AFT Pharmaceuticals Limited ($AFT)

Thank you for standing by, and welcome to the AFT Pharmaceuticals FY '26 Full Year Results Analyst Briefing. [Operator Instructions] And finally, I would like to advise all participants that this call is being recorded. I'd now like to welcome Hartley Atkinson, CEO, to begin the conference. Hartley, over to you.

Great. Thank you very much. So look, welcome, everyone. What we'll do is go through the investor presentation, and I will go through it and mention the page numbers just so we can keep track. So obviously, there is the disclaimer on Page 2, so please be aware of the details in that notice. And then clicking on to Page 3. Yes, look, this is just quickly a summary of generally the business, what we're doing. So just reaffirming our $300 million revenue target. We sort of can see good growth this last year, and that target is well and truly now in sight. So we managed to get to $254.7 million, up 22%, which is about a 17.6% 5-year CAGR. Operating profit was slightly ahead of guidance at $24.4 million. Pleased also to have an increased dividend and to reaffirm that growth target. Now other important parts I'm looking at is on the top right. So certainly, expanding our global footprint is kind of a really key target that we're focusing on and takes quite a lot of work. So we are working hard on those different areas, Europe, North America and also South Africa as well. And then going down on to the boxes below. Active, the R&D pipeline is something we're also doing a huge amount of work on. So at the moment, we have a pipeline which we look at in more detail, a number of patented products. We also do have some off-patented products. And then to tie in some IP into that, we've also got a fridge-free project, which will be IP-related projects. Instead having to store them under refrigerated conditions, you'll be able to -- you won't have to store them in the fridge. And that is actually quite significant and well recognized by various customers around the globe. And then on the right, we are also commercializing some of our R&D presently, which is also important to start to get the money flowing in from that to help also fund the ongoing R&D. And we did do 9 licensing agreements we closed during this financial year. And we do have a significant number that are currently under negotiation, and we have about 7 R&D projects we're working on commercializing. And basically, also importantly, in that bottom box, we do currently have sales have started in 87 countries around the globe. So flicking on to the next page, which is Page #4. Look, we just want to put this sort of slide in because you can see that over the years, we have had growth literally every single year, year after year after year. And in fact, the current 17.6% 5-year CAGR is not much different from our overall 20-year 17% CAGR. And if we can keep up that sort of growth, then the sales will roughly double, as I'm sure you can work out every -- between every 4 and 5 years, sort of 4-point-something years. So that's an important thing. We are a business that's working on growing, and that's all part of it. So that's Page #4. And moving on to Page #5, investments in growth to drive this long-term value. Yes, look, we have been investing pretty heavily actually. But what we're pleased though, as well as investing heavily, we are able to report a record profit on top of that. So it's not just all about investing. We are getting operating leverage, which we can show you later on in the financial pages. And we have got, as we mentioned, operating profit of $24.4 million, EBITDA of $28.8 million. That's enabled us to report a record dividend. So we're able to increase our dividend, which is also very pleasing. But certainly, look, there's a fair amount of money being put into R&D. And we also got a profit forecast this year of between $28 million to $32 million. I mean, looking at that graph on the right, what you can see, obviously, from the picture is, look, the profit has been relatively flat, going sort of up and down over the last 4 years despite a large increase in sales. We obviously are acutely aware of that. I mean, the main driver behind that was -- there is a lot of investment in these new business hubs or affiliates or whatever you want to call them. And they're not really yet profitable. So -- but we've got the stage now that we've got the leverage that we see as our sales increase, the profit will increase along with it. So that's really a kind of key part there. So flicking on to the next Slide #6, Australia. Yes, look, pleasing, we had ongoing strong momentum in our largest market. I often say to people, hey, look, to be honest, we are an Australian company that happens to have its office in Takapuna. So we are very focused on that market. We have a lot of boots on the ground in Australia. And great to get revenue growth of 19%, and also similar increase in operating profit as well. New product launches are helping, but we are also getting sustained growth from our existing products as well. But look, we do see there's ongoing opportunities in the Australian market, and that's really what we're focused on to keep on growing and taking advantage of what is our largest market. Clicking on to Page #7, New Zealand. Yes, look, we're actually very pleased. We've got double-digit growth, up 11% in sales revenue. Operating profit was up 7%. New Zealand market, we read a lot about it in the papers. To be honest, and try and ignore it about negative things, but we're pleased. We ignored that and just sort of really knuckled down and got on with things and able to grow revenue by 11%. So pretty important part of that business. And we're carrying on to get good results there and certainly want to keep on growing our New Zealand business. So that was Page #7. And moving on to Page #8 for Asia. Yes, look, pleasing. Revenue was up 41%, which is reasonable growth, to $15.6 million. Operating profit was better, up 111%. Yes, we did have -- I don't want to dwell on it. We did have a few things we talked about last year with particular disruptions. And as you can see, very much in line with what we said last year, that's well and truly resolved. And you can see the upward lift, and we'll certainly work on carrying that on. There is basically growth across Asia, but also some new launches into some new parts of Asia being Thailand and Taiwan. So that will sort of help as we can start to establish those markets, which will still take time. Certainly, obviously, the largest market is China. And that will take time, but getting good growing results with our cross-border e-commerce and getting some slow but steady progress internally within China. So then going on to Page #9. This is our global map of our business. You can see the red dots in the circles where we have our offices, New Zealand, Sydney and Australia, Singapore and Malaysia, then up in Hong Kong. So Hong Kong effectively is the headquarters of our Asia business, and we have a manager up there who coordinates all the Asia business. Then in South Africa, in Cape Town, we have our office there. Quite a lot of work has gone into that. We acquired a number, about 14 product licenses from an existing player in South Africa. And that's taken a good kind of 3 or 4 months going into the back end of last year to integrate that, a lot of work went into that. We've also got a CEO who is very experienced who's helping us run that. There's a stock control person. There's a part-time finance person. So -- and then we've got a couple of rig -- we had 1 rig person. We've had to increase that to 2 rig people now for the South African market, which we see going forward has some good growth potential. And then going across to North America, we have a small kind of office in Detroit. Originally, that was to help kind of run our American licensees, but that is starting to morph where we're more involved in our Combogesic tablet launch now where we're basically running the whole thing in conjunction with one American partner called [ Lexo ]. And then also, we have our OTC products. So more work is slowly building into the U.S. office. Then in Canada, in Toronto, that's our Canadian office. We have a number of launches underway at the moment and over this financial year. So a lot of work is going to Canada. And then across to Europe as well, we have ongoing work in the U.K. as well with launches across this year in the U.K. And then also, we have a little sort of satellite office in Ireland that's really just to coordinate our EU business. We do have a fair chunk of business in the EU, and it's starting to grow kind of nicely. So that's certainly something that's important. Countries in yellow is where we are selling. Countries in blue is where we have agreements. White is where we're either not going to or it's still in progress. The key one probably is Japan. We've done a lot of work on that and would hope to get an agreement -- a firm agreement there. We do have an option agreement, but we're keen to get a firm agreement and turn Japan to blue, maybe even yellow quite quickly. Turning the page to Page #10. You can see last year, we still had that dip. But this year is more respectable with $28.5 million overall, including licensing income, but overall sales were $25.5 million. Potentially, that actually could have been larger. We had a number of shipments delayed right at the close of the year due to various geopolitical things. But look, always