how much we achieved in the second half. We had an onerous contract in the API business, that's -- which resulted in us getting lower revenue. Unfortunately those concepts are beyond me. I mean I think I was -- when I was a chartered accountant, we had 1 statement. So this is beyond -- this is something that the accountants can explain. Heparin, we sustained the elevation, the elevated sales -- explained by the unwind the sale of the stock and that's unwind is a permanent unwind. The future model is really working capital light. And effectively, we've got about ZAR1 billion of stock on -- that's something that we need to work on is how we actually shift the stock out of our system so that everything relates to what is affectionately almost going forward. So with that, I hand over to you, Sean.

Sean Capazorio: Thank you, Steve. That's -- when I was sitting preparing my notes this morning, I looked out the window and I saw the Springbok bus on the other side. But really proud thing for Aspen and I think similar for the Springbok 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 cover 2 financial highlights slides which will just give us a really high-level view of where we've performed. Some of it, Steven 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 offset the decline in Injectables. So a good performance from Commercial Pharma withstanding the VBP impact. The standout performers, I think from a half-on-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 HEPS from half 1 to half 2 and that really gives us the foundation in building momentum to go forward with our new strategy, underpinned by our new derisk 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 ZAR1 billion, as Steven 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%. You can see the second half is testimony to where we're aiming to go going forward. Standout performance for me obviously, on the finance side, our working capital, big underpin there is the unwind of our heparin inventory which we dropped by ZAR3 billion which we did guide in the first half when we met that guidance. And for -- 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 FY '23 at 55% at the half, we're at 49% and we ended 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, FY '22, we're 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 normalized net financing cost which is the third graph on this page, you'll see that in total, we were relatively flat at ZAR1.2 billion but it is the tale of 2 stories: the one is you can see in the dark blue, our interest has gone up from ZAR800 million to about ZAR1.2 billion, there, about ZAR400 million up on interest and that's driven by the higher interest rates which will unpack in a later slide and also 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 ZAR400 million on our foreign exchange losses because of the volatility in emerging market currencies and that has been squashed pretty much down to below ZAR100 million 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 ZAR22.2 billion up to just under ZAR27 billion, an increase of ZAR4.7 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 2.3x, 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 in last -- from last year in November. You'll see if I just sort of take you through the bars to navigate the -- we start with the FY '23 margin on the left. We then talk you through the 2 halves and then we show you the full year margin on the right-side. 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 2 halves but overall, a pretty steady margin. And if you remember, we do have -- that's after having a 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 growing in the New Year because we're going to have 12 full months of the LatAm 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 started -- 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 obviously, 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 FY '25. So from a guidance perspective, you can take that as a steady margin going into the New Year. Let me 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 Diprivan 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 2 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 Steven 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 3 in terms of segment size. When you put all of those 3 together and look at the margin impact, you can see the impact is barely slight from the VBP. Last year we ended at 59.6% and at this year in 59.4%; so a slight decline. We do anticipate with the mixed nature of prescription, a steady OTC margin. We anticipate those outweighing the lower injectable margins; so we do anticipate that commercial pharma margins will be steady at these levels or slightly increasing. So, I think that’s something you can take into your guidance. From a manufacturing perspective; yes, if we look at that, you can see that the first half we were at 5.3%, and that jumped up quite substantially in the second half to 12.3%, ending the year at 9.2%. Bearing in mind, the previous year margin of 12.4% had the benefit of grown funding and the vaccine benefit in it there; so we've had to absorb all of that and still come out at a 9.2% margin. The sale of all the Heparin stock to dilute the margins for this year, although it did give -- that did provide us with gross profit -- absolute gross profit and cash flow benefit but to dilute gross margins. From an FY '25 perspective with the increased sterile contribution, we do anticipate this margin lifting into the New Year, into the double digits. We're going to have less -- your Heparin 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. 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 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 again for FY '25 with the Heparin now at its new lower level. The increased sterile contribution coming into play, the steady Commercial Pharma margins going into the new year with a slight increase potentially, we do anticipate that the gross margin for FY '25 will at least get to what we were in FY '23 and perhaps a little higher. On to normalized EBITDA; I think maybe just to navigate this slide -- so what we've got you, we've got revenue, gross profit going all the way down to normalized EBITDA and we're comparing our current year's performance versus FY '23 at a reported and then on the far right, at a constant exchange rate base percentage. So if we just, 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 Pharma 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 FY '23 of 27%. And that purely is a function of the increased manufacturing mix this year. For FY '25 with the improved gross margin mix from steriles and the lower heparin sales mix, we do anticipate EBITDA margins returning back to the 23% EBITDA margin percentage levels of around 27%-odd [ph]. And I think just again to emphasize that this EBITDA being up at 1% is after having absorbed ZAR1 billion impact from our Manufacturing and another probably around ZAR1 billion from