Adcock Ingram Holdings Limited (AIP) Earnings Call Transcript & Summary

Good day, ladies and gentlemen, and welcome to the Adcock Ingram Group interim results for the 6 months ended 31 December, 2023. [Operator Instructions] Also note, this event is being recorded. I will now hand the conference over to the Chief Executive Officer, Mr. Andy Hall. Please go ahead, sir.

Thank you, Chris. Good morning, ladies and gentlemen, and welcome to our interim results webcast for the 6 months ended 31 December, '23. We know it's a busy day with the budget speech, so we appreciate you taking the time to join the webcast. I'll take you through an overview of what we consider to be a resilient performance attributed to our defensive product portfolio, good work from our sales and marketing teams and focus on customer service in the distribution division. According to IQVIA, the company that measures pharmaceutical market shares, Adcock Ingram has retained its status as the #1 pharmaceutical company in the South African private market. Results were achieved under tough macroeconomic conditions compounded by some supply chain challenges, which we'll talk to, mainly emanating from the Durban port congestion because we do bring in quite a bit of product from India. Once I complete my overview, I'll hand over to Dorette Neethling, our CFO, and Dorette will take you through a detailed overview of the financials, and we'll be glad to take questions at the end of the session. Just looking at the numbers overall. For the period under review, turnover improved by 1%. Included in that 1% was average price realisation of 4%. We had a mix benefit of 2%. And then organic volumes were down 5%, primarily due to difficult trading conditions with consumer discretionary spend under pressure, those inventory supply chain challenges that I mentioned and lower ARV tender sales in the Prescription division. The gross margin declined from 35.1% to 34%, primarily influenced by the weaker exchange rate as well as the sales mix, and Dorette will give you some more detail on that gross margin compression. Our operating expenses were well controlled and ended more than 2% below the comparative period, resulting then in a trading profit of ZAR 618 million, which was just short of what we reported in the first half of the previous financial year. The group's repurchase of 1.7 million shares in the current reporting period and a big chunk of 7.7 million shares repurchased in the latter part of the previous financial year, helped translate into headline earnings per share of [ ZAR 2.93 ] and that's up 1% above the comparative period. Looking at the regulatory environment, you're well aware that we operate within a complex and highly regulated environment. The quantum of the single exit price adjustment that is awarded by the Department of Health, largely determines the pressure on our margins in relation to the exchange rate and rising costs of raw materials and packaging, transportation, utilities and wages. A single exit price adjustment of 3.28% was granted in 2023, and we had a top-up increase later in the year of 1.73%. We were recently awarded a pleasing single exit price of 6.79% for 2024, which will assist in alleviating the margin pressure currently caused by the weak rand. Taking a quick look at our 4 divisions. Our Consumer division competes in health care, personal care and home care, mainly in analgesia, energy and dermatology as well as suncare, vitamins, minerals and supplements and shoe care. With consumer discretionary spend under pressure, this business delivered a decent performance during the 6 months. Turnover was up 2%. The standout brand performance was from Epi-max which grew in the double-digits. And then we now have, as you know, the E45 skin care range on board from our partner Karo Pharma, and that contributed ZAR 50 million to the top line. There was good cost control in this division, even though the gross margin was down due to the weak rand, and the sales growth eventually yielded trading profit of ZAR 189 million, also an improvement of 2%. Innovation remains a key strategic driver within the core portfolio in this division. There were a couple of product launches in the period, the one being Panado, a great flavor syrup, which was launched in December 2023 in 50 and 100 millimeter pack sizes. This product is alcohol-free, colorant-free and sugar-free. So we are quite hopeful that, that will do well in the market. And then Island Tribe gel is a product that we removed from the market a number of years ago. We reformulated the product in this period to improve quality and re-launched it in 2023 in 2 pack sizes for adults. We plan to launch the kid's version of the Island Tribe gel ahead of the summer season later in the year. The Over The Counter division is the market leader in pain, cough, colds and flu and digestive and allergy categories in the pharmacy channel in South Africa. This division has maintained its first place ranking and has a market share of almost 19% in Schedule 1 and Schedule 2 medicines in pharmacy. Turnover here was flat, ending in line with the comparative period. This division was impact -- was the most impacted by the inventory supply chain challenges that we mentioned of the Durban port congestion. Both Adco-Dol and Allergex, which are the 2 biggest brands in this division, suffered towards the end of the year. We were effectively out of stock on those 2 products and running back orders when we clicked into the new calendar year. Products that are doing well in this division particularly are Citro-Soda and Adco-Mayogel, they're continuing to gain share nicely and both recorded double-digit growth in the period. The gross margin was also weaker in this division, mainly again due to the currency, and we also elected to air freight some inventory in towards the end of the year, which obviously leads to higher transport costs. This resulted in trading profit declining by 9% in this business. If we had been able to service those back orders before the end of the year, they would have been just ahead of the comparative number. The Prescription division markets a portfolio of branded and generic medicines. It also does specialized skin care products and ophthalmology equipment