going to be some unders and overs. But overall, that was -- we saw that as a pleasing solid result. But really, we're very focused this number. We're wanting to significantly increase this over the next few years. So really, growth is what it's all about for the International division. So we've added a few places. Egypt is actually certainly quite a reasonable market. A lot of people live in Egypt. So that's been added. Taiwan, as I mentioned before, as part of Asia. License income was up a wee bit. Do see license income sort of consistent around that number. But potentially, some of the larger R&D projects come into line that can increase costs significantly over time. So that's at Page #10. Clicking on to Page 11. Just a bit of kind of rough detail here about what's happening in the U.K., this work with Combogesic, expanding the product range is an important thing. And look, we were -- we had thought we could break even towards the end of last year. We didn't, but we see we can break even this financial year in the U.K. South Africa, as I mentioned, we've got those 14 new products and the existing staff. Last year, we didn't make a profit in South Africa, so that was a drag. But this year, we would expect to make positive earnings in the South African market this year. Canada, we've got some launches, as I mentioned. Big contract field force is helping us as well. We don't think we'll make money in Canada this year. Maybe we will, but we're not planning on it at this stage. So that will be a drag. But you can see the first 2 were loss-making and so is Canada, but at least we're turning 2 of those around. It's just the timing and the volume of products. And that's something that we're quite used to, having gone to different markets over the years. Page 11, so going to Page #12. United States, this is, as you know, the largest pharma market in the world. It's tricky in terms of -- there's a lot of detail and a lot of local key points that are not necessarily the same as everywhere else in the world. So we're doing a lot of work on the United States. Very difficult to put a very -- any sort of firm forecast on a market like the U.S. So to be honest with you, it's kind of a variable, really. But we're used to this sort of thing where we go in there almost with a blank sheet of paper, we fill in all the bits and then we start to roll them out. And that's literally what we're doing. So that's the U.S. And the big thing there, actually, sorry, just to dwell on it, the big thing there is the Combogesic Rapid launch is only really occurring now. So it was delayed and didn't picture in last year. So that's a big project. We're focused on the water landing and will be released into the market in July. And most of the launch activities will be in September, which will correspond with Pain Week, which is a big thing in the U.S. So it's a good time to launch in September. So Europe, as I mentioned, last year, we did have to take over a product acquisition from a defunct bankrupt German company. And those products, we're just working on getting them out to various partners. That has got a little bit slower than we planned, mainly because regulators have a knack sometimes, even ones that are very predictable have a knack of going slow. And they have, to be honest. So some of that's gone maybe 6 or 8 months slower than we anticipated, but they are rolling out this year where they should ideally be rolled out at the end of the last financial year. Hong Kong, we've got a lot of work in Hong Kong, a big pipeline of products, a lot of registrations now in place, and we're starting to work on growing that. Singapore is a work in progress. We've expanded our business into the private hospital market, which is actually going well. Government, we work a lot with the Singaporean health authorities. That's gone very well. So we have got a pipeline of products, and Singapore is a very solid market for us at the moment. So that's Page #12. Going on to Page #13. So yes, this is some of our existing R&D that's starting to come to market. So our intravenous iron product is actually still R&D, but we did do a licensing agreement into China with kind of the fourth largest pharma company in China. The reason -- specific reason for that was that you really -- as an outsider, you can't really run the whole development program for China without a Chinese partner. So that was a deliberate step to get Grand Life Sciences involved. So that's underway presently. So Maxigesic orals, Maxigesic IV, talked a lot about those in the past. But look, they are still underway, and we're doing pediatric studies at the moment which will help to expand certainly the IV indication, which is actually quite important. So that's that. Hospital injectables, we mentioned we started that project Sinoject. And look, we've got the first dossier filings that have started. There's about 5 of them to be filed or have been filed or will be filed this financial year, and we have got some licensing agreements starting with that. Crystaderm, Micolette, Kiwisoothe, Capsaicin are all underway, and we're having agreements with those. Pascomer, have an orphan indication. Some licensing happened last year, and it's also underway now. And the dossier is filed in a number of key jurisdictions. So registration for that, we would hope is not too far away. Amongst all this too, though, we have also got some quite significant projects, local -- specific local projects. A couple of them as examples, we will be planning to file this year. And they're like significant, greater than AUD 50 million kind of markets, and we see those as really helping our Australian business once they finally get registered in Australia. Then clicking on to Page #14. Here is our current R&D pipeline. Probably, this is about it in terms of adding things because we've really got quite a lot to digest. Certainly, we see it as a very valuable part of our business. I've mentioned the people, we've done a lot of work on valuation things, and we do see as a valuation in excess of USD 1 billion. And we have the hospital injectables, the Sinoject projects we talked about just before. Then we have the fridge-free project we're doing with our partner in the U.K., Stablepharma. And there's about 5 products in Phase I, then another 9 products in Phase II, and they cover a market of in excess of USD 6 billion. The first 2 or 3 projects are presently underway, and we're looking to start another one as well to add that in. Got a migraine project, which is part of Sinoject, and that's -- we aim to file that next year. Pascomer Port Wine Stain, this is actually advancing. It's in Phase II at the moment, clinical studies in Spain and in Texas and the United States as well. So this is underway and actually a very nice project. One of the probably biggest parts of our portfolio in terms of valuation is the iron injectable. It's a new chemical entity. We finished the first Phase III study, which is actually very positive, showed a number of advantages over the existing market leader. Basically, it's so well tolerated, you can give it as one dose for everyone, which is not the case with other iron injections. So yes, that is pretty significant. And that's really what ties the key proposition for the fact that it doesn't impact a number of parameters, which are a concern otherwise with injectable iron products where they actually are relatively toxic. And our product didn't have a lot of those features like affecting plasma phosphate levels and things like that and also being able to give it once. And like one of the other results, for example, was with existing market leader product, it had about a 29% incidence of administration side effects, where ours had a 2% incidence of administration side effects. So we've got a big job there. We've got our final study where what we're doing is just looking across different ethnicities so that we can register it globally. Sort of easy to say, but actually quite tricky to execute. We've had quite a lot of meetings in Tokyo, for example, with the PMDA to tie the Japanese in. So we've got a clinical study that we're planning to start in September, about 1,366 patients. And it would have study sites in New Zealand, in India, in China, in Japan, in the United States and in Europe. So that's a big project. Then antibiotic eye drop as well, which we are going to FDA soon to open our IND. And by opening IND, mean then we run our human clinical studies. So that's quite always a very important endpoint, opening the IND. Strawberry birthmarks for babies with basically strawberry birthmarks on them, a topical treatment. Done a lot of progress on that and also working on getting our IND submission started next year. Keloid scars as well, that's still early phase. Burning mouth is early phase. We've just licensed actually, which hasn't been announced anywhere yet, but we've just announced -- we just licensed, rather, a novel injectable formulation from Massey Ventures, who we've got partnerships with another couple of projects, really keen to extend our partnership with Massey. They're great people to work with. And basically, it is a decent sized market with an estimate of between $3 billion and $3.7 billion category by 2032 to 2034. So this is a really exciting project, albeit at an early stage. The NasoSURF is still continuing at the moment, and it's probably the last one. So that's our R&D pipeline. And then I will hand over to our current CFO, Malcolm Tubby.