the impact of VBP in Russia in the current year. So I think overall, we've derisked 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 of half 1. And you can see how it's jumped up 2.8% in 2023 first half 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 popped 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 now we've pretty much come in on that guidance as we said. Going into the going into the New Year, we do anticipate our finance costs to increase. I know it sounds counterintuitive because we know that the interest rate cycle is 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've still got the residual carryover of the high interest rates from this year. You can see that in half 2, we ended at 5%. So that will 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 IFC loan that, if you remember, was at the 0% base rate. So we've -- we expect to pay €120 million 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 FY '24 closing interest rate. Very proud to announce and I can see we've got one -- we've got the IFC representation, yes. And thank you. We've now -- we've managed to raise or secure funding of €500 million 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 in a very strong position from an overall funding mix perspective. So thank you to the DFIs for that support. And from an ESG perspective, are really a 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 ZAR434 million down to the ZAR64 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. So you do have -- if you look at just towards May and June, you can see that little blue line, for example and I think the -- and the gray line is starting to pop up there at the end and that's the peso and the Brazilian real starting to weaken against the euro. So we do anticipate -- and obviously, you also noticed the ZAR also got stronger in the last period of time. So with the stronger ZAR, we do anticipate there could be some weakening of our reported results, if the ZAR continues at that strength. And that would be the -- that's the main underpin why all of our guidance has been provided in CER so that we can give you proper guidance without the impact of currency volatility. On to probably my favorite slide, the accountants and I love this slide but it certainly was my least favorite slide for 2 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 you in a little bit more detail, that depicts our net working capital as a percentage of revenue. And you can see how we've dropped from FY '23 through down to half 1 of 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 the 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 where we -- what the ratios were in each of the halves. So you can see that in H2 '22, we were at 117%. Last year, first half was 58%. We then came up to 115% in half 2 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 Steven has mentioned that we've still got ZAR1 billion of, let's call it, old model Heparin if we want to liquidate. And we've also got opportunities within our broader order 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 FY '22 levels of 45%. From a guidance perspective, we expect to at least be at 45% next year and hopefully slightly lower. On to net debt; just to sort of talk you through the moving parts here. On the left is our net debt at the FY '23 of ZAR22.2 billion. And on the far right, we ended the year at ZAR26.9 billion. If you look at the bridge between, we've generated operating cash flows of ZAR8.3 billion. If you're wondering why that's different to what you're seeing in the operating cash flow. We have also funded ZAR2.1 billion of the Viatris 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 ZAR8.3 billion and our CapEx spend for the year of ZAR3.8 billion, a positive free cash flow there of around ZAR4.5 billion. We've obviously got our dividends. And then you can see the big outflow for the year is our acquisitions of ZAR7.7 billion, of which the big one is the Viatris LatAm. We've obviously got Sandoz (SIX:SDZ) in there and we've got other smaller bolt-on IP acquisition sitting in there as well. From a leverage perspective, the -- we ended the year -- to be precise, 2.28x but we rounded it up to 2.3. And for FY '25, based on the strong cash flow as we're expecting, we do expect our leverage ratio to dip below 2 into the FY '25 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 the financial period. So that cash benefit will come through next year on the profit line as well. On to 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 impairment. So gross impairments less the reversal of impairments. And you can see in FY '22, we were ZAR1.2 billion of impairments slightly down last year at ZAR1.1 billion and that's gone up to ZAR1.6 billion, a 49% increase in impairments. The big driver there is the VBP impact that we've picked up on Fraxiparine and Diprivan which were 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 2.2% of our net book value of ZAR72 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 ZAR72 billion. But unfortunately, as accountants do, we can't write anything up. We could only write things down. So the focus is always on impairments and never on -- I mean you can only write things up to the original book value or original costs but not above that. So just to bear in mind that 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 have -- we do anticipate interest rates 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 2 to 3 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 20 -- all-in tax rate of 22.9%. That went up because of the impairments because impairments are not 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 2 and its impact on the business, so we're going to be going through a full assessment of that in FY '25 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 2 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 FY '24, 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 impacts to the way we run the business into the new year and we've put those in 4 pillars -- patient pillars, our people, society and environment. And within those, we've also started -- we've set KPIs which will -- 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 balanced 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 projects early calendar year '25. I'm pleased to report that, that is still on track. And following that, Gqeberha, our Gqeberha 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, that will have quite a -- this new project will have quite a big impact on that ratio into FY '25 and you can imagine the benefit is 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 solid pie in France when it's sunny, certainly during the Olympic period, they had a lot of sun. So 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 followed over many years and we've got some little snippets there in how we've reduced our water consumption and electricity. 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, Steven.