and ophthalmology surgical products. They also promote a number of brands on behalf of our multinational partners. Turnover here was also flattish, in line with the comparative period, but we had strong demand in the branded prescription portfolio, which offset the decline in the ARV tender. In fact, in our branded prescription portfolio, all of the top 10 products are in growth, with the top 3 products recording very good growth in the period. This division grew trading profit by an impressive 13%. During the period under review, we've had some nice product launches in this division. We've launched generic products for erectile dysfunction, product for schizophrenia, and we have also launched an oncology -- generic in the oncology market, and revenue from these products was almost ZAR 10 million in the period. The Hospital division is the leading supplier and manufacturer of critical care and hospital products in South Africa. Turnover improved here by 5%, assisted by the award of the Large Volume Parenterals tender that started running on the 1st of October 2023. But this division did experience a number of operational challenges during the period. We had some water supply interruptions, which led to problems with output, and we've also experienced some union activity at this factory as we try and up production volumes. The weaker currency and the change in the sales mix with these larger proportion of tender sales impacted the margin. And as a result, trading profit was a little bit disappointing here, down by 16%. But certainly, if we look at it compared to the second half of last year, this business did a little bit better than that. The division has recently concluded a 5-year marketing sales and distribution agreement with a company called Convatec. Convatec is a global wound care and ostomy products company, and we expect to commence commercialization of these products in the latter part of this financial year. Just looking at our 3 local factories. In Clayville, the plant that produces oral liquids, effervescents and powders and eye drops, the facility is not running at full capacity, but production volume has improved in the current period. And the congestion at the harbor impacted the supply of some raw materials here, which led to some manufacturing delays. If you look at capacity utilization, our effervescents facility here is running at about 77% -- close to 80%. Our liquids capacity is running at about 60%, and our eye drops facility is gearing up slowly, bringing in products incrementally, but capacity there is still less than 30%, capacity utilization that is. Wadeville had a slow start to the financial year. We were doing a plant upgrade there in July and August. And subsequent to the upgrade, we've seen volumes improve there. The plant is also in the process of gearing itself up to be a backup site for the Bangalore facility for some of the key product lines to ensure continuity of supply. Our liquids part of that facility is -- capacity utilization is in excess of 50%, and the oral solid dosage facility, now that we don't do many ARVs there, is less than 50%. The Aeroton facility is running quite full, operating at a utilization well in excess of 80% at the moment. That's where we produce our [Audio Gap] intravenous fluids, renal fluids and blood collection bags. We've had to recruit additional employees there and incur a bit of overtime, while we gear up to make sure we can support that LVP tender where we won about 90% of the volume on that tender. The facility doesn't experience any loadshedding per se. It is exempt from loadshedding, but power introductions in the area affected the municipal water supply to the plant, particularly in the last quarter. So we've put in a couple of 2 million liter tanks at that facility, which we just commissioned in January, and that should give us about 1 week's worth of supply in the event prolonged water outages. The facility continues to undergo improvements and upgrades to maintain regulatory compliance and adherence to our partners' quality standards. Our Distribution business, as you may recall, operates in partnership with RTT. In fact, we've just entered into a new agreement with RTT, which will commence on the 1st of March. So we've got a well-embedded relationship now with them. They do all our outbound logistics. And we focus there again in the period on service levels, regulatory compliance and cost control, and we're very happy with the level of on-time delivery to our customers in the period. Moving on to our ESG journey. In our efforts to manage the effects of unreliable electricity supply and move towards greater usage of renewable energy, we now have solar installations at 5 of our sites. And in the current reporting period, these sites delivered 6% of our total power consumption. If we include the electricity supplied by our own generators, we generated 10% of our electricity requirements during the reporting period. Our water usage outside of municipal water is only about 2% currently. We are particularly focused on our waste management and have introduced a number of projects to reduce the waste that we sent to land for. The projects include sorting of waste on-site. We do wooden pallet recycling now, and we have repurposed our thermal shipping covers into blankets. We also now have 5 electric trucks to enhance the reduction on our carbon footprint. We were happy to again obtain a Level 2 [ B-BBEE ] rating in November 2023. So that Level 2 remains in place until November 2024. We've continued to invest in corporate social responsibility projects. These include the removal of solid waste from the Hennops River through an NPO called Hennops Revival Foundation. We've donated money to the Gift of Sight project, which assists with restoring eyesight to school children and the elderly community in the Eastern Cape. The project assists with eye examinations, providing spectacles and removing cataracts. In addition, we continue to support the Smile Foundation, which does magnificent work in surgical procedures on children born with facial abnormalities. That concludes my overview of the company. Dorette will now give you a detailed commentary on the financials, and then we'll move into questions if there are any.

