Aspen Pharmacare Holdings Limited · JSE:APN

Aspen Pharmacare — FY2024 Earnings Presentation

51 slides from Aspen Pharmacare's earnings presentation, Sep 4, 2024

  1. Slide 1: FY 2024 Annual Results

    FY 2024 ANNUAL RESULTS 4 SEPTEMBER 2024

  2. Slide 2: Disclaimer

    Disclaimer • We may make statements that are not historical facts and relate to analyses and other information based on forecasts of future results and estimates of amounts not yet determinable. These are forward looking statements as defined in the U.S. Private Securities Litigation Reform Act of 1

  3. Slide 3: Performance Overview

    PERFORMANCE OVERVIEW INTRODUCTION AND HIGHLIGHTS FY 2024 REVIEW

  4. Slide 4: Performance highlights

    Performance highlights Group Performance Commercial Pharma  Performance in H2 2024 was a crucial underwrite for  Effective strategy has derisked Commercial Pharma base Aspen » Albeit VBP˄ reductions in China more impactful » Delivered against strategic objectives  Successfully integrating of regi

  5. Slide 5: Performance Overview

    PERFORMANCE OVERVIEW INTRODUCTION & HIGHLIGHTS FY 2024 REVIEW

  6. Slide 6: Group Revenue | Continued positive growth led by Manufacturing

    Group Revenue | Continued positive growth led by Manufacturing % change ⱡ R'million FY 2024 FY 2023 Reported CER Commercial Pharma 30 570 29 412 4% 0% Prescription 11 380 9 921 15% 11% OTC 9 706 9 106 7% 3% Injectables 9 484 10 385 -9% -12% Manufacturing 14 136 11 297 25% 16% Group revenue 44 706 40

  7. Slide 7: Commercial Pharma | Strength in portfolio and geographic diversification

    Commercial Pharma | Strength in portfolio and geographic diversification % change ⱡ Revenue FY 2024 FY 2023 Reported CER Africa Middle East 9 021 8 154 11% 11% Americas 6 677 5 079 31% 20% Australasia 5 904 5 827 1% -1% Europe CIS 4 868 4 847 0% -5% Asia 4 100 5 505 -26% -27% Total Commercial Pharma

  8. Slide 8: Prescription | Strong performance led by Americas

    Prescription | Strong performance led by Americas % change ⱡ Revenue FY 2024 FY 2023 Reported CER Africa Middle East 4 242 3 876 9% 9% Americas 2 832 1 801 57% 42% Australasia 2 618 2 713 -4% -6% Europe CIS 991 989 0% -7% Asia 697 542 29% 24% Prescription 11 380 9 921 15% 11%  Acceleration in repor

  9. Slide 9: OTC | Performance driven by marketing teams and brand equity

    OTC | Performance driven by marketing teams and brand equity % change ⱡ Revenue FY 2024 FY 2023 Reported CER Africa Middle East 3 561 3 501 2% 2% Australasia 2 430 2 278 7% 4% Europe CIS 1 974 1 742 13% 7% Americas 1 450 1 323 10% 1% Asia 291 262 11% 7% OTC 9 706 9 106 7% 3%  All regions continue t

  10. Slide 10: Injectables | China VBP and Russia CIS impactful

    Injectables | China VBP and Russia CIS impactful % change ⱡ Revenue FY 2024 FY 2023 Reported CER Asia 3 112 4 701 -34% -35% Americas 2 395 1 955 23% 12% Europe CIS 1 903 2 116 -10% -15% Africa Middle East 1 218 777 57% 58% Australasia 856 836 2% 0% Injectables 9 484 10 385 -9% -12%  Full impact of

  11. Slide 11: Manufacturing | Delivery on sterile contracts

    Manufacturing | Delivery on sterile contracts % change ⱡ Revenue FY 2024 FY 2023 Reported CER FDF 5 262 3 970 33% 24% API 5 102 5 024 2% -6% Heparin 3 772 2 303 64% 51% Manufacturing 14 136 11 297 25% 16%  FDF now the largest contributor to Manufacturing  Heparin, elevated sales sustained » Delive