Stephen Saad: 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. Yes. So, well done Sean. And only advice I'll give you is if I go back 20-odd years in South African drug is we've done a one-of-journal entry. We just wrote off that IP in one go. We've got a tax deduction in those days. But I've got to give you that it's got to be worth. 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. Yes, we go on to a strategic review. So in this review, we find ourselves in a very sweet spot in the industry as Aspen. We're really well positioned with commercially and from a manufacturing basis. And just to have a little bit of history here. Have we ended up here by accident? Is that -- was it just be just fortunate but I think just to tell you -- just to give you some grinding as to how we got you. We've got a strong relationship and partnership with multinationals. Those of you that now have worked with us over the decades, will know that, that's been a core and fundamental to our growth. Many of our transactions have come because we're good manufacturing. We fixed factories, we're able to get commercial opportunities as well. What we noticed in Big Pharma was a big shift in the focus and they were increasingly moving to a high-value units per -- 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 have 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 will have a material impact on Aspen. It's been incredibly capital-intensive. It's very resource, human capital, not just money, 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. We can make mRNA, insulins, vaccines, GLP-1s. So when someone comes and says, "Can you make the Mpox vaccine?" We get the dose here, we see where 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 they've been -- a lot of them have been regional. And I think what you should be aware of is we think this 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 we'll announce them as they come around. But that footprint has definitely proved relevant. If you're unsure you just have to look at the history of what's going on and sits 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 GLP-1s. This has been -- I think if I over the last 6 months since I've spoken to you, I probably spent 5 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 -- the massive, they're the biggest in America, they're the biggest in Europe, just as a result of having this having these products in the space. There really have been breakthrough treatments and there's more and more of the -- 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 this space global is very limited and prohibitive to put in. The innovators themselves and for those of you that have been in the market are 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 its API, whether it's devices, whether it's the manufacturing and the sterile fill. The markets are undersupplied, particularly even the U.S. is undersupplied. And I'd say even in the U.S. because that's always the first port of call for these companies. And the products that are available are really, really prohibitively expensive. Yes, there's a portion of the market that can afford them but there's only a portion. So you got an undersupplied market and you have a price point. So when you sit back at us and you said, "Well, 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 affordable, 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 1,000 and B, who's selling at 50, 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 chances selling at a higher price to B because that capacity is tightened further. So capacity is at a premium. And what you're seeing that many generic companies are really battling to get access and the development companies to capacities. That really -- the door just keep shutting in terms of the capacity. It's a bit like aero plane seats. We're not 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 U.S. 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 the Europe and the USA are not early patent markets. So big markets, over $100 billion projected, etcetera. We don't know where the top and the bottom is. I've done -- I put 2 pictures on there for you. The first one is what we call an auto-injector. So you pulled 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 prefilled syringe. At the bottom is a multi-dose pen, in that -- underneath there's a cartridge which we make in our South African facility and you do see a needle. So you -- the one you sort of throw away, you use it once and done. And the second one is like a month supply. So you take it injection, you got to take the needle or 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 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 exploration 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 pens and auto-injectors. So manufacturing will impact both our South African and our French site. The IP around these GLP-1s is exceedingly complex to develop and the license for us is significant crew. It's not easy to get access to these products. The reason we did get access to this product is because of the manufacturing capabilities and the capacity we have. And that really has been the catalyst here. Without that, we wouldn't -- without those capabilities, we wouldn't have had the opportunity commercially. And the opportunity commercially is effectively Aspen has its own brand to put into the market. And that -- those numbers could be pretty large. And we really are dependent. The values are -- you can do it on a spreadsheet and you run out of 0s. But the reality is that you've got to have a regulatory pipeline. You've got to get the products registered. These products are 