Aspen Pharmacare Holdings Limited (APN) Earnings Call Transcript & Summary

Good morning, everyone. Thank you very much for your attendance today. Very interesting set of results, I think. You have pretty good picture on sort of a global stage. I mean, Aspen is probably South Africa's most global company. So we have all the impacts, tailwinds, headwinds, whatever is happening in the global economy. And as you guys always teach me, it's always good to have diversity, and then you have some offsets and something knocks off this, and if China doesn't work so well, well then Russia might do better, et cetera, et cetera. And there's always some geographic offsets because you have that diversity. However, I must tell you this last year has been 1 with no offsets at all. There have been problems all around the world, which we're experiencing here in South Africa in our own way. But it's amazing how 1 year can change things. I remember, and I'm looking at some of you in the room today, who -- we had really good results this time last year, but we had a very bleak outlook, and we were really concerned about the macroeconomic environment. There was so much uncertainty and so we weren't -- we were sure only of 1 thing, that a storm was coming. Just the extent of what storm was coming was what we were unsure of. And I mean, I suppose it felt a bit like being a fly-half stuck in a permanent scrum, but that's what the last year felt like. But that said, I'm happy to report that contrary to expectations, the sun did come up every day. We did have solar. So it grafted a bit for us. And fortunately, we've got a much better sense of what the storm looks like and our ability to manage that storm. And I'm happy to say that we have -- with that knowledge, which we were unsure of some time back -- with that knowledge, we have a very strong guidance for the second half and for the period ahead for Aspen. I think what you see now, unlike last year, you'll see the results reflect the effects of that storm and our ability to manage that storm and a very strong outlook. And I'm hoping that when I sit and talk to you this time next year, we have the best of both worlds. So a good outlook with the continuation of very good prospects. So with that, I'm going to shoot into the presentation. And I think just 1 thing that you should be looking at for when there's hundreds of things you're going to see in here. But if I were looking for 1 theme in Aspen, I would be looking to say -- for those of you that follow our business, we got a commercial pharma business, it's a bit of a cash card machine. And if you buy a product, you get an immediate return. So it's a pretty simple business to understand. The manufacturing business is a different business in that -- and you've seen with COVID -- COVID, let's be candid about it. The COVID vaccine from a pretty commercial point of view was a lemon from an Aspen perspective. But we saw quite quickly how positively it can influence results. And so it's really about how you turn the lemon into lemonade. And so filling that manufacturing business takes time, but your returns are much higher than you'd ever get in commercial pharma, and you have great cash flows that follow it. So very important for us is -- I mean, like any business, it's about returns. Take your capital, where do I get to return. Some are quicker, some are longer. The longer ones, if you get them right, give you a much higher return in time. And we poised at the moment there, and we'll talk a bit about that during the presentation. But that's just the 1 takeaway out of here in our model, then I think it's a good takeaway to have. So let's talk about the trading environment that I talked about earlier. Well, this time last year -- the results of last year, there was war in Russia. And you all knew the consequences of that war globally. You're seeing it everywhere. We've had inflation, and we'll speak a bit about inflation impacts on Aspen. And we had business interruption. We had a big business in Russia that did, at this stage last year, I think, about ZAR 500 million for the half, and it must be down at least 60% shown in this period. What was unexpected was China had complete lockdown for COVID. And remember, Aspen has a lot of hospital products. So you lockdown hospitals, our products aren't sold. And our products are often in big cities and people were scared to travel. A lot of people come from rural areas to hospitals. They were scared to travel because they could just be locked out on the day. I mean, literally, when you were in Disney, you got locked down in Disney. We had COVID revenue in last year's numbers. And there was some uncertainty going forward, but it wasn't in the numbers. And then we made a divestment of some generic products, commodity generic products in South Africa, which, of course, will affect turnover, revenues, profits, but also it's a reason your interest line is low, it's because you receive cash for it. So that's the environment that we face. But positively, there were some very important movements in the global economy, which have been very strong for Aspen. The key ones are there's big demand for prefilled syringe production to support innovative products. Aspen must have, probably globally, for third-party manufacturers, 1 of the biggest, if not the largest capacity available immediately for prefilled syringe production. And I'll speak to you about that in a little more detail later. The COVID vaccine for all its ills to the income statement, the commitment to African manufacturer, Aspen put African vaccine manufacturing on the map. No one can ignore Africa or African manufacturing, and I'll talk to you a little bit about how procurement policies are changing and have changed to accommodate African manufacturer. Then the last 2 points are linked. It's really about what multinationals are doing. If you look at all Aspen businesses over the years, it's how we've worked well with multinationals. Many of the transactions for you that follow us will see that those transactions involve either buying a manufacturing plant and then buying plants. There's always a link to our manufacturer and sometimes our commercial footprint. And we've got a resilient and effective sales footprint. So in the geographies we're in, many people are pulling out. They're saying, "Look, we'll give you a distribution license. We don't want to be in those markets. Our products are $100,000 a patient that don't work in emerging markets." A lot of them oncology products, for example. Also, as a result, they're also selling products and product ranges as well. And all of those, when there's a bit of fluidity, assets moving around, represents opportunities for Aspen. So testing environment, but some positive developments. Out of every storm, there's something that comes out of it and there were some good developments for us there. I'm going to talk -- normally, Sean speaks, I'm going to talk about performance now and do the performance review. Sean will talk to you about the financial numbers. So at least I give some context, and then I'll come back and talk about outlook. We did guide H1, and I think our H1 is in line with guidance, and we've had a pretty good commercial pharma performance in spite of China, Russia and the product divestments. A lot stronger than we guided you. You might remember, I said we had a strong first half last year, a weaker second half because a lot of those tailwinds came into that second half, and we hope to claw back a bit. We clawed back fairly high given the relative impacts that you've seen there, and in H2 we'll continue that momentum. And I think what you will see is a gross margin expansion in Aspen Commercial Pharma. Sean will take you through that. Now if there's 1 result that we're the most proud of in -- yes, it's that we didn't guide this. We guided a declining margin. So we got that wrong, and I'm happy to have got that 1 wrong. And it's not because we didn't have inflationary pressure. We've got massive inflationary pressures. We sit in many geographies that are used to a 0 inflation rate and now they've got inflation. And it's not easy in health care to get price increases. In many instances, these are government controlled and regulated. So that commercial gross margin expansion is something that came with the inflationary pressures. And I think it shows you the brand equity we have and a lot of the work that we've done around our manufacturer to drive costs down and to move from third parties to our own. So it was part of the synergies we had seen in shifting to our own manufacturer. The manufacturing business is a -- carries a significant cost. Unless you're shutting it down, you don't get rid of the costs, particularly in Sterile. So what are your costs. Your cost is your building, you've paid for it. You got your machines in. You've got something called an HVAC. It's like air conditioning. You've got your air conditioning, you can't switch it off. And you've got people on the lines and they're working there and there's no use letting them go because you're busy trying to bring other products on the line. So we have a very high fixed cost base in manufacture. Don't get carried away by gross margin percentages that go up or go down very sharply. It's because the incremental revenue is often just additive -- or subtractive, whatever the word is. So it comes off or it comes down. So it has a very big impact. Volume has a massive impact on gross margins there. We introduced a number of product trials across our facilities, and this is very important for future revenue. We did tell you what we're going to do the last set of results. And here's the dilemma you've got. You've got a line and you've got a product that can do 100, and you say, "Yes, I'd really want to make that, because I'm going to sit here now and talk about my manufacturing. Really, I want it as high as possible." But you got a product that you need to trial for a third party or whatever and it will do 300 in a year or 2 years from now. So you say to yourself, what do I do? So we decided that -- we had a lot of delays during COVID, we decided that we needed to bring these products on now because we needed the future revenue and income. So a lot of our turnover is compromised by bringing non-revenue-generating products on the market now, but it will be incremental to future revenues. And you will see from our discussions that we've advanced numerous contracts, and we've really gone a long way down the road on many of those, and that's only achieved by running those trials successfully. And then we got grants from the Gates Foundation and CEPI, which were really great because there's a big cost in bringing products into your line, not just downtime. There's trials that are run and you take stuff, you throw it away, and you keep running stuff. And they did a great job in negating some of the costs that relate to bringing the serum vaccines into our South African facility. I think given the environment, I thought our operating expenses were kept well under control. It's not easy. People in those environments are not asking for -- the turnover might not be going up, but they're certainly not asking for a 0% salary increase. Probably the area that an analyst might look at and you might look at the 1 area that it's hard for us to call in and probably impact the results more than we ever would have thought or hoped is the earnings not from ForEx losses. Sean will take you through in detail where those came from. Happy to say, I think all of you who have followed us know we've got a particularly competent team in manufacture in South Africa, and they demonstrated not just with COVID, they're now demonstrating it too with the serum vaccines, and we're really hoping to have that -- subject to the regulatory approvals, we expect sales of those products in the H2 of 2024, so the first half of calendar year next year. We've got some transactions to build on our commercial pharma, which I'll talk to you a little bit about later, and I'll talk to you also about the capacity for contracting, which from an Aspen perspective was the most critical internal KPI. In fact, I mentioned in our last presentation, I said, really, we now need to deliver contracts. And that's sort of been the byword or the byline within Aspen. Show us the contracts. We need the contracts, yes. And as I told you earlier, it's a material, sustainable and predictable earnings generator. If we go into the numbers, the numbers are actually very easy to understand, I think, because you've got here a manufacturing business which is down 10%, and that manufacturing business is down affected which you don't have COVID vaccine revenue, and we've made a conscious effort to not bring product -- to bring non-revenue-generating product in this half. And so you'll see our second half is much higher, driven by manufacturing, where we bring those products back on because we've done the trials that we need to do. We've had a very strong delivery out of regional brands. It's a very important part of our business. Obviously, it's nearly half our turnover. A good performance, and we'll go into a little bit into that performance. And the Sterile brand, it's very simple what's happened there. We've had -- the Russian business impacted the Sterile brands, as did the lockdowns in China. The other area to think about is the -- you look at the Reported, we're down 1% in Reported revenue, and we're down 6% in constant exchange and that's really all about the positive exchange rate tailwinds that benefited revenue in this period. I told you we spoke about the divestment we had out of the South African business. Had we not -- if we adjust for that, which we do internally to look at our operating performance, our group revenue would have been flat and the commercial pharma would have been up 4%. So it did have a group-wide impact, but as I said, a particularly strong performance out of Commercial Pharma, given the headwinds that it faced in the period, and that is largely because of what happened here, which is our Regional Brands. Our Regional Brands grew 7% and 2% in Reported earnings. And if you have a look in constant currency, which we look as a business and constant exchange rate, you will see that almost every area has grown between 4% to 8%, except Africa Middle East, and that's because we had the divestment in that region. If we extract that divestment to see our operating performance, which is largely the South African business, sub-Saharan and what we do in the Middle East, you will see that the turnover grew by 6% for the region, of which 5% in constant currency. So across the board, a very good performance and our Regional Brands, as I said, is our biggest section and would have grown at 11%, making that adjustment in Reported. And for those of you that have been following up, we've really done well in Australia. We continue to face pricing pressure there, a very good team, and they keep performing. And probably the most outstanding region in the Aspen business over the last 5 or 6 years has been our Latin American business. Really good team, and they've got all their metrics work very well, and they keep growing. So another very strong performance from that region again. Here is the Sterile brands and the Sterile brand impact. We've really got 2 regions of consequence here, Asia and Europe CIS. The Europe CIS business, you will see down -- it's down by about ZAR 300 million in constant currency. That's Russia. As you can work that out. That is all Russia. And we're down by a similar absolute amount in China, and that is lockdowns. The lockdowns have now been lifted. You might ask how it's going. They have a Chinese New Year in February, so it's hard to tell, but we're really hoping for some uptick in this period, March to June. But we'll see how that goes, but at least we now have a more normal environment in China. Manufacturing is the last area that I touch on here. And we've got a very good API business. It's a very profitable business. We lost 1 month this year because we had to do strategic maintenance in this period, but we'll catch it up in the second half. So we've been able to produce enough in the second half, so it's really going to be a tale of 2 halves. The new product initiation impacted production downtime and the revenue for Heparin, although up, it was very heavily constrained. The Finished Dose Form, of course, we've got a termination of COVID production, which we've spoken about, but we've had some offset at some of our spring site bring some Sterile products online. And we're going to expect a much stronger second half driven by API in the Heparin business and it's pretty significant, that increase. With that, I'll come back and talk about guidance and outlook. Sean, I think we'll bring you on here, and you can -- and there's people that make the money and there's people that have got to keep the money. So look at Sean carefully, make sure that he's keeping it. Yes, there we go, Sean.