Thank you, Hartley. Yes, so Slide 15, the P&L. So revenues up 22% to just over $250 million. Gross profit increase is around about the same, a little bit less, 21%, a little bit of a drop in the margin. So there's a bit of currency in there, primarily the euro in the last year, and then the other bits, product mix. Operating expenses are reducing as we get our leverage going down to 33.8% from 35.6%. And that does include the R&D spend that we expense. So that gives us an operating -- record operating profit of $24.4 million, up from $17.6 million last year. Taxation, now we are -- we're fully imputed now, so the dividend gets full imputation. So that leaves us net profit after tax of $14 million. If we move on to the balance sheet, we can see we've been increasing our working capital, as you'd expect, in line with the revenue growth. Inventory, we have pushed that forward up to about 5 months at the minute. That includes the products we've purchased for South Africa. Plus with the uncertainty at the minute, we thought it would be more prudent to move those levels up. Plus, we've got -- we're building stock for the new launches. And we're happy to stay at 5 months for now. We'll see when everything settles down, we can start pulling it back down as we're able to. Debt has grew as well in line with revenue. Part of that revenue growth coming from international. And typically, we see longer debtor days, normally about 60 days for those international customers, primarily because they're buying bigger amounts of stock each time. It's not weekly orders we're supplying like it is for Australia and New Zealand. The ERP project did produce a little bit of a glitch for us in debtors. So we -- where there's a little bit of money we're still looking to collect from the debtors. Apart from that, we're very pleased with the ERP transition, which we did on the 1st of October through to NetSuite. So equity down the bottom there, up to over $100 million now, $109 million. And then if we go to Slide 17, cash flow. So the outflow there from operating activities as we build up our working capital. The investing activities primarily are the intangibles and then the net cash, which is the increase in the debt. And sorry, just -- I should have mentioned on the balance sheet, we put a new facility in place with the BNZ of $50 million. So that's a 3-year term that we did in December. So that's the cash flow, and I'll pass you back to Hartley to the outlook.