Thank you, Andy, and Good morning, ladies and gentlemen. As always, just a reminder that the summarized booklet with the financials is on our website as well as on the SENS platform, and the investor presentation will be available later today. Now in a closer to look at the financials, and starting with the income statement. As Andy mentioned, revenue during the period under review increased by 1.4% to just over ZAR 4.7 billion, aided by an overall price realisation of 4.1% and a mix benefit of 2.3%. Organic volumes declined by 5%, impacted by the pressure on the consumer discretionary spend parts of the business, the supply chain challenges caused by port congestion in South Africa, and lower ARV tender sales. Gross profit of ZAR 1.6 billion is 1.9% below the prior comparative period, and we've seen this deleveraging, resulting in the gross margin for the 6 months decline by 110 basis points from the comparative period to 34% in the current period. This was impacted by a change in sales mix with increased E45 and LVP tender sales and an average increase of 14.4% in forward exchange contract rates for raw materials and finished products acquired in foreign currency. In a closer look at the impact of the exchange rate, we bought the following material foreign currencies during the 6 months. USD 18.6 million at an average rate of ZAR 18.84, which represents a 12.9% weakening relative to the comparative prior period, which was at ZAR 16.68, and [ EUR 50.2 million ] at an average rate of ZAR 20.26, which represents a 5.4% weakening compared to the prior period, which was at ZAR 17.56. With approximately 36% of FECs in U.S. dollar and 63% of FECs in euro, the weighted cost of our basket of all currencies weighted on actual settlements in the period was 14.4% higher than the comparative prior period. You will recall that historically, the split between the U.S. dollar and euro foreign currency contracts was weighted 2/3 towards dollars. During this reporting period, there was an increase in our euro purchases by the Hospital division due to the recently awarded LVP state tender and a decrease in U.S. dollar-based inventory purchase from the Indian joint venture following the supply chain issues in that country. The increase in the weighted cost of our basket of currencies over the second half of the 2023 financial year was 7%. At the end of December, the group was carrying the following open FECs. USD 23.8 million at ZAR 18.91 and EUR 23.5 million at ZAR 20.80, which more closely reflecting the historic ratio of our purchases and also indicating that the impact of the weakening of the exchange rate will continue into the second half of this financial year. As Andy mentioned, operating expenses have been well controlled, ending 2.5% below the prior comparative period, resulting in trading profit of ZAR 618 million, being ZAR 5 million below that of the comparative 6 months period. It is, however, noteworthy to -- that trading profit increased by 11% over the second half of the previous financial year. And looking at non-trading expenses of ZAR 32 million, which consists of share-based expenses of ZAR 50 million and the impairment of the Lulu and Marula intangible assets. Equity accounted earnings from joint ventures for the half year, which arise from the National Renal Care, the JV with Netcare and the Indian JV in Bangalore with Medreich of ZAR 57 million, just short of 12% below the comparative 6 months period. The performance from the JV in India ended 20% below the comparative period as that market experienced [ coding ] and supply issues at the start of the financial year. Net finance costs of ZAR 39 million were incurred during the period, including the IFRS 16 finance costs of ZAR 14 million. The average borrowing rate in the current reporting period was 11.25% compared to almost 9.5% in the prior comparative period. The effective tax rate adjusted for equity-accounted earnings is 29.5%, with nondeductible expenditure causing the increase over the statutory rate. Headline earnings for the period decreased, therefore, by 4.6% to ZAR 447 million, and this translated into headline earnings per share of [ ZAR 2.93 ], an improvement of 1.1%. As Andy alluded, HEPS benefited from the group's increased treasury shares of their subsidiary repurchased 1.7 million shares in the current reporting period at an average cost of just below ZAR 54 and the repurchase of 7.7 million shares during the latter half of the prior financial year. As at 31 December, the group held 10.3 million in treasury shares, which represents 6.4% of shares in issue. If we now turn to the balance sheet. Within noncurrent assets, depreciation charges amounted to ZAR 93 million, just below the comparative period and include depreciation charges of ZAR 22 million on the separately disclosed right-of-use assets. Intangible assets, including goodwill, have a carrying value of [ ZAR 1.2 billion ] and