Thank you. Thanks, Stephen, for those -- can you all hear me? Thank you for those valuable performance insights. I said to Stephen before, and I don't have to present much for Stephen's done everything, so I'm going to pay him a royalty afterwards. Thank you, Stephen, for that, but really good. I think it's painted the picture and shows you the sort of robust growth that underpins the revenue. And if you take the headwinds out of the picture, we've actually had a very strong commercial pharma performance in the first 6 months. So on to the financial review, going through the highlights. On the left, you can see our revenue is down 1% relative to the prior year and 6% in constant exchange. But interestingly, if you look at half 2, we're pretty flat on the half 2 of the prior year. And as we've guided, with the strong growth that we see coming out of our manufacturing business in the second half, we see that uplifting quite significantly above half 2 and half 1 in the second half of this year, and that's what we've guided. From a gross profit percentage, the next block, you can see that our gross profit percentage has dropped from 48.5% to 46.8%, a 1.7 percentage point drop. That is heavily influenced by the loss of the vaccine contribution. We also had the benefit of the VBP pricing in China before the VBP cuts. And interestingly enough, if you look at the second half of 2022, and compare that to our first half, we've actually ticked up by 0.4 percentage points. So quite a nice trend, and that's driven by what we spoke about earlier on about the improved commercial pharma margin performance, which I'll unpack a little bit later. Going on to the normalized EBITDA. From a normalized EBITDA perspective, we're down 11% on the prior year in reported terms and in constant exchange. Again, relative to half 2, we're only down 4%. And given the strong growth we see in the Manufacturing business, we anticipate to outperform both half 2 and half 1 in reported terms in the second half of the year. And obviously, as we've said, our target is to try and achieve our reported EBITDA from FY '22 by the end of this year. On the right, our normalized earnings -- headline earnings. There, we've dropped 17% on a reported basis, 21% CER. You'll ask why is there such a big gap between that and the normalized EBITDA gap, and that is driven by the foreign exchange losses, which I'll unpack a little bit later at ZAR 284 million swing, which has impacted our normalized headline earnings growth relative to the EBITDA growth. Yes, on to our normalized EBITDA income statement. Perhaps just to walk you through the format before we dive into some details. So on the left, we take you down from revenue, gross profit, all the way down to normalized EBITDA. And the columns across the page, the first column is our first half performance this year. The next numerical column is the performance last year in reported terms, and then we have a percentage change in reported and then a constant exchange reported percentage there. So it gives you all the metrics that you compare reported and constant exchange.