  12. Slide 12: Financial Review

    FINANCIAL REVIEW FINANCIAL HIGHLIGHTS GROSS MARGINS COMMERCIAL PHARMA BUSINESS SEGMENTS NORMALISED EBITDA FINANCE COSTS WORKING CAPITAL NET DEBT IMPAIRMENTS TAX RATES ESG

  13. Slide 13: H2 Normalised EBITDA and NHEPS up 17% on H1 2024

    H2 Normalised EBITDA^ and NHEPS up 17% on H1 2024 | Building momentum ∑ +5% CERⱡ -3% CERⱡ -4% CERⱡ +10% +1% 0% 11 100 11 255 1 499 1 492 44 706 40 709 +17% +17% 6 061 5 194 804 688 FY 2023 FY 2024 FY 2023 H1 2024 H2 2024 FY 2024 FY 2023 H1 2024 H2 2024 FY 2024 Revenue Normalised EBITDA^ Normalised H

  14. Slide 14: Lower working capital investment drives strong operating cash flow

    Lower working capital investment drives strong operating cash flow 103% 1 229 1 232 26 893 55% 49% 88% 45% 22 184 1.9x 2.3x 1 168 795 FY 2023 H1 2024 FY 2024 FY 2023 FY 2024 FY 2023 FY 2024 FY 2023 FY 2024 Interest FX losses Net working capital % of revenue^ Operating cash Normalised Net Net Debt (R

  15. Slide 15: Gross Profit Percentage | VBP slightly dilutes Commercial Pharma margins

    Gross Profit Percentage | VBP^ slightly dilutes Commercial Pharma margins 60.9% 61.2% 60.7% 60.9% 58.2% 58.8% 58.5% 58.7% Prescription OTC  Favourable sales mix  Enhanced portfolio offsets regulated price sales mix ensured a cuts in Australasia positive trend FY 2023 H1 2024 H2 2024 FY 2024 FY 202

  16. Slide 16: Gross Profit Percentage | Increased Manufacturing sales mix dilutes Group margins

    Gross Profit Percentage | Increased Manufacturing sales mix dilutes Group gross profit margins 59.6% 59.7% 59.0% 59.4% 12.4% 12.3% 46.2% 44.0% 43.1% 43.5% 9.2% 5.3% FY 2023 H1 2024 H2 2024 FY 2024 FY 2023 H1 2024 H2 2024 FY 2024 FY 2023 H1 2024 H2 2024 FY 2024 Commercial Pharma Manufacturing Total G

  17. Slide 17: Normalised EBITDA | EBITDA up 1% from reported FY 2023

    Normalised EBITDA^^ | EBITDA up 1% from reported FY 2023 % change ⱡ R'million FY 2024 % of revenue FY 2023 % of revenue Reported CER Revenue 44 706 100% 40 709 100% 10% 5% Gross profit~ 19 454 43.5% 18 934 46.5% 3% -1% Depreciation 1 390 3.1% 1 247 3.1% 11% 7% Operating expenses (10 138) 22.7% (9 42

  18. Slide 18: Finance Costs | Lower foreign exchange losses offset higher interest costs

    Finance Costs | Lower foreign exchange losses offset higher interest costs Effective interest rate R’million FY 2024 H2 2024 H1 2024 FY 2023 5.0% 4.7% 4.4% Net interest paid 1 168 646 522 795 3.6% Effective interest rate for the period * 4.67% 5.08% 4.40% 3.21% 3.2% Foreign exchange losses 64 20 44

  19. Slide 19: Working Capital | Sustainable reduction in working capital investment

    Working Capital | Sustainable reduction in working capital investment Operating cash conversion cycle Net working capital % of revenue^ 140% 60% 55% 49% 120% 117% 115% 115% 50% 45% 100% 40% 89% 44% 80% 38% 30% 36% 60% 58% 40% 20% 20% 10% 0% 0% H2 2022 H1 2023 H2 2023 H1 2024 H2 2024 FY 2023 H1 2024

