2019 Interim Results For the six months ended 31 st December 2018 - - PowerPoint PPT Presentation

2019 Interim Results

For the six months ended 31st December 2018

Financial Review

DISCLAIMER

CAUTIONARY REGARDING FORWARD-LOOKING STATEMENTS We may make statements that are not historical facts and relate to analyses and other information based on forecasts of future results and estimates of amounts not yet determinable. These are forward looking statements as defined in the U.S. Private Securities Litigation Reform Act of 1995. Words such as “prospects”, “believe”, “anticipate”, “expect”, “intend”, “seek”, “will”, “plan”, “indicate”, “could”, “may”, “endeavour” and “project” and similar expressions are intended to identify such forward looking statements, but are not the exclusive means of identifying such statements. By their very nature, forward-looking statements involve inherent risks and uncertainties, both general and specific, and there are risks that predictions, forecasts, projections and other forward-looking statements will not be achieved. If one or more of these risks materialise, or should underlying assumptions prove incorrect, actual results may be very different from those anticipated. The factors that could cause our actual results to differ materially from the plans,

• bjectives, expectations, estimates and intentions expressed in such forward-looking statements are discussed in each year’s annual

report. Forward looking statements apply only as of the date on which they are made, and we do not undertake other than in terms of the Listings Requirements of the JSE Limited, any obligation to update or revise any of them, whether as a result of new information, future events or otherwise. Any profit forecasts published in this report are unaudited and have not been reviewed or reported on by Aspen's external auditors.

3

DISCLOSURE NOTES

• Results separately disclose discontinued operations arising from the pending and completed disposals of the Nutritionals business

and a non-core pharmaceutical products portfolio in the Asia Pacific region

• Adoption of new IFRS 9 (Financial instruments) and 15 (Revenue from contracts with customers)

− IFRS 9 deals with expected loss provisioning − IFRS 15 addresses revenue recognition of customer contracts

• Requires that revenue and the related costs are only recognised when performance obligation has been satisfied

− Has resulted in restatement of H1 2018 in accordance with the new standards (see Appendix 4)

• Segmental reporting structure at the overview level refined

− In line with business strategy and focus

• Sterile Focus Brands: Anaesthetics and Thrombosis
• Regional Brands: Now includes High Potency & Cytotoxic Brands which have been de-prioritised for regional focus

4

NHEPS PS (cents) 743. 743.4

• 9%

9%

• 6%

6% OCF per s share (cents) 317. 317.4

• 45%

45%

5

FINANCIAL HIGHLIGHTS

CONTINUING OPERATIONS

Disclosure notes: All information presented on a Normalised Basis *H1 2018 figures restated for IFRS 15 **CER = Constant exchange rate. H1 2018 results restated at H1 2019 average exchange rates

% Change vs PY R’million H1 2019 Reported* CER** Net r reven enue e 19 673 19 673 1% 1% 0% 0% Gross ss p profit 10 10 236 236 2% 2% 2% 2% Gross profit margin 52.0% 0.5ppt 1.4ppt EBIT ITDA 5 534 5 534

• 3%

3%

• 1%

1% EBITDA margin 28.1%

• 1.2ppt
• 0.3ppt

Net Financing Costs 902 20% 17% Tax 631

• 8%
• 6%

Normalised effective tax rate 15.7% 0.1ppt 0.1ppt

EBITDA MARGIN

CONTINUING OPERATIONS

Contrib ibutio ion t to c change in N Normalis lised E EBIT ITDA Ma Margin gin

• 1.4%
• 0.9%
• 1.4%

0.1%

H1 2018 Normalised EBITDA Margin (CER) H1 2018 Normalised EBITDA Margin (Reported)

• 0.9%
• 0.9%
• 0.2%

Selling & Distribution Administrative Depreciation

• 0.5%

Steriles Net other

• perating income

Other Pharmaceuticals H1 2019 Normalised EBITDA Margin

2.3% 29.3% 28.4%

• 1.1%

28.1%

FX impact

• 0.

0.3%

6

Lower Thrombosis COGS Anaesthetic residual rights in prior year Oncology price cuts Lower manufacturing volumes Increased spend in China & Japan Once-off receipts in prior year

1. 1.2% 2%

• 1.7%

7% Revenue ue Normalis lised E EBIT ITDA

CURRENCY IMPACT

CONTINUING OPERATIONS

• ZAR contribution

− Revenue: 19% − Normalised EBITDA: 17%

• Positive translation impact of relative ZAR weakness
• n revenue
• Stronger USD and EUR impact on COGS

Currency impact i in H1 H1 2019 2019

Average FX Rates to ZAR Contribution to revenue Contribution to Normalised EBITDA H1 2018 FY 2018 H1 2019 EUR 29% 8% 15.77 15.33 16.34 AUD 11% 19% 10.45 9.96 10.27 CNY 7% 15% 2.02 1.97 2.07 USD 7%

• 17%

13.41 12.86 14.19

7

RECONCILIATION OF CER NHEPS

CONTINUING OPERATIONS

8

Capital raising fees 9.6 13.6 Restructuring costs 10.3 12.3 Redundancy costs 1.6 3.8 Transactions costs 38.3 24.4 Product litigation costs 7.1 14.8 Foreign exchange gain relating to acquisition

• (38.8)

Normalis lised ed H HEPS 743. 743.4 792. 792.0

• 6%

6% Cents H1 2019 H1 2018 % change Basic ic e earnin nings gs p per er s share e (EPS) 628. 628.9 728.