Sorry, Sean. Can we just hang on? We seem to be having a technical issue.

Oh my goodness. Sorry. I wondered why you were all looking perplexed. I could see it on my screen. Did any disappear now for this slide?

We're just going back to the last 2 slides.

Okay. So you saw the headline earnings at least. Well, there's a lot to absorb in what we've told you so far. So nice to have a little bit of a break. Can't blame load shedding there, it's not on the hour yet.

I think we're almost there.

There we go. All right. So perhaps, to talk the format again, so that you can see what I'm explaining to you. So on the left, we've got the income statement from revenue, gross profit all the way down to normalized EBITDA. The first column there is our current half performance, followed by the mix or percentage of revenue. Within our next column is the reported numbers and our percentage of revenue. The column on the right of that is the percentage growth relative on a reported basis. And the last column is our percentage growth on a constant exchange rate basis. So I'm not going to dwell a lot on revenue. We've taken you through that minus 1% on reported and minus 6%, and we know what the elements are there. I think we've covered that in a lot of detail with the headwinds. If you look then to the gross profit and the normalized EBITDA, collectively, you can see our gross profit, as you saw from the first slide, we're down 1.7 percentage points and also down in absolute terms because of the flat or the slightly declining turnover. And that has had an impact both at gross profit level and on our normalized EBITDA and has led us to an EBITDA percentage for the half of 26.5% relative to last year's half of 29.5% and a reduction of 11% on reported and 15% in constant exchange. But perhaps just to highlight that the prior 29.5%, which I proudly presented last year, that was at a peak. We had the COVID vaccine contribution. We had the VBP pricing benefits in there. We had Russia cooking. So that really was probably the highest ever EBITDA margin we've seen in our business. And if you go to the second half, we were actually at 27.5%, which is only 1% higher than what we've come in this half. So I think you've got to look at it on a balanced basis. But certainly, we're comparing ourselves to a very strong first half last year. Also, very pleasing on the expenses. From a constant exchange rate perspective, we contained our expense growth to 3%, which I think is a commendable performance given the inflation environment and expectations on payroll increases. This is my favorite slide. So yes, I'm going to talk about the gross profit percentages of all the segments in the business. These are all in constant exchange rates. So the gross margin percentages are slightly adjusted in the comparables for constant exchange rate, not significantly. So first of all, I'm going to start with our regional brands. As you know, regional brands makes up just under 50% of our total revenue. So this is the heartbeat of Aspen. If this segment performs, gives us a real good foundation for performance across the group. And if you look from left to right, you can see from FY '21, where we were at 55% gross margin, we ended this half at just under 60%. And that has come with a lot of hard work in terms of cost of goods savings initiatives, a lot of factory efficiency improvements. We've also had a very positive sales mix, particularly in our emerging markets, South Africa and Latin America. And that more than offset -- if you recall, we did guide there were some pricing pressures in Australasia. We've more than offset that with a favorable mix in the emerging markets. So a really positive performance on our regional brand gross margin percentages. On our Sterile Focus brands. Again, if you look from left to right, we've come from a 60% margin in 2021 and ended this off at 60.5%. You can see, in the first half of last year, we did have a high margin, but that had the benefit of the higher pricing in China, and obviously some of the other benefits in terms of sales into Russia at that point. So you can see, in the second half, we dropped down to 59%. That was impacted. If you remember, we had heavy freight costs, which particularly impacted our Sterile business last year. And with improved freight cost profiles and our site transfer savings and a favorable mix in terms of obviously trying to increase exposure to OTC anesthetics, our segment within the anesthetics, to increase that segment. And all of those have contributed to a positive trajectory in our Sterile brand. So collectively, when you look at commercial pharma as a collective, I haven't given you a collective number yet, but our commercial pharma margins ended at 60% across the collective portfolio relative to last year's number. I think it was about 58.7%. So really good performance. On the manufacturing, you can see that historically, we've run very constantly at around 19% to 20% margins. And you can see the impact that -- with a fixed cost base that Stephen spoke about in detail, what the impact of losing the vaccine contribution has been, dropping us right down to 5%. We also had to sacrifice some sales in our API business in the first half to do some maintenance. So we lost a month of sales. I think Stephen took you through that in the first slide. And we do expect the API business to have a very strong second half for the full 6 months with the sales, and that's a very high margin contributor. And I think Stephen has also taken you through the fact that we sacrificed revenue generating output in this first half in our Sterile facilities to bring in some of these new product introductions. And on top of that, we've had inflation repression. I think inflation particularly is at the factories, I mean, particularly in Europe. I mean, as you said, they're not used to inflation. So it's been really, really tough. We've tried to pass levies on. We've been successful in some areas, but not in others. So it's been a really tough ride. And I think all of those things have contributed to the drop in that margin. But on the positive side, I think if we look forward to half 2, with our bounce back that we see in the API sales and the Heparin sales, we foresee that the margin in the second half will be back to double digits, probably low to mid-double digits. So you can see the benefit of having that volume, how it influences your gross margin. So the 5%, I think, is a low point. And I think going forward, I think we'll be back in double digits and big value accretion once we get into the medium term. Now if you throw all of that into the group margins. We ended this half at 46.8%. As you saw from the first slide, that's a nice uptick from half 2 '22. Unfortunately, we are much lower than the first half last year, but I've explained the reasons for that. But importantly, we're not far off our FY '21 margin percentage. So I think we've come back to quite constant margin trends given the headwinds that we faced and we look forward to some positive increments going forward. On to the financing cost slide. There, we've had -- if we look at the overall -- you can see our financing cost slide on a normalized basis has increased from ZAR 334 million up to ZAR 586 million for the half. And you can see the numbers that are blocked in blocks there, the foreign exchange losses, we went from a gain last year of ZAR 50 million to a loss this half of ZAR 234 million. And that's driven predominantly by the weaker emerging market currencies against the euro and the USD in our business. And it's in the working capital space. And based on timing of receipts and payments and it's outside of our control, and we're hoping that we don't have that level of volatility in the second half. The very pleasing part of this slide is, if you look at the numbers just above those blocks, you can see our effective interest rate for the period. It's come in at 2.83%. Last year, we were just under 3.5%. So you would think wow, you would expect the interest rates to rise. But fortunately, we've managed to drop our effective interest rate in the half. And that's come with a combination of 2 factors. The 1 is our average debt levels are lower than they were in the previous year. And also, we've managed the mix of our currency. So a lot of our mix is more euro facing where our real interest rate costs are much lower than our rand costs, and that's also helped to