  20. Slide 20: Net Debt Bridge | Value accretive acquisitions increase net debt levels

    Net Debt Bridge | Value accretive acquisitions increase net debt levels 26 893 60 2 775* 7 700 22 184 R’million 3 814* Leverage ratio well below targeted levels at 2.3x 1 525 24 118 8 288 FY 2025 projected to be Includes the R5.3bn Latam <2x portfolio acquisition funded 18 370 3 832 from both operat

  21. Slide 21: Impairments | Intangible asset impairments impact EPS

    Impairments | Intangible asset impairments impact EPS | Headroom of >60% Net-Impairments (Pre-tax) +49% 1 583  Impairments are 2.2% of intangible asset net book value of 1 190 R71.8bn 1 060  Increased impairments in FY 2024 following VBP^ impact on R’million Diprivan and Fraxiparine. Future risk m

  22. Slide 22: Effective Tax | Effective tax rates expected to increase from FY 2025

    Effective Tax | Effective tax rates expected to increase from FY 2025 Effective and Normalised Group Tax 22.9% 20.2% 20.2%  Group normalised effective tax rate has remained stable 17.6% 17.7% within 16-18% guided range in FY 2024 16.4%  Group effective tax rate increase has been driven by the high

  23. Slide 23: ESG | Sustainability

    ESG | 16 sustainability Click to edit goals Masterfortitle meaningful style impact Patients Our People Society Environment Healthier populations Inspiring culture Thriving communities Restored planet Improve the health and quality of life Achieve diversity and inclusivity in our Reduce our carbon em

  24. Slide 24: ESG | Renewable energy - Realising our target to be off the grid

    Renewable energy ESG | Renewable energy - Realising our target to be off the grid Manufacturing  Various renewable energy projects are on track at our facilities SA facility progress  Power supply project that converts plastic waste to synthetic gas by pyrolysis is on track to come online in early

  25. Slide 25: Strategic Review

    STRATEGIC REVIEW Healthcare. We Care. © aspen

  26. Slide 26: Strategic Review | Positioned for shifting market dynamics

    Strategic Review | Positioned for shifting market dynamics ‘Big Pharma’ an important partner  Aspen has a strong record of partnering/ transacting with Diverse/relevant sterile platform multinationals » Many commercial transactions were rooted in Aspen  Filling this capacity has a material impact

  27. Slide 27: Strategic Review | Aspen progressing into GLP-1s

    Strategic Review | Aspen progressing into GLP-1s  GLP-1 -currently the single largest opportunity for global pharma » Breakthrough sterile injectable products for the treatment of diabetes and obesity » Manufacturing is complex and capacity limited » The innovators alone have insufficient capacity

  28. Slide 28: Strategic Review | Aspen progressing into GLP-1s

    Strategic Review | Aspen progressing into GLP-1s  Aspen has a license agreement for the IP to these early expiration countries » This is both a commercial and manufacturing opportunity » Includes both multi-dose pens and autoinjectors  IP is complex to develop, and the license is a significant cou

  29. Slide 29: Outlook and Guidance

    OUTLOOK AND GUIDANCE COMMERCIAL PHARMA MANUFACTURING

  30. Slide 30: Commercial Pharma | One-off impacts now behind us

    Commercial Pharma | One-off impacts now behind us  FY 2024 revenue was up by R3bn » Before China and Russia CIS decreases of R2bn  FY 2025 does not face the same challenges as FY 2024 » Major impact of China VBP˄ absorbed • More than offset by Sandoz acquisition/net of EU product divestments » Rus

  31. Slide 31: Commercial Pharma | Targeting double digit revenue growth in CER

    Commercial Pharma | Targeting double digit revenue growth in CERⱡ  Injectables revenue gains projected to recover to circa levels of FY 2023 » Organic growth and products acquired in China • More than offsets China VBP˄ impact and Europe products divested » Growth from SA, with Mounjaro launch plan