comprise of consumer, OTC and generic trademarks and license agreements. As I mentioned, the Lulu and Marula intangible was impaired due to the discontinuation of that brand and amortization in the 6 months amounted to almost ZAR 5 million, very similar to that of last year. And looking at the current assets. Inventory of ZAR 2.4 billion is stated at the lower of cost and net realizable value. The days in inventory at the end of December are 132 days compared to 141 days reported at the end of June. Trade accounts receivable of ZAR 1.9 billion are shown net of provisions of ZAR 58 million, despite being higher by ZAR 65 million, days in receivables of 57 days, only marginally above the day for June, which was at 55 days. Government debt makes up 13% of trade receivables and 72% of this customer's total outstanding debt is due within 60 days or less. At 31 December, the group was in a net debt position of ZAR 75 million with access to the remainder of the contracted working capital facilities of ZAR 1.65 billion. The owner liabilities outside of accounts payable and provisions relates to the leases. The Group has shareholders' funds of ZAR 5.5 billion at December 2023. The movement in the non-distributable reserves of ZAR 71 million since June relates to the following increases: ZAR 32 million in the share-based payment reserves, ZAR 18 million in the cash flow hedge accounting reserve and ZAR 21 million in the foreign currency translation reserve. Now, I'm turning to the segmental information, and I'll start with the Consumer division. Sales of ZAR 866 million ended 2.3% ahead of the comparative period, driven by a mix benefit of 7.5% due to the onboarding of the E45 skin care range and line extensions in their core portfolio. An average price increase of 4.8% was realized, and organic volumes declined by 10%, mainly because of the challenging economic environment where discretionary spend remains under pressure. The gross margin ended lower than the prior comparative period as significant cost pushes from suppliers, the weaker exchange rate and the inclusion of E45 at a lower margin could not be fully compensated for by the selling price increases. With excellent cost control, trading profit of ZAR 189 million improved 1.9% from the previous period, and this is 10% higher than the second half of the previous financial year. Moving to the OTC business with sales of ZAR 1.1 billion ended pretty much in line with the prior comparative period. The realized an average price of 6.6%, which compensated for the volume decline of 6.3%. As mentioned earlier, the division was impacted by inventory supply challenges emanating from the Durban port congestion, which affected the 2 largest products. Gross margin was below that of the prior period, adversely impacted by the weaker currency, additional costs incurred in airfreighting of inventory as well as a change in the mix of products sold during the period. Despite well-controlled operating expenditure, which ended below the comparative period, trading profit ended almost 9% below the comparative period at ZAR 165 million. Looking at Prescription, sales of ZAR 1.7 billion ended in line with the comparative period. An average price realisation of 3.1% was achieved and a mix benefit of 2.5% due to the number of new product launches. This was offset by a decline of 6% in organic volumes as the comparative period included sales from the previous ARV tender. Excluding the impact of the ARV tender, volume growth was 0.7% and sales growth 6.3%. The gross margin is higher than the margin in the comparative period despite the weaker exchange rate as a result of an improved sales mix with less low-margin ARV sales. With well-controlled operating expenditure, which ended 2.3% below the comparative period, an impressive 13% growth was achieved in the division, trading profit of ZAR 190 million -- [ ZAR 189 million ]. Lastly, looking at the Hospital division, with sales of just over ZAR 1 billion ended 5.1% above the comparative period. Average price realization of 2.1% was achieved. Organic volumes increased by 3%, aided by the 3-year Large Volume Parenterals tender awarded on the 1st of October last year. The gross margin ended below the comparative period following the change in the sales mix with increased lower-margin LVP tender sales, the assets impact of the exchange rate and production challenges arising from union activity and water supply interactions. Operating expenditure ended above the comparative period as a result of higher distribution costs in line with the sales performance as well as higher warehousing costs. As a result, trading profit of ZAR 74 million ended a disappointing 16.3% below the comparative period, but well ahead of the second half of the previous financial year, as Andy mentioned. Thank you. Ladies and gentlemen, that concludes my part, and I will hand back now to Chris, and we welcome any questions.