• 728. 7

7

• 14%

14% Profit on sale of property, plant and equipment 0.1 0.2 Impairment of PPE 1.6 2.3 Impairment of intangible assets 45.9 30.1 Reversal of impairment of PPE (0.1)

• Loss on sale of intangible assets

0.1 0.6 Headlin dline e earnin nings gs p per er s share ( e (HEPS) 676. 676.5 761. 761.9 9

• 11%

11%

PPE CAPITAL EXPENDITURE

Ma Main intenance c capex g generally ly b between R R400m 400m – R500m 500m p p.a PPE C E Capex - R'millio illion

1 484 2 145 H1 2019 1 168 2 600 1 500 1 200 500 1 000 1 500 2 000 2 500 3 000 3 500 FY 2017 FY 2018 FY 2019 FY 2020e FY 2021e FY 2022e Planned Actual H2 2019 1 800 74% 21% 5%

Planned C Capex s spend – Anaes aesthetics (approx R R4. 4.5 b billio lion)

PE NDB BO

• Construction of buildings nearing completion
• Equipment installation has commenced
• Expected first commercial production:

− Port Elizabeth FY 2021 − Bad Oldesloe FY 2021 − Notre Dame de Bondeville FY 2022

• Full commercial benefits expected in FY 2024

9

R’million H1 2019 FY 2018 (CER) Net Working capital - comparable base* 19 103 17 111 Net Working capital - excl. Oss 13 870 12 338 Working capital % of revenue 49% 43% Less: Attributable to Oss

• 10%
• 8%

Working capital excl. Oss - % of revenue 39% 35%

WORKING CAPITAL

CONTINUING OPERATIONS

Workin ing C g Capit ital – R’millio illion

664 664 1 086 086 FY 2018 (restated) Inventories

• 3

Trade debtors 245 245 Trade creditors Other Rec/Pay H1 2019 17 17 111 111 19 19 103 103

• Inventory increased by stock builds

− Transfer of Mono-Embolex API and finished dose manufacture to NDB − Heparin safety stock − Serialisation − Brexit

• Settlement of long-standing accruals for

restructuring and litigation

• Increase in VAT receivables tied up by revenue

authorities’ audits

10

* Refer to Appendix 10

NUTRITIONALS DIVESTMENT

• Agreement reached with Lactalis in September 2018
• Both parties committed to closure on 31 May 2019

− Approval for Lactalis investment by New Zealand Overseas Investment Office the only outstanding external condition precedent − Remaining conditions precedent within the control of the parties

• Gross consideration = EUR 740 million
• Estimated net proceeds = EUR 635 million
• Proceeds to be utilised to retire debt

− Immediate and enduring reduction in interest payable

11

CASH FLOW

CONTINUING OPERATIONS

• H1 2019 operating cash flows constrained by working capital investment

− Operating cash flow per share of 317 cents − Conversion rate of 47%

• Strong H2 cash flows expected

− FY 2019 operating cash flow conversion rate between 90% and 100% − Net proceeds from Nutritionals disposal estimated at R10.4* billion

• Positive medium term cash flow outlook

− Bulk of deferred consideration now settled

• R4 893 million paid in H1 2019
• ~ R1 000 million payable in H2 2019
• ~ R500 million payable in FY 2020

− PPE capex to decline from FY 2020 as anaesthetic capital projects come to completion

12

*Proceeds of EUR 635 million translated at EUR/ZAR 16.34

BORROWINGS

69% International - EUR 23% South Africa - ZAR

969 1 498 Net Borrowings at 30 June 2018 Distribution to shareholders 4 943 6 Other Net Borrowings at 31 December 2018 Acquisition related payments 1 431 Cashflow from

• perations

47 749

• 1 711

Net Borrowings at 30 June 2018 (rebased) 46 780 53 507 FX impact

• 409

Proceeds from sale of assets Capex

Movem emen ent i in Net et Borrowin ings gs - R’millio illion

13

BORROWINGS

Analy lysis is o

• f R53.