  32. Slide 32: Manufacturing | FDF is now the main contributor to revenue and growth

    Manufacturing | FDF is now the main contributor to revenue and the core growth driver  FDF-related commercial considerations » Very high volume filling 1x » Very high volume filling and packaging 2x » High volume filling and packaging 3x  Aspen focus on high volume filling and packaging » Maximize

  33. Slide 33: FDF Outlook and Guidance | Projected financial impacts of capacity fill

    FDF Outlook and Guidance | Projected financial impacts of capacity fill  Current offtake weighted towards the French facility » SA facility to provide impetus in second wave • Key contracts include Novo and Serum vaccines - Timing of contribution dependent on regulatory approvals » GLP-1 manufactur

  34. Slide 34: Summary and Guidance

    SUMMARY AND GUIDANCE

  35. Slide 35: Summary of guidance

    Summary of guidance Commercial Pharma Financial Performance  Double digit CER revenue growth  Gross margins and EBITDA margin » Performance underpinned by base organic growth and acquisitions percentages to increase. Commercial » Revenue impact of VBP˄ absorbed and focus shifts to successful integ

  36. Slide 36: Appendices

    APPENDICES APPENDIX 1 | ABRIDGED STATEMENT OF COMPREHENSIVE INCOME APPENDIX 2 | ABRIDGED STATEMENT OF NORMALISED COMPREHENSIVE INCOME APPENDIX 3 | RECONCILIATION OF REPORTED TO NORMALISED EBITDA APPENDIX 4 | RECONCILIATION OF REPORTED NHEPS APPENDIX 5 | NORMALISED HEADLINE EARNINGS BRIDGE APPENDIX 6

  37. Slide 37: Abridged statement of comprehensive income

    Abridged statement of comprehensive income R'million FY 2024 FY 2023 % change H1 2024 Net revenue 44 706 40 709 10% 21 141 Cost of sales (25 252) (21 775) 16% (11 829) Gross profit 19 454 18 934 3% 9 312 Gross profit margin 43.5% 46.5% -6% 44.0% Operating expenses (10 138) (9 426) 8% (4 998) Other o

  38. Slide 38: Abridged statement of normalised comprehensive income

    Abridged statement of normalised comprehensive income R'million FY 2024 FY 2023 % change FY 2023 % change H1 2024 (CERⱡ) (CERⱡ) Net revenue 44 706 40 709 10% 42 660 5% 21 141 Cost of sales (25 252) (21 775) 16% (22 972) 10% (11 829) Gross profit 19 454 18 934 3% 19 688 -1% 9 312 Gross profit margin

  39. Slide 39: Reconciliation of reported to normalised EBITDA

    ^ Reconciliation of reported to normalised EBITDA R'million FY 2024 FY 2023 % change FY 2023 CERⱡ % change H1 2024 Net revenue 44 706 40 709 10% 42 660 5% 21 141 Cost of sales (25 252) (21 775) 16% (22 972) 10% (11 829) Gross profit 19 454 18 934 3% 19 688 -1% 9 312 Operating expenses (10 138) (9 42

  40. Slide 40: Reconciliation of NHEPS

    Reconciliation of NHEPS FY 2023 % change R'million FY 2024 FY 2023 % change H1 2024 (CERⱡ) (CERⱡ) Basic earnings per share (EPS) 991 1 177 -16% 1 212 -18% 521 Impairment of property, plant and equipment 18 1 1 1 Impairment of intangible assets 533 291 314 99 Impairment of goodwill 33 - - - Reversal

  41. Slide 41: Lower forex losses offset increased net interest paid

    Lower forex losses offset increased net interest paid 370 373 6 657 155 181 6 628 R’million NHEPS = 1 492 cents FY 2023 Normalised FX impact Net interest Other^ FY 2024 Reported EBITDA~ ~ Normalised EBITDA represents operating profit before depreciation and amortisation adjusted for specific non-tra