Yes. Thanks, Malcolm. Just the last slide being #18. Yes, look, the outlook, really, the summary is we're positioned to drive that future growth in both revenue and earnings. So we've talked a lot about investment, but we are also looking to increase our sales, revenue and earnings in parallel. So basically, we're focused this year on pushing our -- towards our revenue goal of at least $300 million sales. And backing this up is going to be ongoing expansion in our Australasian markets. So we're working on that. Then there is a strong program of new launches across the international business hubs. And really also sort of mentioned before, it's those hubs starting to make a contribution or pay their way or however you want to word it with U.K. and South Africa, looking for that to make a positive contribution to earnings this year. Canada and the U.S., I don't want to say yet. We're not sure, to be frank, exactly, but that will follow. Even if it's not achieved this year, that will follow. And obviously, then that sort of really helps the overall profitability. Continued progress in R&D and regulatory milestones. This is very important. A lot of work is going into R&D with that large clinical study, but that's not the only clinical study. We're kicking off the pediatric ones, as I mentioned, but then got a number of other very interesting and valuable R&D projects. We really are wanting to make sure we realize the value and monetize the R&D pipeline. And the good thing is we're able to do that without raising capital. With a lot of investment, we're not running off to raise capital. We're funding all of this out of existing profits. So then we've also got an active licensing program. So that continues as well to monetize our IP. It's important too because it helps to pay and offset that R&D spend. So yes, look, as I said, we're going to make significant investments this financial year, and we're aiming for that operating profit between $28 million to $32 million. So that's kind of hopefully a reasonable overview of both the results and looking forward as well. So I'm happy to try and answer any of your questions.