bring the interest rate down. I guess the next question is where are we going in the next half on interest. Everyone knows that we're in a rising interest cycle. Fortunately, we've got just under ZAR 12 billion of debt funded through the IFC term loans and that's at a 0% fixed base rate. So that gives us quite a lot of protection against base rate increases. So we see that our interest rates for the second half will grow between 60 and 80 basis points. Without the IFC protection, it would have gone up as much as 170 basis points. So that's a significant benefit. And that benefit is obviously locked in for the period of that loan, which I think is only fully paid up by 2028. On to working capital. If you look to the bottom right block, our working capital has grown from ZAR 17.3 billion to just under ZAR 19.6 billion for the half. There has been an impact of foreign exchange there. So it's just under ZAR 800 million of exchange weaker rand that's increased the level of working capital balances. And the balance of the increase is driven predominantly by increased inventory investment. We've obviously still had a period of investment in our manufacturing segment in inventory, and this has followed all the supply change disruptions that came from COVID and some of the other logistical issues. We do, however, have started to see a normalization of logistics and supply chain, and we do anticipate that the position will improve in the second half. And this improvement, together with the heavy weighting of API and heparin sales in the second half, if you put all of those into the pot, we should be seeing quite a significant reduction in our inventory in the second half, which will then lead to -- we're still targeting to get an operating cash conversion rate of above 100% by the financial year-end. So if you cast your eyes to the left and the little chart there, the blue line is our rolling 12-month operating cash conversion rate. And you can see in H2 2021, which is the financial year ending 2021, we were above 100%. And if I had to track that back, we've been above 100% for the last couple of years. And it's only in this last financial year and this half that the trailing number has come below 100%, but we're confident that we will be above 100% by the financial year-end, underpinned by the unwind of inventory and the heavy weighting of manufacturing sales in the second half. On to net borrowings. This is just the bridge of our borrowings from FY '22 to this half. So if you look to the left, our borrowings ended June '22 at ZAR 16.1 billion. And we've ended this half at ZAR 18.8 billion. The 2 main drivers for that increase in the borrowings are the FX. The weaker ZAR has increased our borrowings just by translation by just about ZAR 1 billion there, that purple little block. And if you look at the dividend payout, which is always coming in this half, it's just under ZAR 1.5 billion. So collectively, ZAR 2.6 billion between ForEx and dividends have pushed up the level of borrowings. In the second half -- obviously, we don't have a dividend payment in our second half. We also got very strong cash flows in our second half, which I've taken you through in the working capital slide. So we see that borrowings coming down quite a lot from the half 1 level. From a leverage ratio perspective, we're well below our targeted level of 3x. We're sitting at 2x, which gives us a lot of opportunity for capital allocation optionality and the opportunity to take advantage of investment opportunities. And I think Stephen will unpack some of that in the subsequent slides. But overall, I think we were in a very comfortable space on borrowings. On to ESG, which is a very important part of Aspen's focus. It's a key driver and underpins everything that we do. And from an Aspen credo, I mean, our credo is health care, we care, and we continue to demonstrate that across a number of initiatives that we've implemented to strengthen health care systems, provide social upliftment and also to provide access to medicines to all patients. In terms of our main pillar of focus, our main pillar is to promote access to medicines. And if you look at our portfolio of products, we've got a broad geography that we supply products to. And out of that broad geography, over 60 countries that we supply are lower middle income countries that underpins our access credo. From a support for Africa, as you know, we've done the agreement with Serum and underpinned with endorsements from the CEPI and the Gates Foundation. We've got a commitment to supply Africa with those 4 vaccines that we've done with Serum. So that's an important underpinning, provides us with the content with health care security for those key pediatric vaccines. We've also been very active, as we always are, in responding to health and humanitarian crises, and that's an ongoing thing that we do. And the most recent example, we supplied life-saving anesthetic products to both Turkey and Syria to help people that were in need of emergency operations. We're very proud that we were a part of that initiative. And if you recall, I think when we had the explosion in Lebanon, we were there first as well to provide life-saving anesthetics. So it's certainly part of our DNA to always be front of queue in those situations. Coming closer to home, I think something close to all of our hearts, on the energy and water supply initiatives and challenges that face us in South Africa. Just wanted to sort of unpack what we're doing in terms of our electricity and water supply within South Africa. And then perhaps just to talk a little bit about Europe. So if we look at Gqeberha, which is our main manufacturing facility in South Africa, at the moment we've got 8% of our power has been generated by solar. From a load shedding perspective, we're exempt up until Stage 4. We are classified as an essential service. We are on load shed from Stage 5, but that's in a very controlled manner working in collaboration with the municipality. We do it on a controlled basis. And when we do go into load-shed mode, we are able to have full backup power to ensure that there's uninterrupted supply of product to the market. But notwithstanding that, we understand that these challenges are going to be with us for the medium term. And so we've taken very strong initiatives to move off the grid, and we've got a plan. We're working with a partner to provide power from recycled plastic. I'm going to try and say the word pyrolysis, which converts plastic waste to synthetic gas and is able to drive electricity. And that initiative should put us in a position to be off the grid within 2 years in the Gqeberha facility and at a cost lower than Eskom's current tariffs. So obviously that saving will grow as Eskom increases the tariffs over time. From a water scarcity perspective, Gqeberha is an area that's in a very tight water spot, and we've taken strong -- we've got no reliance on the municipal water there. We've got full groundwater extraction and treatment and reticulation. And we've got similar strategies in our other facilities, depending on what the challenges are in the other facilities. From a European perspective, I don't know if you recall, from I think maybe the last set of results or maybe no, it actually was the last year's interims, I mean, we were all worried the gas is going to be turned off in Europe and our factories would be left high and dry. But they were all agile and all of our factories have managed to divert their reliance on gas from that supply. We've got alternative supplies of gas and other energy sources. So we've made a lot of progress in diverting our reliance on 1 single source of power and gas. And from a pricing perspective, I mean, prices in Europe of electricity and gas were all over the place, but our team were very flexible and able to negotiate fixed cost contracts and lock in prices over periods of time to be able to contain those and gas costs. So a very successful process there. But all in all, from an ESG, water, electricity, and all of those, we've got ongoing initiatives in many areas to reduce our reliance on water and electricity -- reduce our usage and reliance on them and looking at more and more alternative ways of renewable energy and alternative basis of operations. So it's a real focus point for Aspen and underpins a lot of what we do. So thank you for that. And on that note, I'm going to hand back to Stephen.