53.5 b 5 billi lion net b borrow

• wings

gs

• Borrowings have peaked
• Focus on de-gearing

− Nutritionals disposal proceeds expected end May 2019 − Strategic transactions

• Medium term net debt/EBITDAd target less than 3.0x

International - EUR 69% South Africa - ZAR 23% Key Indicators H1 2019 pro formaa H1 2019 H1 2018 Net borrowings R43.1bn R53.5bn R43.1bn Normalised net funding costs R735m R902m R753m Gearing 43% 51% 50% Net Debt/EBITDAd 3.7xb 4.4x 3.6x Interest cover ratiod 5.6xc 5.4x 7.9x Effective interest rate 3.59% 4.03%

53.5 9.9 10.9 52.5 43.1 8.5 22.0 29.6 Net borrowings Cash Current Non-current H1 2019 H1 2018

a) Assumes proceeds from the sale of the Nutritionals received on 31 Dec 2018, and that the net proceeds are applied to the Net Borrowings in their entirety, all else equal b) Assumes that only EBITDA and net debt change purely as a result of receipt of proceeds, all else equal c) Assumes that full 12mth figures for EBITDA related to the IMF disposal are excluded from the covenant calculation as at 31 Dec 2018, all else equal d) Calculated in terms of Facilities Agreement covenant measure 14

Business Overview

De-lever the balance sheet and create headroom Drive organic growth Build on our strengths Increase focus and reduce distractions

CURRENT STATUS & PRIORITIES

• Period since 2014 has transformed Aspen
• Now a global multi-national specialty pharma company

− Portfolio of niche brands including steriles and biochem − 70 established operations in 56 countries

• Predominantly across Emerging Markets

− Complex production capabilities at 25 manufacturing facilities on 17 sites

• Facilitates sustainable COGS reductions and security of supply
• Strategy to transform vindicated by changes in pharma industry, particularly significant pricing pressure in generics
• High awareness of need to continue evolving to remain relevant and successful

− Have reflected on the strengths and challenges of the transformed Group − Assessed capabilities, complexities and distractions Prio iorit itie ies identif ifie ied

16

INCREASE FOCUS

• Nutritionals disposal allows full focus on pharma

− Aside from New Zealand Overseas Investment Office

• All external conditions fulfilled, agreed closure on 31 May 2019

− Material value creation − Insufficient critical mass for global penetration − Nutritionals ~ 4% of EBIT

• Non-core product disposals

− Disposals and license terminations in Asia Pacific

• Strategic review of South African Commercial Pharma

− Divide pharma divisions between detailed/branded portfolio (Aspen) and commercial portfolio (Ethicare)

• Ethicare revenue ~ R1.5 billion

− Achieve heightened portfolio and customer focus

• Streamline Commercial Pharma

− Regio gional B l Brands

• > 80% from Emerging Markets and Australia
• High Potency & Cytotoxics de-prioritised into regions for local focus

− Sterile ile F Focus Brands

• Comprises Anaesthetics and Thrombosis

17

Performance Review

GROUP REVENUE

CONTINUING OPERATIONS

R’million H1 2019 H1 2018 % change H1 2018 (CER)* % change Comme mmercial Pharm rma**

**

16 687 16 687 16 16 323 323 2% 2% 16 434 16 434 2% 2% Regional Brands 8 886 8 639 3% 8 610 3% Sterile Focus Brands 7 801 7 684 2% 7 824 0% Ma Manuf nufactur uring ing 2 986 2 986 3 186 3 186

• 6%

6% 3 309 3 309

• 10%

10% API 2 292 2 297 0% 2 383

• 4%

FDF 694 889

• 22%

926

• 25%

Total R l Rev evenue ue 19 673 19 673 19 19 509 509 1% 1% 19 743 19 743 0% 0%

*CER reflects the underlying operational performance

• H1 2018 restated at H1 2019 average exchange rates

**Refer to Appendix 6 for segmental disclosure as previously reported

Emerging Markets +5% growth Developed Markets

• 3% growth

Commer ercial P Pharma R Reven enue e R16. 16.7b 7bn

R9.4bn 56% R7.3bn 44%

• Commercial Pharma growing at 2%

− 5% Emerging Markets growth offset by 3% decline in Developed Markets

• Manufacturing decline

− Heparin sales to third parties suspended − Gilead tender loss − Discontinued operations revenue R1.9 billion ↓ 17%

19

COMMERCIAL PHARMA - REGIONAL BRANDS

CONTINUING OPERATIONS Regional Brands Across Emerging Markets and Australia – Driving Organic Growth

R’million H1 2019 H1 2018 (CER) % change Middle East Africa 4 308 4 062 6% Asia Pacific 2 328 2 261 3% Rest of World 1 200 1 317

• 9%

Latin America 1 050 970 8% To Total 8 886 886 8 610 610 3% 3%

Emerging Markets +5% growth Developed Markets +0% growth

Regio gional B l Brands R Revenue R8. 8.9b 9bn

R5.8bn 65% R3.1bn 35%

• Regional Brands dominated by SSA and Australasia

− SSA and Latam contribute over 85% to Emerging Markets − Asia Pacific makes up over 65% of Developed Markets