[Operator Instructions] And your first question is from the line of Ben Crozier of Forsyth Barr.

Well done on a very solid result. First question for me just on Australian margins. I think you put a comment in there that you see opportunities to improve the operating leverage in that Australian business over time. I think margins have been around -- EBIT margins around 20% in the last couple of years. Do you have a sort of target in mind? Presumably not going to be immediate because as you say, there's still exciting growth opportunities in there. But do we think margins can go to sort of 21%, 22% or up to 25%? Just any idea of how much operating leverage you can get out of this business as it grows?

Yes. We see -- over time, we do see we can get further improvements out of it. I guess the one provider is like if we see a really good opportunity there, we would take it. So if we see something going particularly strong as a new launch, we would put more money behind it. But yes, we see we can get more leverage going forward in -- particularly in Australia.

And then maybe just on the revenue growth. I think to get to $300 million, there's another 20% revenue growth, which as you say, is not too dissimilar to what you've done historically. But can you give a bit of a color on sort of what the portfolio did and sort of existing portfolio growth this year versus new product growth and sort of the contribution between the two of them?

Yes. So overall, it is -- the underlying products still continue to grow. The -- for Australasia, there's around about a total of about $6 million that came out of products we've launched of that $6 million growth from the products we've launched in the last 3 years.

Yes. That's pretty encouraging underlying growth, then. And then maybe just last one on this net debt or the working capital swing. How much of it was inventory purchased within that acquisition in South Africa versus the move to 5 months, just so we can get an idea of when you drop back to your previous inventory levels, how much could unwind?

Yes, it was around -- it was just over $3 million of product that we bought from the other party. And then we've done some extra ordering ourselves. So probably allow $4 million to $5 million for South Africa in total.

Yes. And then the rest of it, you just kind of keep at this 5-month ordering while the uncertainty is still out there in the market. And then once that resolves and you have more confidence in the supply chain, that's when you bring it down. Is that the plan?

Yes, then we'll bring it back down. It depends on what the product is, but that's an overall number. And then you do have a little bit of a buildup when you're launching in those new products into Australasia. Or new markets like the U.K. and the U.S., you will buy more stock up for the launch. So typically, you'll go to a good 6 months. And when you get into those big markets, that's going to be even harder to make sure that you have got the right inventory levels.

Your next question is from the line of Joeri Sels of JS Alpha.

I have two questions. First one is on CapEx, please. You spent roughly $10 million last year. Can you give us your -- the estimate for this year, please?

The estimate for this year will be probably -- we've got it at around $10 million on the basis that a fair amount of the R&D this year will need to be expensed.

Yes. Okay. So roughly unchanged. Second question is around Australia. I noticed that when you compare the first to the second half year, growth softened significantly, I think, from 30% to 10%. Can you elaborate a little bit more, is this due to basis effect or maturization? Or what's behind that, please?

Yes, it was a particularly strong first half, as you say, 30%. So there may have been a little bit of spillover potentially into the second half from that. But overall, we've seen a 20% growth. So it's a little bit tricky when you try and do the 2 halves, particularly for Australia because the second half has got -- is the summer months, and you will sell more OTC in the second half typically.