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 how close 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 licensor for total global products. So you've got a licensor that owns the IP. They look for commercial partners around the world. And the licensor volumes for Aspen manufacturing will be supported by global generic players. And this will include the U.S. and the European offtake. So what we see here is an opportunity to supply into a continued supply running -- and growing supply running right into the mid-30s into both our sites on this. And that -- and it's an exclusive supply agreement from us. So we would -- 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 I've told you the opportunity is not without risk, regulatory time lines are never certain but this is 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 the finite long-term supply contract only with a lower per pen unit with higher -- 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 do but we 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 could ever have 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 already and when I spoke to you at the start. Our revenue was up ZAR3 billion and that was before Russia and China decreases of ZAR2 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 us. 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 from -- 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, 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 acquired and the products acquired in LatAm. We expect growth in all segments, Injectables, Prescription and OTC. And the -- 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, as it unrolls. 2026 is a big period for patent expirations. And we're working on further bolt-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 -- we were 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 have acquired in China and then there will be some offset for what we sold in Europe but the net impact will be that we get Injectables back to the levels before. South Africa will -- it depends on the Mounjaro launch. We're hoping to launch at the end of this calendar year, so in the next 2, 3 months or so and that will also positively impact the injectable business. The OTC business is really steady and has sort of shown growth year-on-year for those of you that followed us and the 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 will 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 in constant exchange rate. If we now move to manufacturing. Finished dose form is really where we want to spend time. It's a main contributor to revenue and it's an absolutely core growth driver. Just to give you a sense of how on sales 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-fill syringe. And then pack 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 pens and that's called packing. And they've got a sort of equal value when someone says, what do you say is that x for this and x for that. When you get very high volume filling, so someone that comes in 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 so what do you want to do there? So we just want to fill with you. We've got all our own auto-injector packing capability. We want our own device. We want to do it separately. You say fine. And you 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, etcetera. And we'll fill and pack with you. You literally get double. And 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 the opportunity is 3x, the value get for 3x. So you've got to decide where you want to be here, manufacturing people, if you just read to the manufacturing team, wow, we just want -- we 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 and he says to you now, I want you to do the bottom line -- I want to know where we make the most profitability is. And our focus now is going to be in that section. I'm not saying we won't do work in the first 2 but our focus is going to be there which 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 move 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 prefilled 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, just jumping around here, sorry. And there are -- 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 -- offtakes 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 at 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 pens and pens 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 so -- how much are you going to do in H1 or H2? Quite hard to tell you when you've got a regulator out there who can delay by 6 months, 9 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 to underline as they are on the pediatric vaccines. We are very dependent on being given a priority review by SAHPRA, 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 you -- and given the shortages of insulin in the country, hopefully, that also has a really speedy review. And if we have a speedy review, we're selling insulins at the very least towards the end of -- beginning of next year. If it's not as speedy as we like, you could wait another 6 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 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, etcetera. So I just thought let's just put it out there and understand what we did. So before we gave you guidance and contribution. Contribution without -- 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 ZAR4 billion. If you take 70% of ZAR4 billion, it's ZAR2.8 billion. We've already achieved over ZAR500 million actually in the first half at 70% of ZAR500 million, it's ZAR350 million. So that is why we've said to you that the -- what we guided previously was effectively ZAR2.8 billion. We've