• Latam strong performance offset by Rest of World

− Underperformance of oncology portfolio in Europe

20

COMMERCIAL PHARMA - REGIONAL BRANDS

MIDDLE EAST AFRICA Aspen ranked #1 in SA Private Market

R5.8bn R3.1bn

• Prescription segment key growth driver

− OTC sales contribution between 25% – 30% − Maintaining growth off high base South A Afric ica

• Revenue contribution >80%

− 5% growth − Volume growth only

• SEP

− 3.78% increase implemented February 2019 − Needed given local manufacturers’ input costs

• ARV tender

− Awarded 12% share of tender − Marginal returns

83% 9% 8%

Regional Brands M MEA R Revenue R4. 4.3 b billio lion +6% growth

South Africa Other SSA MENA

Source: IQVIA TPM Dec 2018

28 26 23 23 28 28 26 26

In 77 therapeutic classes – contributing 80% of total market value – Aspen has a Top 3 position

21

COMMERCIAL PHARMA - REGIONAL BRANDS

ASIA PACIFIC Rated #1 team in Australia

R5.8bn R3.1bn

• Australasia and Japan > 85% of sales

− 1% growth in Japan Australa lasia ia

• Revenue contribution >70%

− 6% growth

• OTC sales contribution ±25%

− Driven by double digit growth

• Prescription sales growth ↑ 3%
• Strong team performance

− Particularly given recent disruptions in the business − Reflected in rep performance

72% 17% 11%

Regio gional B l Brands Asia ia Pacif ific ic R Revenue R2. 2.3 b billio lion +3% growth

Australasia Japan Other Asia

8.128.057.957.947.947.937.927.917.907.907.887.867.867.857.84

Austral alia: a: O Ove veral all R Rep Performan ance ce R Ranki kings

MAT D Decem ember er 2018 2018

Source: IQVIA ChannelDynamics™

22

COMMERCIAL PHARMA – STERILE FOCUS BRANDS

• Sterile pricing resilient

− In spite of global pharma pricing pressures

• Given use of steriles

− Highest quality manufacture non-negotiable

• Significant capex requires volumes
• Strategically, Aspen acquired material global volumes

− Six different transactions completed − ~1 in 8 Injectable Anticoagulants and Anaesthetics sales globally (ex-USA) are Aspen brands

• Aspen has global economies of scale

− Supports new capex base − Quality and supply certainty for sustainability − Volumes reduce COGS, drives both growth and margins

R’million H1 2019 H1 2018 (CER) % change Anaesthetics 4 412 4 450

• 1%

Thrombosis 3 389 3 374 0% To Total 7 801 7 801 7 824 7 824 0% 0%

R3,4bn

Sterile ile F Focus Brands Revenue R7. 7.8b 8bn

R5.8bn R3.1bn

Emerging Markets +5% growth Developed Markets

• 4% growth

R3.6 bn 46% R4.2 bn 54%

23

STERILE FOCUS BRANDS – THROMBOSIS

Euro rope CIS ↓ 4% 4%

• More than 50% of decline attributable to Russia CIS

− Reduction of Arixtra stock in trade − Aspen to take over distribution

• Developed Europe ↓ 4%
• Developing Europe ↑ 3%

− Positive performance of Fraxiparine continues Rest of World ↑ 26%

• Strong performance has offset negative in Europe CIS
• Driven by China

− Dialysis centres

R’million H1 2019 H1 2018 (CER) % change Europe CIS 2 735 2 853

• 4%

Rest of World 654 521 26% To Total 3 389 389 3 374 3 374 0% 0%

Thrombosis is R Revenue R3. 3.4b 4bn

Emerging Markets +7% growth Developed Markets

• 4% growth

R1.8bn 54% R1.6bn 46%

R1.6bn

24

STERILE FOCUS BRANDS – THROMBOSIS

EU Thrombosis is m market

• Biosimilars affecting originator

− 10% market share of Germany, UK and Italy

• Aspen market share resilient but not making inroads into

above market shifts Opportunities es

• Orgaran registration across rest of Europe starting ~July 2019

− Italy, Norway, Spain

• Mono-Embolex – API spec updated at NDB

− Broader EU roll out planned

286 288 293 198 197 200 88 90 93 Dec-16 Dec-17 Dec-18 €’million

Europe Thrombosis A Annual R Revenue (exclu ludin ing R Russia ia C CIS) EUR’m ’m

Total Europe Developed EU Developing EU CAGR: 1.3% CAGR: 0.5% CAGR: 3.1%

• Aspen data best trend indicator

− IMS limitations include:

• Discounts and rebates on hospital sales not reflected
• Some channels omitted
• Growth in spite of historical price declines

− Volume increases continue across Eastern Europe − Margin expansion > sales growth