Thank you so much, Sean. Well done. Just a few points on what Sean covered there, just some things to consider. A lot of the headwinds we faced that we talked about now and we face now, we faced in the second half of last year as well, our financial year. And to give you a sense of our Commercial Pharma performance, which Sean sort of alluded to there, but to put it into numbers, relative to that second half versus this half now, our Commercial Pharma is up 9% in reported and 4% in constant currency. So that's a pretty good achievement, considering the only difference really was the lockdown in China that we didn't anticipate. A lot of people speak to me about Russia and what it is and whether there's bounce back in that. I mean I can only tell you what we're seeing on the ground. One of our products is a critical product. And we're not losing market share. So please take this in context. The market core from the stake was 50,000 packs a month. During COVID, it went up to 100,000 packs. Now we're only seeing 7,000 packs of demand from the state. So clearly, the state money that was in health care has now been redirected to the war effort. So I would not be assuming any major positives coming out of Russia in terms of turnover. The other point I'd like to make, if you have a look at Sean's margins and the margin impacts, we've got real potential to increase those margins. We fix manufacture -- we get manufactured driving up, and we've got real opportunities to change the margins. Forget about historics, going forward that is what will change margins and take us to levels that we haven't seen before historically is to change manufacture. The working capital, I think the unwind is in our hands. I've spoken to you earlier about having so much uncertainty. It's horrible. The supply chains in every industry, not only ours, are really impacted. And so we've been really cautious, but I think we've got a much better insight now and we've got confidence to be able to unwind that working capital. And then the last -- just to comment on ESG, really happy to be doing something with plastic. It's something we learned from the Northern Europeans. You know, in South Africa, we pick up lots of the aluminum cans because they get recycled. Really hopeful we'll have a whole lot of people wanting to pick up plastic now and then create -- something's got a value, you're going to pick it up. And hopefully, we create that value and hopefully you don't see too much plastic lying around the Eastern Cape region. With that, on to outlook and guidance. The Commercial Pharma has got very steady organic growth. It's a very strong cash generator. And it's what's funded the manufacturing platform. In fact, we sort of starved our Commercial Pharma of capital because we've put it into manufacture. The gross margins, we've spoken about at length, but really the most pleasing aspect of these results are that we have grown that margin rather than the decline we had initially guided you towards. And we have opportunities on acquisitions to enhance some of that growth and we'll talk about that now. The Sterile manufacturing expansion has been a core investment initiative over the last 5 years. And this is all about successful allocation and utilization of that installed capacity. And delivery on the manufacturing contracts is absolutely fundamental to that. You might remember, in previous presentation I've told you, we are not concerned about filling the capacity. It's a case of not if we fill it, but when we fill it. That's always been the sort of open question for us. Incremental growth opportunity given the limited fixed cost, Sean and I have covered that ad nauseam. And our CapEx is largely complete to get to that end state with both OpEx and personnel costs deployed. And really the increasing contribution will not just drive profitability, but also drive free cash flow. And we're a business, you might remember, we never come to ask the shareholders in all the years for any money. We've never issued any shares. So our business growth and future depends on our ability to raise cash. Aspen is very focused on cash. And when you start your own business and you run it from small and you take that mentality forward, you realize that it doesn't -- all the fancy ratios don't work. At the end of day, we've got to pay the bills and cash pays the bills. So Aspen is a company very focused on conversion and cash flows. And if you get all of that right, then all the accounting metrics work and we can argue what ROIC means and ROE means and all those fancy formulas. But let me tell you, if you make more profit on the same assets, all those ratios go in the right direction. So really, it's about strong free cash flows, and we've got a lot of optionality about how we allocate capital. So when you say, what is Aspen working on, what are the key areas? It's really about delivery of these manufacturing contracts and now quite a big focus on enhancement of our Commercial Pharma growth. When we look at the Commercial Pharma outlook, we've had sustained organic growth from our Commercial Pharma brands, and that's without any investment. And we've got a diverse portfolio. They've got really strong brand equity, and they're supported by in-market sales teams. And those teams are very important commercially in emerging markets. It's quite interesting to watch where our headcount in sales forces, very heavily weighted towards emerging markets and a lot less in developed markets, although they might be producing the same relative turnover. So you need more head count there. And I think I don't have to tell you, an incredibly resilient performance from there, particularly our regional brands business. From an Aspen perspective, you have that fear and greed mentality that all your investors fully understand. But China, for us, we see as a country with the greatest growth potential. It's just -- when we get a new product, we want to launch it. You might need 5 countries to band together to do the development, without fail China, once you do it, because of the returns. What we've got there is a risk on volume of VBP, which is the pricing mechanism that unilaterally decreases price. It's effectively a way of getting products post patent, because what happens in China is different to other markets. People don't gravitate towards generics. A lot of it is a lack of trust. So they have sort of almost an enforced generic exposure there. Once that happens, it's like the rest of our market is post patent. The only thing, it does grow a lot quicker, even post patent. So for us, there's a short-term risk of VBP, but it's actually impacted a lot of people, not just us. And we are in numerous commercial discussions. And those discussions are really about how we can get products from others, who are saying, look, we're out of here, we're exiting, our sales costs are too high. So we're in discussions around that. It's really about how we leverage our sales force that have done incredibly well there and well respected, while we bring in our next phase of pipeline. And we've got a great pipeline of existing anesthetics, as you know, globally that we can bring into China. But very interesting, a lot of the Chinese companies have a pipeline in anesthetics. And they particularly want Aspen, not only for China, they want us because they'd like to use our platform globally. So we've got -- there's a lot of rods in the water, irons in the fire, whatever the terminology is, we are having a full go to make sure we have -- in a post VBP environment, we may or may not be impacted, sorry, I should say that. There's no telling you when you will or won't. We may or may not be impacted by VBP. But our working assumption is we will be impacted across the board, and that is what we work towards. And we're trying to keep our sales force together in the short term for what we see as a longer-term opportunity. Our Commercial Pharma portfolio will be expanded. I think we spoke about this in the previous presentation. We will be adding products in Latin America and South Africa within the next 6 months, between now and next 6 months, and we expect to -- there'll be revenues of around $100 million out of what we do there. Latin America, for those that follow, you realize it makes logical sense. We do really well. We've got a good team. And also build critical mass in some of the other territories. So a lot of gross to net, hopefully, in that area as well. And our South African is team very highly rated by multinationals and they're looking to use Aspen much more broadly on new chemical entities, biosimilars. And so you should just watch to see what we do in that space, but there's some pretty exciting developments for our South African business as well. These are 2 slides that follow -- probably the 2 slides that maybe need a little bit of concentration. We've got a COVID vaccine. It's around our manufacturer and what we do in Steriles. The COVID production I think did demonstrate the value and competence of Aspen Sterile manufacturer. For those people that understand the push, you might think that this was a little bit of a mock charge. And that's how we felt it at a point. But albeit a couple of years -- our working model was to -- we expected COVID to last a little longer, and the others would kick in. It didn't quite work out as seamlessly as we had planned. But what I must say about it, it was 1 of the key catalysts in driving these contracts. So the contracts that we have signed have been driven by some things: our capabilities in Africa, the ability to access Africa, and just put us on the stage as a world-class sterile manufacturer. We were the 7th or the 8th company brought on of 11 in the J&J network. So they've brought on the Americans and the Europeans because they had the R&D. We're the first out the blocks and we produce the most. That is now known in every multinational circle. These guys are great manufacturers. So there has been very positive spinoff around what we did around COVID. We've got a unique position for sterile vials. Now what are vials and prefilled syringes. Vial is a thing you've got your COVID vaccine, they put it in and they took out 5 or 10 doses out of there and then take it. Whereas a prefilled syringe is 1 syringe like that, which you can go and get to the chemist and they'll give you your flu shot or whatever you get. The people, there was not enough vial capacity for COVID, but then the vial capacity has come on now globally. So there is a global overcapacity, in my opinion, in vial manufacturing. And we're seeing it with sites across Europe that were built and are not being used, and they're not competitive. And we're seeing it in Asia as well, particularly India, where people built up these capacities. I think our unique positioning in Africa is a massive -- I don't think I know it's a massive advantage. And it's in our -- given the pressure on the globe with Africa having received vaccine so slowly, there's