realized ZAR350 million. So we have ZAR2.4 billion -- ZAR2.5-odd billion that we will be -- that we still is incremental on this year that we expect by financial year 2026. And that also takes into account all the regulatory noise, etcetera, that could be there. But that's a very least and we've assumed very little of serum in there because over and above regulatory, we've got Gavi, etcetera. So we're trying to keep this to we're very search it. So the current guidance and I've told you through that. So that guidance I want to let you know, hasn't changed. It's been maintained. And the -- 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 guidance. But of course, if the GLPs coming in 2026 and other contracts come online, they may impact generally financial year '26 more positively and give us more certainty to give you '27, '28, etcetera. From financial year '27 and calendar year -- really 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 hoped to achieve, could be a material contributor to just closing our total gap beyond the ZAR4 billion. We've told you before that we could get up to ZAR8 billion of contribution. And we think there could be a material contributor to getting us to that number and above. So that's -- that was -- that's a story on commercial. So in Commercial Pharma, we've told you we expect in constant exchange rate, double-digit growth, given 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 we -- it's really underpinned by the organic growth which we see continuing and the acquisitions. The revenue impact of VBP has been absorbed and it's really off the picture and our ship focus is really to integration. Integration is an important -- is very important as we have been successful now we -- we're putting 2 teams together in China, integrating those teams and shaping the team -- shaping the numbers of the team is important for Aspen to get that right as well because that will also improve profitability and we expect growth in all 3 segments and the footprint we've got in emerging markets is us well positioned. And that could also impact that 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 ZAR2.5 billion as we transition to the toll model. So -- and that's why Sean has guided on the higher margins, etcetera. We do expect double-digit growth to continue in finished dose form and it's going to be build and we hope this is something that we build over the next 5 to -- next year and the next 5 to 10 years is the increased sterile contribution, heavy seasonal weighting. Some of these are a winter products. So there is seasonal weighting. It is in H2 and I'll come to that as well. And we told you what we expect the EBITDA to increase by and the risks around timing. 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 ZAR2.5 million and the balance into financial year '26. We're obviously hoping with earlier -- with the priority review and earlier registrations around insulins, etcetera, we can get to a much higher percentage than the 50%; that percent is probably approach of 70% or more. So when we look at the gross margin and EBITDA margin percentages, they both set to increase. The Commercial Pharma 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 steriles. And you remember, steriles has very high contributions we pay for very few components. So it's 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 -- in Commercial Pharma will follow. And we've given you very good splits, I believe, in terms of what -- how you can model your manufacturing seasonality. I mean, these things are very hard to call. It depends sometimes you get early offtakes 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 split is likely to be 45-55, H1 to H2. Sean has taken you through the interest rates, the carryover of interest rates, the tax rate and the tax rates that are likely to increase as we have more profitability in manufacturing on a relative basis in the business. We do see the operating cash conversion expected to exceed 100% again. So some of that is further liquidation of some of our stocks and just generally where our run rate is and not having the uncertainty of heparin volatility in there. And of course, that all leads to lower leverage ratios going forward and that ratio of less than 2 is anticipated. And currency is something we don't call [indiscernible]. It's very hard and it will impact results whichever way it goes. And we're now reported is higher than constant currency. Then you know the rand has had -- the rand has weakened relative. And when it strengthens relative, then our constant exchange rate will be higher than reported. But that's our story. It's been a really, really busy time. Busy time fixing, making sure we can operationalize those sterile contracts. I think that was the really -- the single biggest goal for Aspen. If I 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 2 slides but it's been a long process and a really thought through process of how we get there. And if we can get it even half right. We'll have an unbelievable kick in commercial pharma and I think a lot of our manufacturing will be spoken for. So yes and I think that's it. So we enter to Q&A. Hopefully, that was understandable. And as I said, the 1 thing that you'll pick up in the strategy, there's not -- if this happens and showing a picture of sales teams in China and what we can and can't do and what we hope to achieve 1 day in sterile. So -- pretty understandable, I hope, completely understand we will be going in commercial pharma, understandable where we're going in manufacturing. And it's just the relative upside on the GLPs that we get. But that will get upside, I think, is a given.