  42. Slide 42: Net Working Capital

    Net Working Capital ^ -10% +R242m Cash 22 313 outflow 442 200 939 R’million Heparin: -R2.9bn 383 Other Manufacturing: +R1.3bn Commercial Pharma: +R1.4bn 1 092 20 141 FY 2023 Reported Inventory Net Receivables Latam deal non-cash Sandoz deal non-cash Forex and non-cash FY 2024 ^ Net working capital %

  43. Slide 43: Weaker ZAR in H1 2024 lifts full year reported results

    Weaker ZAR in H1 2024 lifts full year reported results FY 2024 FY 2023 FY 2024 FY 2023 Currency contribution Revenue Normalised Revenue Normalised Average Average EBITDA* EBITDA* rate rate EUR 34% 13% 30% 17% 20.23 18.61 ZAR 15% 4% 15% 9% AUD 14% 22% 15% 22% 12.26 11.95 CNY 5% 10% 9% 20% 2.59 2.55 U

  44. Slide 44: Operating cash conversion rate of 103% exceeds our benchmark of 100%

    Operating cash conversion rate of 103% exceeds our benchmark of 100% R'million FY 2024 FY 2023 % Change H1 2024 Cash operating profit 9 967 11 300 -12% 4 128 Changes in working capital (242) (3 358) -93% (88) Cash generated from operations 9 725 7 942 22% 4 040 Net finance costs paid (1 351) (808) 6

  45. Slide 45: Sterile capex expansion project spend increases

    Sterile capex expansion project spend increases to meet customer and market related requirements PPE Capexˠ PPE Capexˠ  Further sterile capacity enhancements to meet market related 3 117 requirements in both the South African and French facilities  Excluding any further potential market requiremen

  46. Slide 46: Reconciliation of normalised to reported net financing costs

    Reconciliation of normalised to reported net financing costs R'million FY 2024 H2 2024 H1 2024 FY 2023 Net interest paid 1 168 646 522 795 Effective interest rate for the period* 4.67% 5.08% 4.40% 3.21% Foreign exchange losses 64 20 44 434 Normalised net financing costs^^ 1 232 666 566 1 229 Debt ra

  47. Slide 47: Latam portfolio acquisition fully paid for in H1 2024

    Latam portfolio acquisition fully paid for in H1 2024 from operating and investment cash flows R'million FY 2024 Intangible assets acquired (5 292) Funded from operating activities 2 063 Receivables forgone 939 Liabilities and provisions raised on acquisition 1 124 Cash outflow on acquisitions (3 22

  48. Slide 48: Net working capital analysis

    Net working capital analysis R'million FY 2024 FY 2023 H1 2024 Inventory 18 002 19 606 18 956 Receivables and Other current assets 12 664 13 053 12 556 Less: ( 178) ( 166) (294) Derivatives (6) (14) (40) Other current receivables (172) (152) (254) Trade and Other payables (10 347) (10 180) (10 578)

  49. Slide 49: Refreshed capital allocation framework supporting growth strategy

    Refreshed capital allocation framework supporting growth strategy Subject to internal leverage cap of 3x 1 PPE capex and IP development 2 Acquisitions & disposals 3 Dividends paid 4 Larger acquisitions and disposals* R3 832 million R1 445 million R1 525 million R 6 255 million Ensure business Portfo

  50. Slide 50: ESG | Milestone achievements in providing access to medicine

    ESG | Our milestone achievements in providing access to medicine with purpose First FDA Generic MDR TB Over 1 million HIV/ 225 million Covid Gavi vaccines Insulins ARV AIDS patients doses for Africa reached in Africa Partnering with Novo to provide Opportunity to Manufactured access to over manufact

  51. Slide 51: ESG | Gender equality and environmental performance

    ESG | A focus on gender equality and environmental performance for a sustainable tomorrow % of females in top management in Gender diversity in the Group Water withdrawn (Megalitres) the Group 34% 35% 30% 48% 1 693 44% 26% Reduction in water 1 204 1 096 17% 19% 1 039 1 061 942 withdrawn from the 201

Aspen Pharmacare Holdings — FY2024 Earnings Presentation on 6ix