[Operator Instructions] We have no conference on the conference call. Then we can move ahead to your questions from the webcast.

Thank you, Chris. So I will go through these and where I can answer or hand them over to Andy. We have 2 or 3 questions from Tumi from SBG Securities. The first is, your export and foreign revenues went up by 63% year-on-year. Can we please have a [indiscernible]? She asked about the capacity utilization. But Tumi, I noticed your question came through before Andy's commentary. So he did refer to those in his presentation. The third question is, do you see any opportunity outside of South Africa? So maybe, Andy, if you can do those 2 first?

Yes. Thanks, Dorette. Thanks for those questions. You're right. The export revenues are up quite significantly relative to the previous period. But in overall terms, they're still pretty small. So our export revenues are still running at just over 2% of total revenue, and they were, I think, just over 1% in the previous -- in the comparative period. Effectively, what we've done is improved our coverage in neighboring territories. So most of these -- for most of this foreign revenue, more than 50% comes from Namibia and Botswana, which is a pretty low-hanging fruit for us because it's on our doorstep. There's not a lot of additional expenditure incurred in servicing those 2 markets. So -- and the balance of it comes from really small exports into the rest of the African territories. And then we've got a very small product that still goes into the Australian market. The -- our Rest of Africa strategy, we still don't believe it's a big opportunity for us. So our view is we will continue to service the neighboring territories. We will do exports into the Rest of Africa on an opportunistic basis where they come to us. The biggest issue is regulatory challenges. So if we're going to have to service these other markets in the Rest of Africa, it requires inspections from the regulators in our factories and maintaining dossiers. And we've just found that the return on investment, particularly when we were in East Africa and West Africa, really wasn't sufficient. And then, of course, the other problem is, once you move into a lot of the Rest of Africa territories, effectively, you're just competing with Indian exporters. And we often struggle to compete on a price level.

Then Tumi had 2 further questions. The one relates to the impairment, which was spoke to, it was the Lulu and Marula brand that was discontinued. And then -- I'll repeat it, the most famous question, what is -- what we're planning with [ Adcock ] going forward? And I can say, Andy's most finest response is, you have to [indiscernible]. I don't know, Andy, if you want to add anything to that?

Yes. Tumi, there's really no update to that. We have 3, but best directors who attend our Board meetings. So we get governance input, we get strategy input. They are not involved operationally in the business. I think the same way they operate their own business model, they leave us to our own devices. And their shareholding is obviously creeping up a little bit on a net basis because every time we do a buyback and if we cancel shares, then they creep up incrementally. But we have no information on what their intention is with their shareholding in Adcock, which I think now effectively sits at 63%, if you exclude our treasury shares, 63%.

Then from Grant Morris from Clucasgray. Could you please comment on the current situation with regards to inventory supply? Has this alleviated? Or is it still a challenge? And maybe, Andy, if I can combine it with a question from Luyanda from Nedbank with, what trends are you seeing regarding supply port issues currently? Are we experiencing the same issues or have they eased? And what measures can we put in place to mitigate the risk? Because I think the supply partly also relates to the port issues.

Yes. Thanks, Grant, Luyanda. Look, there were 2 areas where we struggled in the 6-month period. The first one was early in the 6-month period there were delays in the Indian government issuing permits for import of codeine phosphate into that country, and those permits effectively allow Indian manufacturers to convert codeine phosphate into finished formulations, in our case, tablets like Adco-Dol and Genpayne and Myprodol, and then export them to other markets. So we struggled a little bit at the beginning of the period to get product out of India because they simply never had active ingredient. But that had largely remedied itself by -- I suggest around about the end of August. So that's not an issue anymore. And we're holding good safety stock levels in India of the raw material. The port delays hit us in November and December, and they were pretty unexpected. As I said, they impacted mainly the OTC division. What has happened now is most of our containers have been unloaded. So we have most of the product onshore, but these products then need to go through post-importation testing. And now we have kind of a bottlenecking post-importation testing because it's not coming through on a smooth or regular basis. We effectively are having to do more at one time than what we would expect to do. So the problems certainly haven't remedied themselves. In January, we were running a back order of about ZAR 70 million on the 2 products that I referred to. It hasn't really come down significantly now as we move towards the end of February. So I would be thinking that we'd probably need about another 4 weeks to get over that problem. Our mitigation strategy is to gear up our Wadeville facility to manufacture some of those products. So we've done test batches at Wadeville. We are now busy with validation batches. And the 3 products we're going to be manufacturing there are Adco-Dol, Genpayne and Myprodol. And we won't do full production, or full demand production at the factory here. We will just make sure that we do enough to cover any potential supply chain problems that come our way out of India.