Yes. And please, staying in Australia, when, again, I compare these 2 halves. So you've added roughly $8 million revenues from half year 1 to half year 2, and the EBIT remained flat. So can you remind us if there's a bit of seasonality in the costs of Australia? Or is there -- was there simply a lack of operational leverage?

Historically, it's more profitable in the second half.

Your next question is from the line of Adrian Allbon of Jarden.

Maybe first one for Malcolm, actually. Just on your opening guidance and given that the net debt did tick up quite a bit and you just put the new facility in place, are you expecting your net debt to move down on a '27 view?

Yes. Yes, we are.

Okay. All right. that's good. I just want to -- and that's mostly a normalization of inventory? And a lift up in profit have been the two drivers?

Yes.

Okay. That's good. Then maybe the next one is for Hartley. Just in terms of the International segment and noting that's still sort of generating losses, like what sort of level of revenues do you need to sort of break even there? Like because obviously, like as you sort of scale, you then introduce -- you look at -- you're constantly looking at introducing new markets.

Yes. I mean, the main driver of losses there is more of the fact we're booking the R&D against it, to be honest. So it's a matter of where you book the R&D against. So it's still washing its face reasonably well if you take that out. So I mean -- but it is true. Like I said, if you look at the international divisions, the U.S., Canada, U.K., South Africa, we're losing money, but then that's already swinging around this year. We see two of them making money, so basically the U.K. and South Africa making money. The other ones that we're not 100% sure about, we're budgeting for a loss. But if things went very well with something, then we could turn that around. But yes, look, it just takes -- it takes a good 3 or 4 years, really, to be honest, to flick it around to get the scale. And we've done it before, same we did in Australia. That took a good 4 years or so, I think, to turn it around. So yes, it is about 3 or 4 years, really.

Okay. That's helpful. Just on the R&D, in terms of like what -- can you give us a sort of an estimate of what you're sort of planning to spend on R&D in '27? Clearly, you've spent a bit of time on -- in the presentation going through the actual -- the width and the depth of the pipeline.

Yes, basically $25 million cash.

Total cash.

Yes, $25 million cash. So that's increased, like we've gone from $15 million to $18 million to $25 million. So there is a bit of an increase as those projects are kind of bigger and some bigger studies, but that's also -- there's more value to be created out of it as well.

And would you anticipate to split that sort of 50-50 or -- between expense and capitalized?

We think it's probably about $15 million expense, $10 million capital.

Okay. $15 million expense, $10 million capital. And just I guess the other point, just in terms of -- like as you sort of start the presentation, like you've now got stronger line of sight on the $300 million. Just in terms of that bridge for us, how much of the sort of the $50 million is sort of the ANZ bucket in terms of how you're thinking about it? In terms of growth?

Yes. Malcolm has that number somewhere. It is mixed, though. It isn't all in one place. There's quite a lot has to come from international as well. I mean South Africa, having that acquisition does sort of help as well kick that off. Malcolm, you've got the exact number here, but roughly?

Yes. So it's where you expect, as you said, Australia, and then good growth, Rest of the World. They're the two leaders, supported by New Zealand and Asia.

Just in terms of, I guess, as we think about -- and this might be the wrong terms, but in terms of your base business, which is sort of like the home markets of Australia and New Zealand, are you able to sort of give us a sense of how much of the $50 million bridge is from those two? Versus Rest of World and International?

Yes. I can do it as percentages, it's probably easier. So Australia, again, around -- we had 19% this year, so late teens next year. New Zealand should be able to hold on to around its 11% growth. Then another significant step-up for the Rest of the World and a slightly smaller step-up for Asia in percentages. If you apply those, you'll get 15%, yes.

[Operator Instructions] And your next question is from the line of [ Mark Topy ] of Research as a Service.

Just a couple of questions, if I could. Just to go back to Australia and what's happening in the pharma market over here. Can you just maybe -- sort of observation here is that maybe Chemist Warehouse is kind of stalling in terms of its growth and the independents are picking up more share and even some of the supermarkets like Coles. So I'm just wondering about the mix of products and whether you see perhaps more opportunity with some of the independent pharmacists who are providing -- they're fighting back and providing more service sort of a proposition as opposed to Chemist Warehouse?