25

Emerging Markets +4% growth Developed Markets

• 5% growth

STERILE FOCUS BRANDS – ANAESTHETICS

• Year-on-year global market growth mid-high single digits

− ~14% share of global market ex-USA

• Solid performance given supply constraints

− Impacted all major markets; aside from Japan

• Asia Pacific over 50% of sales

− 6% growth in China

• Supply retarded growth by at least 5%
• Japan ↓ 2% - strong volumes offset price
• Australia ↓ 11% - all supply related
• Rest Of World – growth driven by Latam and MENA

R’million H1 2019 H1 2018 (CER) % change Asia Pacific 2 318 2 360

• 2%

Developed Europe 1 131 1 166

• 3%

Rest of World 963 924 4% To Total 4 412 4 412 4 450 450

• 1%

1%

Anaes aesthetics R Rev evenue R4. 4.4b 4bn

R2.4bn 54% R2.0bn

46%

• Quantifiable revenue lost over the last 18 months

estimated at EUR 55 million − Orders foregone due to inability to supply

• In addition, numerous tenders foregone

− Europe most impacted

• Penalty risk punitive

− Stock supply improving

• Stock normalisation by December 2019

26

Looking Forward

USA PIPELINE – ASPEN’S HIGHEST PIPELINE POTENTIAL

Women’s He Healt lth a assets

• Aspen has reached a broad promotion/revenue share agreement with a partner

− Partner has clear commitment to and capability in therapeutic area in the USA − Partner targeting peak sales of greater than USD 500 million

• Once all launched
• First launch to be conjugated estrogens in 2020

Orgara ran

• FDA inspection approved PE facility
• Reactivation approval expected shortly
• HIT indication trials initiated – timeline approximately 1 year
• Partnering discussions in process

HP HPC

• Approval in the short term

28

BUILD ON OUR STRENGTHS & DRIVE ORGANIC GROWTH

Superior capabil ilit itie ies i in Emergin ing Ma Markets

• Organic growth driver
• Commercial Pharma Emerging Markets growth of 5% for the period

Optim imise our c comple lex m manufacturin ing c capabilit ilitie ies

• Continue to work towards completion of major capex projects for Anaesthetic manufacture
• First commercial production FY 2021, full benefits realised FY 2024
• Source third party volumes for surplus capacity being created

Seek c colla laboratio ions i in territ itorie ies where w we l lack s suffic icie ient c crit itic ical l mass

• Strategic review of Europe

− Consider partnering opportunities − Non-commoditised, niche and synergistic portfolios − Objective to achieve scale and enhanced distribution capability

• Driving volume growth fundamental to Aspen model

29

DE-LEVER THE BALANCE SHEET

Create te headroom f for new o

• pportunit

itie ies

• Proceeds from Nutritionals disposal
• Proceeds from Asia Pacific portfolio divestment
• Potential inflows from strategic reviews
• Full focus on organic growth drivers
• Medium term target of leverage ratio < 3.0

− Deleveraging accelerated by divestitures

• Assessing niche specialty pharma opportunities in Emerging Markets

30

PORTFOLIO MANAGEMENT STRATEGY

Acquir ire Devel elop Collab aborat ate Proactively seek value enhancement

• pportunities

Complimentary to existing

• perations

Leverage intellectual & manufacturing advantage Product development lifecycle management Strategic relationships with MNCs

Aspen P Portf tfolio Balance between focus & diversification across regions and therapies Leading Global & Regional Brands Off patent, niche specialty brands Build ild p por

• rtfolio

lio

Revitalis lise Collab aborat ate Divest st Evaluate

• pportunity to

extract further value e.g. line extensions, new regional launches Seek partnerships that will unlock further value Check alignment to Portfolio Strategy & divest non-core assets

Reshap ape p portfol

• lio

Generate s sustainable c cash f flows Realis alisatio ion o

• f p

proc

• ceeds f

from s sale ale o

• f assets

Avail ilable le C Cap apit ital l

Strategic gic p partnership ips w with l leadin ing MN MNCs

Sales es & & Marketin ing Manufacturin ing Supply ly Cha Chain

Maxim imis ise p por

• rtfolio

lio returns

Leverage sales and distribution network Achieve manufacturing synergies Optimise supply chain Integrate acquisitions into existing business

Driv ivers o

• f p

portfoli

• lio
• stra

rategy Patients needs Market Conditions Group Capability Return on investment expectations

R47 47 bil illio ion inves este ted s since e 2013 R22 22* billio lion real alised ed f from dives estmen ents s since e 2013 2013

31

*Includes Nutritionals disposal to Lactalis

SUMMARY

• To transform Aspen from a regional generics business to a global specialty business at this rate/scale

− Without any equity injection − Will come with growing pains

• Created significant value from acquisitions made
• Demonstration of ability to both de-lever and drive organic growth

− 14% delta in growth rate − 10% improvement in EBIT Margin − Positive earnings contribution