pressure on the funders to support local manufacturing initiatives and that's been entrenched by Gavi now. They're the largest buyer of vaccines, which have got pillars, which include regional manufacturing. And watch those pillars carefully. There is a desire to buy 60% of all vaccines needed in Africa from Africa. I don't think there's a company better positioned anywhere than Aspen in doing that. And I go so far to say we're at least 5 years ahead of anyone else. And while sentiment is with you, it's fine, but doesn't last forever. So what you have to be is price competitive. And that's where I think Aspen relative to other manufacturers, we are globally competitive site in Steriles. We can compete with Asian manufacturers, with European manufacturers. We don't need any special levies to be able to compete. And if you want to understand commercial dynamics that is going to work, have a look at how the Asians and the multinationals behave. Asian companies that transact with Aspen are not transacting with Aspen because they like Aspen, they're focused at commercial companies. But they see a commercial benefit in the incremental volumes that Aspen will bring. They might lose finished dose volume, which is what we do, but they'll get more of the chemical volume, the API. For multinationals, they also want to retain volumes. And what's your way of keeping your African volumes? How do you keep your ESG commitment? You've got to now say, make in Africa. But guess what, it's really nice making at Aspen because we can say we make in Africa and all of that, and they're competitively priced and actually they can make for the U.S. and Europe as well, but we're getting it all out of Africa. So we bring a lot of positives in that area, and I think that positioning is very important for us. And in time, you will find out a little more about the partnering that we have there. The prefilled syringes is the biggest value add here. It's an expensive technology, and it's an important technology and brings significant profitability if you get your volumes right. These are machines that are longer than a rugby field from start to finish, and so you need to keep them moving. We invested in prefilled syringes because we knew multinational businesses were moving that way and now our partners, most of them moving into biologicals. We anticipated some shortages, and we invested early. It takes years and years and years to put facilities like this, a lot longer than a bit facility. There is a massive global capacity shortage now as we speak. Why is there? It's because of portfolio shifts. So COVID hit will move from vials to prefilled syringes in developed markets. What does that mean? I know COVID has gone away. Let's say, 90% of COVID has gone away. There's still 10% available. In this vial that we had before, you had 10 doses here, 1 vial. You now go to 1 prefilled syringe, which you've lost 90% of your volume. The chemical ingredient goes from 10 to 1, so that's lost 90%. But your manufacturing conversion of 1 vial, 1 prefilled syringe, you haven't lost finished dose form volumes. And we're in that area of the business. In fact, that value goes up because the vial is a lot cheaper to make than a prefilled syringe. You might have noticed or might be aware, there is massive focus on diabetes and weight loss products. They are finding diabetes products that are assisting with weight loss. There are massive products out there. People like Eli Lilly are talking, I mean, a $30 billion brand in a product called Mounjaro. All of these are in prefilled syringes. And you might have read about all the shortages even in South Africa, but they're global. There's a massive switch in the market there. And even in HIV portfolios, they're now moving to prefilled and vial manufacturing as well. And simply put, the COVID vaccine, yes, we've got all the naysayers around vaccines, but there's a far bigger majority that know the value that vaccines bring and the new technologies in vaccines. And so there's definitely increased development. You just have to have a look at all the biotech companies, all the mRNA companies. There's big developments going and there is increased usage of vaccines. So for us, for the fulfillment of our strategic goal, we'll be at delivery of returns on these investments. And that, once again, goes to filling capacity and optimizing capacity. When we look at what the financial impacts might be here, we had a capacity for when we last spoke to you, I think, 3 years ago about our value of our capacity, we spoke about ZAR 1.5 billion for half. So extrapolating that, it was worth about ZAR 3 billion. We've revised our project to say we think it will definitely be no less than ZAR 8 billion, the value of that capacity. And that's really a view that we've got a much better view now on what we can get. So we're a bit like a hotel business, I suppose, you've got fancy building, and it's all about the occupancies and what rate you get per customer. We've got a much better idea now of the full. And so we're comfortable enough to tell you that if we were to fill all our capacity, it would be no less than ZAR 8 billion of contribution. We've made significant progress with the contracts, and I'll talk to you about that in a little bit more detail now, and we've got ZAR 4 billion in agreements, advanced or completed. And the type of products we're looking at are both in vaccines and biologicals that aren't vaccines. We are with 4 contracts and Serum you're aware of. And I mean we'll make public comments in due course, and we've got to just align that with the whole comms process with the multinationals as well. And there are a number of additional contracts under discussion. I've got to tell you that this process of bringing contracts is not a simple process. I wish I could tell you it was a switch on and off. The commercial part of the contract is 1 page and you can do that in 1 minute. It's bringing that on. There is an entire due diligence. It's a due diligence in every respect. I mean, that can go into your IT systems, it goes to that level, but really, it's a lot around your abilities and your capabilities. Have you got the right analysis? Can your labs do the work? Does your pump pressure work against this? Can a Luer Lock on a syringe fit into this thing without affecting this very expensive machine, and then how do you adjust for that? Can you adjust the shape of the glass? And these are just some of the issues that we live on a daily basis. I'm happy to tell you that we've been through that successfully. That's your biggest coup. It's not will you or won't you. Once you're sitting talking on these things, it's a long process, and it's all about can you or can't you do this? And that's what we -- when we say we sacrificed revenue, that's where we sacrificed it. In all issues, these tech transfer activities have been initiated. I don't want to bore you with lots of jargon, but you start effectively with trial batches, then you do validation batches. What is validation? You must do 3 batches that produce exactly the same results. Then you can ask for what is a change of site or a new site to say, "Please put Aspen on this dossier." That whole process can take 12 to 24 months. And our contracts are in calendar years, so that's quite important, because remember, our financial years are June, the contracts we look are on calendar years, and the guidance we give you is in calendar years. There is a seasonal bias in the contracts that we have. What does that mean? A lot of them would be sort of full winter, which means that your manufacturing -- when we look at our load in manufacturing, in particularly our French site, you're looking at sort of a May to October manufacturing period. So we were quite a load over that period, just because of the nature of the contracts and the products that we have. And we expect contribution from that. Contribution isn't revenue. Contribution is after you've paid for your raw materials. It's very hard to give you guidance because sometimes you pay for raw materials, sometimes you don't. So I'd just say, here is the sales, here's whatever you've got to pay in materials. Once you've taken that off, you've got contribution to your labor and overhead. So that's what this number is. And so this really goes towards paying for our fixed and variable costs in our facilities and we expect in calendar year '24 to have ZAR 2 billion of contribution and ZAR 4 billion of contribution from the contracts we have in 2025. And these contracts have longer durations than prior. And I'll talk a little bit about that, I suppose, now on our last slide. Going to H2, our guidance is on a stronger H2 relative to H1. And that's been a guidance, and that's maintained. Our improved revenue outcome is really from both commercial and manufacturing, but the manufacturing is a big jump for us. And even the turnover we expect now will be higher than the previous year -- prior period, even though we had a vaccine revenue in the prior period. So we more than compensate for that loss of revenue in this period. We're targeting for our reported EBITDA to be on a par in line. We're really trying hard to make sure it gets to the levels of 2023. To remind you, those levels are about ZAR 11 billion. We have ZAR 5.1 billion now. So I don't think it takes incredible math to say we're going to try and come as close as we can to ZAR 5.9 billion for the period. And of course, it depends where the ZAR ends up, but there should be an uptick in our reported results from that. Bear in mind, quite a lot of revenue coming in from Europe, where we had 17.5% and I think it's like 19.5%. Rising interest rates, Sean has taken you through that. It will impact finance charges. I think you should be modeling a cash flow conversion of greater than 100%. The Commercial Pharma transactions that we hope to announce and implement over the next 6 months will provide new growth stimulus in both Latin America and South Africa, and there's some other opportunities we're looking at. And the manufacturing agreements, we'll be announcing them as we have agreement with the multinationals and agreements are signed. Those contracts, as I said earlier, will be of a longer duration and value, because if we take COVID, when we first signed, people didn't know if the vaccine would pass or not pass. No one is going to commit to a long term saying, "haven't I got a product"? So here, the people know they've got a product, they know it takes a couple of years to bring it in. So it's very difficult to get in, and also very sticky to get out. So these things tend to be almost lifelong commitments. So that is where all our focus is. I think our story is understandable, I hope. Very big challenges that we face, challenges that we will continue to face, but as I said, it's been a scrum, but I think we've come out on the right side of it. So thank you, everyone, and thank you for your attendance. Appreciate it. We can do Q&A now.