Yes. Look, that's a good big picture point. I mean, what we're careful about is we do have a good number of boots on the ground. So we have 25 pharmacy reps in Australia. And I think it's about 10 or 11 merchandisers and then key account managers. So certainly, we see it as really important to kind of cover everywhere and exactly as you've alluded to. And also, some categories anyway do differ. Like for instance, if it's vitamins and kind of skin care, Chemist Warehouse has always proportionately been bigger. But then other things like, say, pain category and things where people want to talk to their pharmacists will get some advice has been bigger with some of the independents or the groups, say like TerryWhite. I mean, we're just very careful, to be honest, to work with everyone across the market. Like we've seen in some places, companies pull back on their sales force and then do more focusing on key account management and reduce the number of boots on the ground. We've purposely not done that because we still want to make sure we engage closely with all of the market, including all of the independent pharmacies wherever they are. If they are in Broken Hill or wherever, we still want to see them.

Sure, sure. But certainly, the supermarkets like Coles seem to be picking up share in that space as well. So would that include Coles in your kind of thinking?

Yes. Look, we are also -- we only expanded to supermarkets in Australia, from memory, about a couple of years ago. I've had quite long experience in the New Zealand market. So certainly, going forward -- and it's been happening, we do want to make sure we also work with the supermarkets as well. Australia is a little bit more limited in terms of product offering. In some ways, the New Zealand regulatory systems are a bit more lenient or flexible in a wider range of products in supermarket. But yes, look, supermarket, you can't ignore it. It's an important outlet for customers. So we certainly work with them as well.

Very good. And then just secondly, just on the supply chain. I guess there's a lot of pressure on sort of costs and coming into. Do you -- have you seen any sort of cost pressures from your supply chain, your ingredients coming from offshore?

Yes. Look, we've seen some, had some discussions with people as well. It's interesting. We're seeing a lot less out of China. And I know when I go to China, spent 2 weeks there recently, I looked at them and said, come on, what do you think? And they just looked at me and said it's going to make no difference. Whereas in other jurisdictions, Europe, I think there's been some increases. And certainly, India and places, they have, China is less so. So we have had a little bit of price stuff, but it's mainly been out of Europe and India, whereas China, to be honest, hasn't seemed to make any difference at all yet.

Right, right. And then just lastly, I suppose, a more kind of generalized question. But with the growth and expansion, you talked about South Africa and other regions. Can you talk to how you see the management structure of the company sort of growing from this point in terms of accommodating and being able to manage some of these offshore businesses, including sort of the risks associated with some of these offshore businesses?

Yes. That's a good question. I mean, look, we have chosen our areas pretty carefully that they're predominantly run on the old Anglo-Saxon/British kind of regulatory system, maybe with the exception of the United States, where it's much easier because the same regulatory dossier is handled in all those territories. So effectively, we're pretty much able to manage all the regulatory work from our head office in New Zealand. The only exception we made was South Africa. We have a couple of people there, but they're working closely with our head office team. And then we do have CEOs or managing directors in each of those territories. We see it as pretty important. And we've -- I don't know where we've heard it from other people I know that have globalized their business. It's actually quite important to hire a heavy hitter. You don't hire some young junior because basically, you really need people that know people. Our problem in the market is we don't know everyone. Just the same in the U.S., where our guy kind of knows everyone, including even people like Mark Cuban, who's a bit of a legend in the U.S. And same in Canada. So it's quite important to get that senior person. And then we're sort of slowly building infrastructure and things like sales force and marketing into each of those offices. In the U.K., we just hired a senior marketing manager there who can help us with Canada and that sort of time zone. So really, it's still run from our head office, but we have certain bits of it that's more and more being taken over by the local people in terms of running the day-to-day sales teams.

Great. That's kind of what I was getting at, how it's going to evolve over time.

And this does conclude our Q&A session, and I'd like to turn the call back over to Hartley and Malcolm for closing remarks.

Great. Now, look, thank you very much, everyone, for your attention and interest. And just to reiterate that we're really pleased our teams worked real hard and continues to work hard. And great that we could get record sales, record earnings, record investments and a record dividend. So thank you very much for your support and interest.

This concludes today's conference call. Thank you all for joining us. You may now disconnect.