• Interest saved > Earnings lost

32

R’billion H1 2019 H1 2018 Growth Before 2.4 2.6

• 8%

After 1.7 1.6 +6% Change i in G Growt wth R Rate 14% 14%

Australa lasia ia Regio gional B l Brands & & N Nutrit itio ionals ls Revenue

before and after divestments and discontinuations

SUMMARY | CONTINUED

• Anaesthetics portfolio was a stretch but strategically critical

− Finally over material deferred acquisition payments

• Intention is to act as we have historically

− Repay acquisition debt through portfolio optimisation and organic cash flows − Partner/divest where others have more capabilities − Drive organic growth trajectories from retained products − Facilitates repayment of debt and new opportunities without need for equity

• Aspen has both the right strategy and portfolio

− We have created value − Focus now on tangible demonstration through value realisation

33

APPENDICES

Appendix 1: Abridged statement of comprehensive income Appendix 2: Reconciliation of reported NHEPS Appendix 3: Group statement of financial position Appendix 4: IFRS restatements Appendix 5: Extract from Group statement of cash flows Appendix 6: Abridged statement of normalised comprehensive income Appendix 7: Group revenue by region Appendix 8: Commercial Pharma revenue by segment Appendix 9: Net funding costs Appendix 10: Working Capital reconciliation Appendix 11: Borrowings Appendix 12: Gross debt maturity profile Appendix 13: Capital allocation model Appendix 14: Institutional investors

APPENDIX 1: ABRIDGED STATEMENT OF COMPREHENSIVE INCOME

R’million H1 2019 H1 2018 % change Net et r reven venue e 19 19 673 673 19 509 19 509 1% 1% Cost of sales (9 437) (9 460) Gro Gross p pro rofit 10 236 10 236 10 049 10 049 2% 2% Gross profit margin 52.0% 51.5% Operating expenses (5 083) (4 801) Net other operating expenses (733) (547) Depreciation 366 345 Amortisation 240 210 EBITDA DA 5 026 026 5 5 256 256

• 4%

4% EBITDA margin 25.5% 26.9% Depreciation (366) (345) Amortisation (240) (210) Operating p profit 4 4 420 420 4 701 701

• 6%

6% Net funding costs (949) (638) Profit b before t e tax 3 471 471 4 4 063 063

• 15%

5% Tax (600) (647) Profit a afte ter t tax f from c continuing o

• perati

tions 2 871 871 3 3 416 416

• 16%

6% Profit from discontinued operations 66 230 Profit f for t the p e period/yea ear 2 937 937 3 646 646

• 19%

9% EPS ( (cents) 628. 8.9 9 748 748.2

• 16%

6% HEP EPS ( (cents) 676. 6.5 5 784. 4.7 7

• 14%

4% NHE HEPS ( (cents) 743. 3.4 4 814. 4.1 1

• 9%

9%

35

APPENDIX 2: RECONCILIATION OF REPORTED NHEPS

INCLUDING DISCONTINUED OPERATIONS

36

Cents H1 2019 H1 2018 % change Basic ic e earnin nings gs p per er s share e (EPS) 643. 643.4 4 798. 798.6 6

• 19%

19% Profit on sale of property, plant and equipment 0.1 0.2 Net impairment of property, plant and equipment 1.6 2.5 Impairment of intangible assets 45.9 33.1 Reversal of impairment of PPE (0.1)

• Loss on sale of intangible assets

27.8 0.7 Headlin dline e earnin nings gs p per er s share ( e (HEPS) 718. 718.7 835. 835.1 1

• 14%

14% Capital raising fees 9.6 13.3 Restructuring costs 10.3 12.0 Redundancy costs 1.6 3.7 Transactions costs 38.3 23.8 Product litigation costs 7.1 14.5 Foreign exchange gain relating to acquisition

• (37.9)

Normalis lised ed H HEPS 785. 785.6 6 864. 864.5 5

• 9%

9%

APPENDIX 3: GROUP STATEMENT OF FINANCIAL POSITION

* H1 2018 figures restated

37

R'million H1 2019 H1 2018* TOTAL A ASSET ETS Non

• n-current a

asse ssets 89 89 475 475 86 86 351 351 Intangible assets 70 297 67 326 Property, plant and equipment 11 692 10 105 Goodwill 4 976 6 003 Deferred tax assets 1 029 1 017 Contingent environmental indemnification assets 824 743 Other non-current assets 657 1 157 Cu Current a asse ssets 45 45 346 346 35 35 698 698 Inventories 15 575 14 021 Receivables and other current assets 13 343 13 055 Cash and cash equivalents 9 868 8 454 Assets classified as held-for-sale 6 560 168 Total a asse ssets 134 821 134 821 122 049 122 049 R‘million H1 2019 H1 2018* EQUITY A AND L LIABIL ILIIT IITIE IES Shareholders e equ quity 52 52 290 290 43 43 934 934 Non