There's a follow-up question from Grant. If we can give an indication of the extent to which we feel we would be able to put through the SEP increase for 2024, and he asked specifically by division, and particularly OTC and Prescription.

Yes. So look, I think for the first time in a long while, the industry was relatively happy with the increase that we got. I mean it doesn't cover the full extent of the cost increases, but it's a long way from where we've come. We've taken the full price increase across our basket in both of the divisions that you referred to. And what we do find is it tends to stick in the branded portfolio where it's almost impossible for pharmacists to substitute the product. I'm talking about products there like Synaleve, one of our painkillers; STRESAM, one of our anxiety drugs; Advantan, one of our corticosteroids. So generally, when doctors write those products, they can't be substituted because there aren't substitutes available. In the generic portfolio, what we find is those prices just keep coming back over time in any event. So the likelihood is that the SEP price increase only sticks about 50% when you look at the generic portfolio. What is interesting, if you look at our IQVIA data and you look at the last 12 months data, which effectively should have had an SEP price increase of the 3-odd percent, plus the 1.7%. So let's call it, in round number, 6% if you're doing a bit of compounding. Only -- the price increase in the entire market for the last 12 months is only 1.9%. So that kind of gives you an indication of exactly how much price does stick relative to what SEP is. And then in our OTC business, you can see in this last period, the total price realisation there of about 7%. So on those branded products, we're tending to find that SEP is holding, and we're still getting good consumer loyalty in that part of the business.

Also a follow-up question from Tumi. The Level 2 [ B-BBEE ] status, will this impact potential future ARV tender awards by government?

Tumi, look, our [ B-BBEE ] status is important to us because we believe that -- particularly in what it contributes back to society. So we focus on preferential procurement and we focus on enterprise and supply development because those are the 2 areas where we can really affect the communities around us. If you look at the scoring system though for ARV tenders, a very small portion is allocated to your [ B-BBEE ] status. I think about 90% of the allocation of ARV tenders, in fact, is price. And that's why we are frankly now a smaller player in the ARV tender than we were 1 year ago. So we don't think it will make any particularly big difference, but we do believe that it's important for the company to maintain that level of accreditation.

We have a question from Charles Boles from Titanium Capital. He asks, can we please update him on the regulations controls regarding codeine? And do we see any further impacts in the future?

Charles, thanks. I'm assuming you're talking about just our South African markets, are unrelated to this permit issue in India, but if I'm wrong, you can correct me afterwards. Effectively, what's happened here with codeine is, the scheduling status of codeine is being reviewed by SAHPRA, and it's now a number of years. I can't remember exactly when the review started, but it certainly is pre-COVID. So we're talking a long time. The latest bit of information SAHPRA requested from people who sell codeine-containing medicines was to support the efficacy and safety of the use of codeine in the population under the age of 12 years because it seems like they believe there may be a safety risk there. In any event, we've submitted all our data. We do what I call post-marketing reviews in terms of reports we get on our pharmacovigilance database. And we've seen no safety problems in that part of the population and submitted that information to SAHPRA. Of course, the ultimate decision on any scheduling status lies with the regulator. We did notice this week, in fact, that what the U.K. authority has done, it's called the [ MHRAs ], they've removed codeine-containing syrups from OTC or pharmacy only to prescription only. So it would appear that there is a focus, particularly on the syrups in that regard. And I guess there's a possibility that SAHPRA might have a similar view. If syrups were up scheduled in South Africa, it's really not a big deal in our life. We have BronCleer with codeine, which is quite a big product for us, but it's really had a pretty thin margin. So if that got up scheduled, we wouldn't really have any difficulty with that at all. Of course, on the oral solid dosage forms like Adco-Dol and Myprodol and Genpayne on the like -- and the like, we would think those things should stay at schedule too because effectively, that improves access to painkillers, particularly in a market like ours where people can't traditionally access health care facilities. So that's kind of what we would hope would happen.

Thank you, Andy. So there are no further questions on the webcast. So I'll hand back to Chris to -- and thank you very much for joining us today.

Thanks, everybody. We appreciate it.

Thank you very much. Ladies and gentlemen, that concludes today's event, and you may now disconnect your lines.