Sibongakonke Nkosi: Thank you very much, Steven 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.

Q - Unidentified Analyst: Hi guys, thanks for taking my question. On the ZAR4 billion to ZAR8 billion guidance [indiscernible] at Serum Institute; that’s about ZAR1 billion on top possibly but the timing was very uncertain. And so, has any of that changed? I'm sorry, I'm...

Stephen Saad: No, no. We -- I said to you in the presentation that we've really put no -- we sort of give guidance without Serum. And Kevin…

Unidentified Analyst: [Indiscernible] to be on top at this time?

Stephen Saad: Yes. There's that, and also just bear in mind, we've always told you our contribution is at least ZAR8 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 we do have -- at these rates, we do have more capacity available than we value of capacity the same volume units but I think the selling prices at the moment is a little higher than what we had budgeted before. But serum, it's very hard to give you guidance. I hate giving -- it's easy on a take-or-pay contract when you get it from a third-party, multinational, whatever and you put it in and you've got set time lines. But 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 we -- the insulins will come online soon. And ultimately, serum will follow thereafter. So, let's see. But we are dependent on not one, we've got to get a priority review from SAHPRA. SAHPRA have 4 serum, SAHPRA have 2 line 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 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.

Unidentified Analyst: And just on the GLP-1, so there's been a lot of litigation trying to move that patents from FY '26 to later, especially, I guess, as you referenced in U.S. and EU. Are you not worried about a risk here that the countries which you are hoping for ex U.S. and EU, might have patents extended due to litigation?

Stephen Saad: I think there 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 that's going through -- 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's quite astounding to us as we went through the IP one. So yes and there's some pretty large countries that have that. But yes, there's always a 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 -- they can only go forward. They have like an early entry mechanism years. 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 with those volumes. And the courts will come out on that. But I think that's on many of the emerging markets, it's pretty clear cut that there's pathway. Quite hard to defend something if you're not supplying something. I mean that's the story, isn't it.

Unidentified Analyst: How is 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 be ideal but your profitability will be obviously linked more towards your own products. So what is the strategy around that?

Stephen Saad: I don't think it's obviously the profits weighted towards our products because we have global volumes. 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 in line but also regulatory pathways. This is not -- these peptides -- there's 1 or 2 examples I can think of the past in terms of regulatory paths but you have all of these regulators with the regulatory pathway and how they're going to deal with these products is going to be interesting by market and I think it's going to be challenging, although I think 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, the volumes are still there. The volumes will still be there, just against a matter of timing. How much volume? Well, there's 8 billion people in the world, 1 billion people could do with this drug, at least 1 billion. That's what the WHO, that's from the WHO, it's how many people are just in the obese category as well. So there's 1 billion people and that -- we're not taking -- there's a whole lot of people that are also on these products for diabetes, etcetera. 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 and so a simple example, on a single dose and auto-injector the one I showed you we make in France. For every 1 million patients, every patient needs once a week, just say around 50 injections a year. So 1 million patients is 50 million units. That's what it is. Now in the U.S., they're selling a unit at $100 to $150 a unit for obesity. So there's -- it's a big market in value and you're never going to sell it for $100 because that's the reason you're never going to get the volumes. You're going to sell it for a fraction of that. But you only need 1 million patients globally to do 50 million prefilled syringes. You have 1 million patients on the pen, then you'll get 12 million -- 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 forecast as they come and it will depend market by market and how the people -- but I'm pretty sure that all I am sure of is that a registered product will sell volumes and decent volumes and we have global rights to those volumes, the 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 -- there's a very big uptake that will also come once the EU and the U.S. patents for.

Unidentified Analyst: 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 serum and GLP?

Stephen Saad: Yes. So I think that in the South African -- well, first of all, Ken [ph], thank you so much for your support. And I'm glad that you were able to afford [indiscernible] for the occasion and looking at the business upfront here -- first interest payment. So 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 it's -- can we increase the insulins, 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 we -- people have come to us on Mpox, okay. So we like to do good in the world but we sort of don't want to be the only ones doing good without support. So we -- can you also like to learn your lessons once in life. And -- so given the experience we had with COVID, we've said, yes, we can make it. It's not an easy vaccine to make it, so it's a live attenuated vaccine. So there's things that move in the back, so -- but there's 2 preconditions: One, you don't -- whatever volume you give us you take. So I don't want to care about the 1.2 billion units were promised for COVID and we got 0. It's a take or pay. It's a very expensive and costly process to move this production into your facility. And 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 pandemic volumes and we had Mpox. So just to answer your question, there's many, many, many more opportunities where Aspen can assist. And of course, 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 François Faintei [ph], who is a top guy in South Africa, he was a top HR guy [ph]. And he's saying this, “everybody should be on GLP-1”. But it's just the affordability. And those are the volumes to that we can; so don't just think about GLP-1s, you know, people have got views of these quotations on the state or maybe I should use [indiscernible] my daughters but there's a whole lot of people boning 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 sought at $100 a bottle. And those products can be substantially -- can be made substantially less than that. There's been interesting pathways around the API that have been found synthetic pathways around it which have made it which give it some -- which I think will give it a lot of affordability going on.

Sibongakonke Nkosi: Okay. We'll move -- we'll take some questions from the online audience. The first question comes from Peter Cromberge from Mergermarket. Can you speak to the tenure and terms of the new DFR funding package?

Sean Capazorio: That's a 7-year tenure and amortizing the first 2 years, only repayment after from year 3 onwards.

Sibongakonke Nkosi: Thank you, Sean. The next question comes from Keith McClellan [ph] from Integral Asset Management. And he's got 2 questions. Can you speak through the rationale for Sandoz to sell you the Chinese business and buy the EU assets? Why were they exiting China? Why sell them the E assets?