• n-current l

liabilities 60 60 370 370 37 37 813 813 Borrowings 52 506 29 579 Other non-current liabilities 2 860 3 067 Unfavourable and onerous contracts 1 252 1 476 Deferred tax liabilities 2 259 2 348 Contingent environmental liabilities 824 743 Retirement and other employee benefits 669 600 Cu Current l liabilities 22 22 161 161 40 40 302 302 Borrowings 10 869 22 015 Trade and other payables 9 343 9 406 Other current liabilities 1 538 8 557 Unfavourable and onerous contracts 359 324 Liability classified as held-for-sale 52

• Total e

equity a and l liabilities 134 134 821 821 122 049 122 049

38

APPENDIX 4: IFRS RESTATEMENTS

Implementation of IFRS 9 Financial Instruments (Expected loss provisioning) and IFRS 15 (Revenue from contracts with customers) became effective for Aspen in the 2019 financial year. Aspen assessed and applied the new standards and presents the December 2018 interim results in line with the new

• requirements. The requirements of IFRS 9 have been assessed and an immaterial restatement was considered appropriate.

The requirements of IFRS 15 have been assessed and are considered to have sufficiently material impact for Aspen to adopt a change in the basis of revenue

• recognition. IFRS 15 is based on the principle that revenue is recognised when control of goods or services transfers to a customer – the notion of control

replaces the existing notion of risk and rewards. The 31 December 2017 and 30 June 2018 comparative periods have been restated in the unaudited results to take consideration of the implementation of IFRS 9 and 15. Aspen has chosen to follow the full retrospective approach in the restatement of the numbers reported. Following this exercise, the following retrospective adjustments for the implementation of IFRS 9 and 15 have been made to arrive at the restated retrospective position:

Statement of comprehensive income R'million H1 2018 FY 2018 Revenue (109) (139) Cost of sales 56 67 Gross profit (53) (72) Tax 19 26 Profit after tax (34) (46) Earnings per share (7.4) (10.1) Headline earnings per share (7.4) (10.1) Normalised headline earnings per share (7.4) (10.1) Statement of financial position R'million H1 2018 FY 2018 ASS SSETS Current assets Inventories 451 461 Receivables and current assets (953) (982) Total assets (502) (521) SHAR AREHO EHOLDER ERS' E EQUITY Reserves (483) (495) Total shareholders' equity (483) (495) LIABILITI TIES Current liabilities Other current liabilities (19) (26) Total liabilities (19) (26)

APPENDIX 5: EXTRACT FROM GROUP STATEMENT OF CASH FLOWS

CONTINUING OPERATIONS

39

R‘million H1 2019 H1 2018 % change Cash operating profit 5 852 6 092

• 4%

Changes in working capital (2 253) (1 470) 53% Cash g h gene nerated f from o

• per

peratio ions ns 3 599 3 599 4 622 4 622

• 22%

22% Net finance costs paid (765) (607) 26% Tax paid (1 123) (1 013) 11% Cash g h gene nerated f from o

• per

peratin ing activ ivit itie ies 1 711 1 711 3 002 3 002

• 43%

43% Operating cash flow per share (cents) 317.4 577.1

• 45%

40

APPENDIX 6: ABRIDGED STATEMENT OF NORMALISED COMPREHENSIVE INCOME

CONTINUING OPERATIONS

R’million H1 2019 H1 2018 % change H1 2018 (CER) % change Net et r rev even enue e 19 19 673 673 19 19 509 509 1% 1% 19 19 743 743 0% 0% Cost of sales (9 437) (9 460) 0% (9 748) Gross p ss profit 10 236 10 236 10 049 10 049 2% 2% 9 995 9 995 2% 2% Gross profit margin 52.0% 51.5% 50.6% Operating expenses (5 083) (4 801) 6% (4 848) Net other operating income 15 118

• 87%

124 Depreciation 366 345 6% 345 EBI EBITDA 5 534 5 534 5 711 5 711

• 3%

3% 5 616 5 616

• 1%

1% EBITDA margin 28.1% 29.3% 28.4% Depreciation (366) (345) 6% (345) Amortisation (240) (210) 14% (212) Op Operating p g profit 4 928 928 5 156 156

• 4%

4% 5 059 059

• 3%

3% Net funding costs (902) (753) 20% (775) Profit b befo fore re t tax 4 026 026 4 403 403

• 9%

9% 4 284 284

• 6%

6% Tax (633) (687)

• 8%

(669) Profi fit a after er t tax from

• m c

con

• ntinuing o
• per

erations 3 393 393 3 716 716

• 9%

9% 3 615 615

• 6%

6% NHE NHEPS ( (ce cents) 743. 743.4 814. 814.1

• 9%

9% 792. 792.0

• 6%

6% Normalised effective tax rate 15.7% 15.6% 15.6%

APPENDIX 7: GROUP REVENUE BY REGION

CONTINUING OPERATIONS

* H1 2018 figures restated for IFRS 15 ** CER = Constant exchange rate. H1 2018 results restated at H1 2019 average exchange rates