Yes. So I'm going to do the online questions first. I'm going to ask Paul to just assist me with the questions in the room. So we have 2 questions from [ Byron Stout ] from [indiscernible]. I'm going to deal with the first one, Stephen. Assuming over the next 3 years that interest rates remain roughly at these levels, can you talk to the expected trajectory of interest costs?

Go ahead, Sean.

I don't need to stand because I'm answering online. That's quite a broad question. Can I stand up here?

Yes. You can just stand next to Stephen. Thank you.

Thank you. I mean, I think, I know in the U.S., they're still anticipating, I think, 225 basis points.

I think that said assuming they stay where they are, Sean.

Assuming they stay where they are?

So the question is, over the next 3 years -- assuming over the next 3 years that interest rates remain roughly at these levels, can you talk to the expected trajectory of interest costs?

Okay. Sorry. I understand the question now. Yes, I think obviously, as our debt levels come down, interest costs will drop. So I think you've seen the free cash flow coming out of the medium-term prospects out of manufacturing, so we will see our interest costs reduce over that period.

I think the rate Sean has guided in the second half, the change of that rate could be, I think you said, about 80 basis points there.

Perfect. Then the next question from [ Byron Stout ]. What factors, in your view, make Aspen more likely to be the dominant manufacturer of African vaccines for Africa versus other players on the continent?

Well, you sort of haven't got a great -- there's not a big field out there to start with. And we're the only company that demonstrated this capability. So it's not a big field, and it's a very expensive field to get into. And personally, if you gave me all the cash in the world and asked me to start this from a 0 base, I really wouldn't do it. So it's about the fact that we have capabilities in place, we are able to leverage of an infrastructure here, and we have a capability. So it's fun to have fancy buildings. But like anything in life, any sport business, you're as good as your human capital. And we've got good, well-trained human capital in the business. And I think it's -- if you compete with us, you should have an existing infrastructure, and there aren't people who have existing infrastructures across Africa that I see. I mean, when I say that we have a 5-year advantage of any one -- sorry, it wasn't just an idle comment. It was a type of comment that the funders and donors have pointed towards and said Aspen has this advantage. And we had everyone at our facility. We've had them all, they're incredibly positive about what they've seen, and some of the best facilities. And not only the facility, the way we run it, the sequencing, with experts there that no one has come up and given us a really great new idea. They're very pleased with what they've seen.

Great. Thanks, Stephen. The next question is from Letlotlo Lenake from Investec. Stephen, Sean, please elaborate on the key drivers of the upward guidance from ZAR 3 billion to ZAR 8 billion. Is that purely from a pricing, bargaining perspective for your capabilities? Or is that mainly due to the nature of the products that will be manufactured?

I think it's a little bit of both, but I think it's quite hard to give you guidance of ZAR 3 billion for total capacity when we bank for. So we got that wrong initially and maybe a little bit conservative. And we're looking at ZAR 4 billion and saying that's probably a little less than half our capacity that we've got to give. And so that's why we are able to guide to at least ZAR 8 billion. So it's based on what we've achieved. It's based on what we're seeing in the market, and there have been some really big shows, particularly in prefilled syringe areas, which have given us some confidence.

Okay. Great. The next question is from Grant Morris from Clucasgray. Could you please clarify that when you talk about the contribution from new contracts, are you talking about gross profit?

Yes. So contribution is -- the way we see contribution is this. You take a sale. So let's just say, we're doing this contract with Serum. We'll book the full sales. We will have the cost of buying the API. So all the ingredients, all the components, and then you'll have what we call a contribution. If we have another contract with some of the multinationals, for example, they insist on paying everything, and they just pay us a toning fee, effectively a conversion fee. Now all of that then goes -- we just have that and there's no material cost, and that becomes a contribution. So in our manufacturing environment, because our costs are so high already and embedded, a lot of that contribution, most of that contribution will fall straight through, logically. You're not going to be -- there's no space to add a whole lot more people. We might have to add a shift and things like that. The air conditioner still runs the way it always ran; the building and the environment created will carry the same depreciation, amortization, whatever are the expenses on this. So that's what we refer to by the term contribution.

Okay. The next question is from Roy Campbell from RMB. Can you please talk around the MSD interest-free loan during September 2023. Is this rolled forward or settled? And is there a reciprocal of buying back safety stock?

Yes. I think it's a little bit -- we're under discussion, Roy, so it's a thing. It is a discussion around stock, who holds stock and whether this is pushed out or pushed forward. So we have made provision for full payment, but I'll tell you there is a discussion around that. And as soon as we have that clear, we'll let you know. And that will be clear in the next couple of months.