Stephen Saad: Yes. So the -- 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 their business faced all the same problems that we had that had a couple of big products also went on to VBP. And their view was they've got this big sales team, how do you support it now with these major products under pressure which was the same questions we had to ask ourselves on a stand-alone 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 at 100 and we were at 100, we had 200 together. We both halved. But if we put it all in 1 basket, we get back to 200 as 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 bunds but we have similar turnover levels. And it's really about what infrastructure we put behind the headcount. 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 of this. It was €12 million 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's not really material numbers from the European side. But certainly just helped with 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 Aspen.

Sibongakonke Nkosi: Next question comes from Steve Minnaar from Abax [ph]. Semaglutides 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?

Stephen Saad: It'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 a sense on...

Sibongakonke Nkosi: The next question comes from Gail Daniel from Ninety One. How does the pricing work on GLPs as the sales price of end products come down? How will this impact Aspen?

Stephen Saad: I think Aspen would like to be responsible for that sell price coming down. And we have -- those are all our assumptions I think the reality is that even if you keep the sell price where it is, you will not access the volumes that of patients and you won't get to patients. So right now, 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 has got very high obesity rates. I mean South Africa is up there amongst 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 would it impact. Every assumption we've made is around a significant reduction in pricing.

Sibongakonke Nkosi: Then we've got an access to medicine question from Moreti [ph], saying how is Aspen ensuring sustainable medicine supply on the African continent, i.e., SADC for coming presence in near future? Any plans in the pipeline?

Stephen Saad: Yes. So we're working -- 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 their capacities and capabilities to be able to answer so many of the problems. And it's something we're working really hard on. As you -- I don't think -- I really don't want to embellish what we've -- but I think all of you really know. But also to mention, 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 is where we want to buy locally in ARV. So once again, we're working on getting our -- the FDA dossiers in place to be able to cover and they're talking about a 2 million lives that they'd like covered out of Africa. With respect, we probably one of the few companies, if not the only one that could one make those type of volumes on the continent and to be able to get the accreditation because to supply those programs, you have to be FDA approved.

Sibongakonke Nkosi: Thanks, Steven. And then the next question, we've got 2 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 impact? Second question.

Stephen Saad: Sure. These markets are quite opaque. It's quite hard to be able to call them all. The negative for us was we have had a history. So the way it works is so that they say, okay, there's 4 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 position. 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 you’re price drops. Now we've had price drops of 5% enforced on us. It's not a set process. We've never had 1 of more than 20 until we got to round about Diprivan which was at 30%. Now the problem with price decreases is I don't have to tell you that goes all to profitability. If you lose volume, at least you lose the cost of sales as well. We had the highest percentage drop in price. And so -- is -- are things tougher in China? Yes, 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 buy products post patent generally across the world. And we get the growth rate, you see 3%, 4%, 5%, 2% with our commercial footprint. We've got thousands of reps we grow. In China, that process is faster. There's a bigger growth rate in the post-patent environment. So I think where we've got the products now as we 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 respect patents, no one wants to buy the generic product. They only want to buy the innovator. So even though there's the day after patient, 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 we're 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 or $100" 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 patient. It's not when Aspen, it tends to buy products. It's just the way the system works in China that we end up getting these products pre-patent effectively.

Sibongakonke Nkosi: Next question comes from [indiscernible]. Firstly, congratulations, Steven, 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 remains stable or just a smaller price erosion but more than offset by volumes?

Stephen Saad: Yes. So, Australia -- so we talked about China and we say it's opaque. Australia, they just speak with a nice accent and it is not going to happen and you understand them and you beat them up a drug be so it's okay. But it's no different really. It's no different. The -- 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 and group in prescription medicines make an assumption on. We've got an unbelievable team and 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 they won't -- 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, these are -- we're in a very political space. So we have those impacts. It has impact but it's much easier when you're selling OTC products and somebody's got a headache and they want to come buy your product from the shelf and -- etcetera. What was the second question? VBP, the VBP, absolutely, the volume and you've taken your price and your volume, there might be slight modifications in price but it will be much more -- it will be more than compensated by volume increases.

Sibongakonke Nkosi: Thank you, Steven.

Stephen Saad: That's it. Sorry, it was -- this 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 who can do a presentation looking at a wall; so, thank you. Thank you for keeping us presenting in person. It's much appreciated.

Sean Capazorio: Thank you, everybody.

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