41

R’million H1 2019 H1 2018* % Change H1 2018 (CER)** % Change Developed Europe 6 210 6 347

• 2%

6 589

• 6%

Sub-Saharan Africa 4 322 4 393

• 2%

4 424

• 2%

Asia Pacific 5 464 5 167 6% 5 251 4% Latin America 1 551 1 522 2% 1 387 12% Developing Europe and CIS 1 333 1 452

• 8%

1 450

• 8%

MENA 480 356 35% 375 28% USA & Canada 313 272 15% 267 17% To Total 19 19 673 673 19 19 509 509 1% 1% 19 19 743 743 0% 0%

APPENDIX 8: COMMERCIAL PHARMA REVENUE BY SEGMENT

CONTINUING OPERATIONS

* H1 2018 figures restated for IFRS 15 ** CER = Constant exchange rate. H1 2018 results restated at H1 2019 average exchange rates

R’million H1 2019 H1 2018* % change H1 2018 (CER)** % change Regio ional B l Brand nds 8 886 8 886 8 639 8 639 3% 3% 8 610 8 610 3% 3% Regional Brands 6 834 6 469 6% 6 428 6% High Potency & Cytotoxics 2 052 2 170

• 5%

2 182

• 6%

Ster erile ile Focus us Brand nds 7 801 7 801 7 684 7 684 2% 2% 7 824 7 824 0% 0% Anaesthetics 4 412 4 405 0% 4 450

• 1%

Thrombosis 3 389 3 279 3% 3 374 0% Total R l Rev evenue ue 16 687 16 687 16 16 323 323 2% 2% 16 434 16 434 2% 2%

42

43

APPENDIX 9: NET FUNDING COSTS

CONTINUING OPERATIONS

R’million H1 2019 H1 2018 Net interest paid (684) (586) Foreign exchange (losses)/gains (41) 50 Notional interest on financial instruments (177) (217) Normalis lised ed n net et f fund nding ing c costs (902 902) (753 753) Debt raising fees on acquisitions (47) (63) Foreign exchange gains on acquisitions

• 178

Repo ported n d net f financ ncin ing c costs (949 949) (638 638)

Higher borrowings Reduced deferred consideration payable Once-off benefit

R’million H1 2019 FY 2018 H1 2018 Net Working capital - Reported 19 103 18 157 17 793 Less IFRS 9 and 15 restatement

• (521)

(502) Net working capital - Restated 19 103 17 636 17 291 Nutritionals - held for sale

• (899)

(699) FX impact

• 374

1 365 Net Working Capital - comparable base 19 103 17 111 19 957

APPENDIX 10: WORKING CAPITAL RECONCILIATION

CONTINUING OPERATIONS

44

APPENDIX 11: BORROWINGS

Blended N NACQ i interest rates f for borrowin ings gs as as at 31 D Dec ecem ember 2018 2018

International 76% South Africa 19% Asia Pacific 5%

Net B Borrowin ings: R R53. 53.5 5 billio lion

45

Blended interest rates ZAR 8.8% AUD 4.2% EUR 2.0%

800 0-1 years 1-3 years 3+ years 16 479 25 887 5 968 4 103 6 600 3 547 AUD EUR ZAR

APPENDIX 12: GROSS DEBT MATURITY PROFILE

Debt Ma Maturit ity P Profile ile – R’millio illion

46

The above debt maturity profile does not factor in unamortised capital raising fees (ZAR 151m at 31 December 2018) which are deducted from borrowings for IFRS purposes.

APPENDIX 13: CAPITAL ALLOCATION MODEL

International - EUR 69% South Africa - ZAR 23%

Cash Flow Generation

Re Re-in inves estmen ent i int nto busin ines ess for sustaina inable g le growth Ma Manu nufactur uring ing c capa pabilit bility & & capa pacit ity Inter ernal d developmen ent o

• f

ex existing I IP Strateg egic ic M& M&A Investmen ent i in s strategic gically lly aligne gned d oppo pportunit nities ies Emer erging ing Ma Markets Spec ecia ialt lty Stren engthe hen n Bala lanc nce S e Shee eet Delev ever erage Shareho hold lder er r ret etur urns Ma Main intain in payout ut r ratio io Focus us o

• n impr

proving ing Free C ee Cash h Flow

Value Creation

47

APPENDIX 14: INSTITUTIONAL INVESTORS

As a at 31 D Dec ecember er 2018 2018 68.5% 14.5% 2.0% 1.5% 1.4% 1.3% 1.2% 9.6% South Africa USA Singapore Switzerland Scotland Saudi Arabia UK Other

48