2019 ANNUAL RESULTS PRESENTATION For the year ended 30 June 2019 - PowerPoint PPT Presentation

2019 ANNUAL RESULTS PRESENTATION For the year ended 30 June 2019

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, objectives, 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. 2

DISCLOSURE NOTE • Results separately disclose discontinued operations arising from the completed disposals of the Nutritionals business and non-core pharmaceutical 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 FY 2018 in accordance with the new standards • 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  Group Segmentation: Split at revenue and gross margin level between Commercial Pharmaceuticals and Manufacturing segment to provide visibility 3

FINANCIAL REVIEW

FINANCIAL SUMMARY CONTINUING % Change ge v vs PY R’millio illion FY 2019 2019 Reporte ted CER ER Net r reven enue e 38 872 1% -2% Gross ss p profit 19 698 19 698 0% 0% -2% 2% Gross profit margin 50.7% 51.4% 50.7% Normalis lised ed E EBITDA 10 824 10 824 -2% 2% -4% 4% Normalised EBITDA margin 27.8% 28.8% 28.1% Normalis lised ed t tax (1 219) 1 219) -3% 3% -4% 4% Normalised effective tax rate 15.9% 15.4% 15.3% NHE HEPS ( (cents ts) 1 414 1 414 -7% 7% -8% 8% Oper erating c ing cash f h flow p w per er s share ( (cen ents) 1 319 1 319 -9% 9% Oper erating c ing cash f h flow c w conversio ion 107% 107% Net et borrowin ings 38 984 38 984 -17% 17% Net debt / / EBIT ITDA* 3.62x 3. 62x CER reflects the underlying operational performance. FY 2018 restated at FY 2019 average exchange rates 5 * Calculated in terms of Facilities Agreement covenant measure

SEGMENTAL CONTINUING Regional Brands Sterile Focus Brands 2019 9785 17817 2019 8365 15267 2018 (CER) 9962 17736 2018 (CER) 15618 8123 • Regional Brands show revenue growth • Improved gross profit from Sterile Focus Brands, notwithstanding declines in the oncology portfolio despite lower sales Manufacturing Gross profit percentage Group 50,7% 50,7% 2019 5788 1548 Regional Brands 54,9% 56,2% 2018 (CER) 2110 6502 Sterile Focus Brands 54,8% 52,0% • Reduced CMO business weighs on revenue and margins Manufacturing 26,7% 32,5% • Gross profit percentage stable due to gains in Sterile Focus Brands Gross profit Revenue 2019 2018 (CER) CER reflects the underlying operational performance. FY 2018 restated at FY 2019 average exchange rates 6

NORMALISED EBITDA CONTINUING R'millio illion FY 2019 2019 % o of r reven enue FY 2018 ( 2018 (CER) % o of r reven enue Gross profit 19 698 50.7% 20 195 50.7% Operating expenses (9 943) -25.6% (9 935) -24.9% Net other operating income 332 0.9% 265 0.7% Depreciation 737 1.8% 694 1.6% Normalised EBITDA 10 824 27.8% 11 219 28.1% Small decline in EBITDA margin % predominantly caused by flat operating expenses on slightly lower revenue 7

IMPAIRMENTS CONTINUING R'millio illion FY 2019 2019 FY 2018 2018 Commen ents r relating t to F FY 2019 Intangible assets 2 412 623 Impairment of intangibles is 3.3% of opening book value Oncology portfolio 754 Increasing generic competition driving prices down Anaesthetics 264 Offset by equal release of deferred payable no longer due Development costs 162 As a consequence of product pipeline rationalisation Other Regional Brands 1 232 Reduced revenue and profit trajectory on specific products Goodwill 111 - Goodwill impairment relates to intangible assets impaired Property, plant & equipment 515 68 Redundant PPE due to efficiency gains and strategy shifts Financial assets 55 - Share in development house written off Aspen classifies certain of its intangible assets as being of indefinite life. Each year the carrying values of these assets are rigorously tested for impairment and carrying values are written down. Intangible assets which are no longer assessed as indefinite life are reclassified as definite life assets. 8

CURRENCY IMPACT CONTINUING Contribution t to Contribution t to Aver erage FX e FX rates es to ZA ZAR Normalis lised ed FY 2019 2019 FY 2018 2018 H1 2019 1 2019 rev evenue EBIT ITDA EUR 29% 6% 16.19 15.33 16.34 AUD 11% 19% 10.15 9.97 10.27 CNY 7% 16% 2.08 1.97 2.07 USD 6% -17% 14.19 12.86 14.19 4% • ZAR contribution  Revenue: 19%  Normalised EBITDA: 21 % 2% • Favourable impact on revenue from relative ZAR weakness • Higher weighting of costs in stronger USD and EUR dilutes the impact on normalised EBITDA  Largest input cost to ARVs is the API which is priced in USD Revenue Normalised EBITDA Currency impact in FY 2019 9

EFFECTIVE TAX RATES CONTINUING 29,3% • The Group’s effective tax rate spiked during FY 2016 and FY 2019 30% due to  The write-off arising from the termination of the Venezuelan 25% 20,5% 22,2% operations in FY 2016 18,0%  Higher impairments in FY 2019 20% 20,6% 16,6% 19,5% 17,1% 15% 15,9% • Normalised effective tax rate eliminates the periodic spikes and 15,4% other non-trading items 10% 5% • Anticipated changes in the mix of contributions to total operating profit by Group companies is expected to increase the effective tax rate in FY 2020 by 1% to 2% FY 2015* FY 2016* FY 2017* FY 2018 FY 2019 Restated Group effective tax rate Group normalised effective tax rate *Total operations which includes the effective tax rate for the Nutritionals Business, therefore not comparable to FY 2018 and FY 2019 10

RECONCILIATION OF CER NHEPS CONTINUING Cents FY 2019 2019 FY 2018 2018 (CER) R) Basic ic e earnin nings gs p per er s share e (EPS) 595. 595.0 1 238.6 1 238. 6 Profit on sale of property, plant and equipment 3.7 - Impairment of property, plant and equipment 92.5 11.2 Impairment of intangible assets 498.1 167.5 Reversal of impairment of PPE (3.9) (0.5) Reversal of impairment of intangible assets - (29.4) Impairment of goodwill 23.5 - Impairment of available for sale financial assets 12.0 - (Profit)/loss on sale of assets classified as held-for-sale (1.8) 8.1 Loss on sale of intangible assets 8.5 0.7 Headlin dline e earnin nings gs p per er s share ( e (HEPS) 1 227. 1 227.6 6 1 396. 1 396.2 2 Capital raising fees 14.3 46.5 Restructuring costs 18.4 28.7 Redundancy costs 3.6 4.3 Transactions costs 105.6 35.4 Litigation costs 100.5 66.7 Reversal of deferred consideration no longer payable (57.7) - Foreign exchange loss/(gain) relating to acquisition 2.0 (41.2) Normalis lised ed H HEPS 1 414. 1 414.3 3 1 536.6 1 536. 6 CER reflects the underlying operational performance. FY 2018 restated at FY 2019 average exchange rates 11