Great. The next question is from [ Andrea Phillips from Risk Insights ]. The question is not too clear, but I'll give it a go. Given the [indiscernible] ROI rates Aspen on ESG and your disclosure has been quite good over the years. However, given the current energy crisis, what is your strategy regarding renewables?

Look, I hope Sean covered that in the presentation. I think maybe that question came before that slide. But our commitment is there and we've [indiscernible] the renewables. I mean, I'm hoping to make plastic valuable. That's what we're trying to do. So that's just from an energy perspective.

Okay. Great. I think those are all the questions online. Are there any questions in the room?

Steve and Sean, Ken Osei from the IFC. Congratulations on the good results. Question around prefilled syringes. Given your capability in Steriles and prefilled syringes, is there an opportunity to do more insulin on a contract manufacturing basis for different continents, given the limited supply? I mean, is that something that's bridge too far?

No, that is not a bridge too far. Absolutely not. Well, firstly, thank you for your support. We've seen how you've helped assist us here. So thank you to the IFC. I appreciate it. I think that's probably the starting point. Absolute commitment to insulins and just watch that space, and it's not a bridge too far for us. It's not a vaccine, but it's a biological. So it's hopefully not giving too many clues there, but here we go. Are there any other questions?

So you guided for the contribution of ZAR 2 billion in 2023. So what sort of capacity utilization you have assumed to arrive at this number?

Yes. So it's for 2024. So I think if you want to work it out, because when you talk about, say, we used to speak doses to you, and there was 5 J&J doses into 1 vial. So we'd make -- so it's just -- these are vials and doses. I think what I've tried to do is guide you to value. So when you say ZAR 2 billion, I'd go ZAR 2 billion and then divided by ZAR 8 billion. And I'd say -- with at least ZAR 8 billion, I'd say it's about 25% of the capacity. I should say, less than 25% of the capacity. I think that's how I would look at it from that point of view.

Just on -- you made a commentary that the seasonal bias is towards EU winter manufacturing. Would that suggest that a lot of what has been agreed to already is missing in European sites?

Are you really asking question? I thought you knew Aspen inside out. We lost touch [indiscernible]. What we're guiding, what we're telling you is -- so for example, you get things like flu vaccines, they're very seasonal, the anticipation is COVID vaccines will be seasonal as well. You get respiratory vaccines, which will also be seasonal. So there are a lot of seasonal... What we were guiding to is that what we see in our manufacturers, particularly out of our European site, as opposed to Gqeberha site, we're seeing people asking us. So it's all very well saying I can make 100. But if they ask you to make 100 over 6 months, you've only got 50. A lot of the demand has come in between May and October -- September, October, because of the type, the nature of what they're trying to deal with.

Nancy from [indiscernible] Capital. So just with regard to filling capacity. I know you mentioned that it's more about the win, not whether you can, right? And I just wanted to find out like in terms of timelines, I think you mentioned that it's a bit hard to say that when you can fill it. But in terms of timeline, how do you see stocks reaching that full crest, reaching that ZAR 8 billion contribution?

Yes. It's obviously core to us to fill all the capacity, we'd really like to. It's been -- and I'll go back to a year, a year-and-a-half ago, I sort of grilled a little chest piece once, and I said, look, this is not about filling meat -- people say, fill it, and our team says just fill the capacity. And I said, no, it's got to be a little bit more strategic about how we think about this. So we have opportunities. It's so binary. You either get it or you don't get it. What I think you should take heart from is what we've achieved so far, given that we're not cold, we get back up -- COVID. But I think you should take heart from the fact that we have a capability. Those multinationals that use us now and are happy are likely to use us further. There are many of them that have products in development, where they will come to us hopefully as a first stop. So for me, the risk is -- when you [indiscernible], what keeps you awake at night? That's what keeps me awake at night. You can have the contract, but it's about execution. Everything is about execution. Yes, you've got a contract, but will your team deliver or won't they deliver on that execution? So for me, we can sit and we will find additional contracts, I'm sure of that. There will be incremental contracts for Aspen. But I really want -- for us right now, the focus is about delivering the contracts we've got to deliver that revenue. They've done so well, our team, brilliantly in doing these tech transfer initiatives. Our focus is about delivering those. There's another whole team that I'm looking at, extra ones, but there's only so much you can complexity you can put into the factory, but it's there and it will be used. I think for us, we as a team had a belief that a global sterile manufacturing platform was a place to be. And people could take a view on it, whether they liked or didn't like it. I think what you're seeing is that we are in the right place. Now we need to execute on it and we will be in a fantastic place. And I have no doubt that all that capacity will be filled. But I'm not going to tell you it's a year or 2 years later. We'll announce it as we go along. Price one from manufacturing point of view is a bit more of the same product from the existing manufacturer. You don't have all the tick transfers. So hopefully, we get a bit of that as well.

Junaid Bray from Laurium Capital. Maybe just on the technology transfer costs. Were there any costs on these trials that's included in this period?

Yes. So we had -- so it's a good question because there's 2 types of technology transfer fees. So when you take, say, for example, Serum, we pick up the fees, because it's our product, our sales, we've licensed the product, so we pick up those fees, and we were fortunate to have backing from both Gates and CEPI on that. When it comes to multinational transfers, they pay for the cost of the technology transfer. So you will see some costs, but you should see some offset of those costs around those technology transfers. They won't be income statement negative, except to the extent they interrupt your revenue flow, as you can't ask someone to say, hey, would you cover this cost for us over here. But the cost of technology transfers are very expensive, very, very. It's a very expensive cost to shift. And that's why I say it's sticky coming in and very sticky going out.

And then COVID vaccines look sort of story of the past, but I assume there's no COVID vaccine revenue in this period?

There's nothing coming up, Junaid. The earliest you're going to see any COVID -- and really, COVID is something I've had to psychologically, mentally move forward from. But it hasn't been easy, because we were promised billions of doses at all levels. But the Gavi -- the next demand that's likely to be needed is in calendar year 2024. But I'm really not hanging our hat on any of that. In life, first time you get caught, you say shame on you; if you get caught the second time, you got to look at yourself. Right now, we've got to move forward and we've got a strategy, we've bounced back. We've pivoted -- I mean, if you take anything out of this, we're pretty agile. You don't just sit and cry on the floor, get up, stand up. We're in for another fight. We've pivoted and we put ourselves into a better position than we were before COVID. Quite honestly, if we get covered revenue, that would be great, but it's not coming before 2024. They've got so much stock still due to them. You might have read very publicly, the people that they've promised doses to, there's all sorts of fights around what will and won't happen there, because they don't even want to take those committed doses. So I think, let's wait. I think if there are doses to be had in 2024, we might be in with a shot. But really, I've got 0 in any of those ZAR 4 billion for you, or whatever billion. Okay. Sorry about being so unfair to cut it. Okay. Well, thank you. I really appreciate your time and effort, and thank you for your interest. And hopefully, we will be talking to you again soon. So thank you.

Thank you.