Aspen in a net-cash position for the first time

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JIMMY MOYAHA: Aspen Pharmacare Holdings Limited released their results for the financial year ended 30 June 2026. We’re going to look at these numbers in more detail with the company’s chief financial officer, Sean Capazorio, who joins me on the line now to see what we make of their performance.

Sean, lovely having you on the show, as always. Thanks so much for taking the time.

A stronger year by all accounts from a business operating perspective. Gross profits declined slightly year to year, but the business is in overall better shape if we look at normalised headline earnings, and look at some of the other moving parts that would have affected the business.

How do you reflect on the year that was?

SEAN CAPAZORIO: I think we guided that we would deliver on all our core priorities, and we did just that.

It was a hard year. We had to recover from the loss of the contract last year in sterile FDF [finished dose form] business.

And so we’ve been working hard in our manufacturing business to reshape those sterile facilities – and we’ve made exceptionally good progress this year. You can see the cost savings starting to benefit the manufacturing Ebitda [earnings before interest, tax depreciation and amortisation].

On the commercial pharma side, we had a good year in terms of profit generation.

We grew normalised profits by about 13%. And combined with manufacturing growth of 21% profits, our overall group’s what we call normalised Ebitda grew at 14%.

Then I think we also had the benefit of really strong free cash flow this year.

And that, coupled with the APAC [Asia Pacific] divestment, put us in a net-cash position for the first time, I think, in Aspen’s history.

So it’s really given us a very strong balance sheet flexibility in terms of capital allocation.

Overall I think a very successful year, and obviously that all translated to double-digit growth in earnings as well.

So a lot of hard work done this year, but a lot of delivery.

JIMMY MOYAHA: Sean, it seems as though the focus for a lot of the pharmaceutical businesses is to win the GLP-1 [appetite-reducing medication] market and to gain bigger access into that market.

I want to get your thoughts around where you guys find yourselves there.

You already have distribution rights on some of those products in the South African market, but I want to look at that in the context of some of the other regulatory approvals you’ve been able to secure from a business perspective – most notably the Canadian approval for Aspen, as well as the South African approval for the insulin manufacturing locally.

The pharmaceutical space looks to be growing in terms of competitiveness. How important is it for Aspen to be able to secure, number one, these regulatory approvals, but also to be able to access greater market share?

**SEAN CAPAZORIO: **Yes, it’s a big growth driver for Aspen.

I think if we just look, if I sort of compartmentalise the GLP-1s into two categories, we’ve got let’s call it, the distribution agreement with Lilly where we do [the diabetes/weight-loss treatment] Mounjaro, and that’s done very well in South Africa this year.

We said we’d do over a billion rand of sales, and we have exceeded that number in the current year and grown the whole market quite substantially.

And we’ve got the opportunity to launch Mounjaro in sub-Saharan Africa, which we look to be doing in calendar year 2027, so that’s on track.

That’s on let’s call it the ‘originator space’.

Then on the generic space, as you correctly say we’ve done a lot of work in the background investing in intellectual property and licensing opportunities. We’ve obviously got a strategy to launch these generic semaglutides in our emerging markets, including South Africa – and I’ll come back to that.

But yes, our first successful registration has been in Canada, and that I think we announced sometime in July. We’re just now reliant on the supply of the raw material from Dr. Reddy’s [Laboratories], and that will be manufactured through another one of the suppliers in India for supply into the Canadian market.

So once we know what the timing of that is, we will let everybody know – but that’s certainly our very first market that we’re going to launch in.

We’ve also an opportunity to launch in Brazil and a lot of the other Latin American countries – also the Middle East.

And then obviously in South Africa our generic product is already in for registration, so we’re just waiting on registration from the South African regulatory authority.

So certainly, Mounjaro in South Africa – we’ve got more than 50% market share.

And obviously, with the generic semaglutide there are going to be a lot more competitors in place, but I think we’re going to see that that’s actually going to grow the markets because it’s going to improve access. People will be able to access those products because of the affordability nature.

I don’t think it’ll take market share away from products like Mounjaro, but will actually grow the market and give people a lot more access to this very good medication.

So we’re very excited about it.

JIMMY MOYAHA: Sean, you touched on the fact that there was that APAC disinvestment – obviously from a business perspective.

That was a positive boost towards the earnings-per-share number. I imagine that would have been even more celebrated if we didn’t have to contend with the R2.3 billion in impairments as a result of the higher discounted rates that the business had to contend with. Impairments are never nice, they’re never easy, but they’re also in some cases unavoidable.

Your thoughts around that impairment figure, and perhaps how it put a bit of a damper on the rest of the mood?

**SEAN CAPAZORIO: **Yes, look, I think impairments, because they have no cash impact, are just an accounting entry.

What I always look at in impairments is how much is because of performance, and how much is out of your control.

As we guided in our results, the bulk of that impairment was because of technical impairments. So the discount rates going up globally – I think obviously the volatility in the world has pushed up discount rates.

So it’s really a mechanical impairment. Our operational ‘impairments for intangibles’ was very, very low. And, as I said, there’s no cash impact.

If you look at the APAC divestment, there you made a profit of a very similar value, and that was all cash.

So you’ve got R2.4 billion cash coming in on the profit on APAC, and you’ve got a R2.3 impairment that has no cash impact. So net-net you’re in a better cash position.

Still, it’s never nice to see an impairment, but it’s not something that impacts our cash flow and outlook from a trading perspective.

Also, Jimmy, maybe quickly on this. When you do value your whole intangible asset base, we’ve actually got 45% headroom on valuation versus our book values.

But unfortunately the accountants only look at writing down impairing, so if things are above their book value, you can’t write them up. You only have to write down. So it’s always only a one-way gap.

But if you had to look at it overall, we’re at about a 45% headroom above our carrying value.

So I think our portfolio is well valued, and it was really a technical impairment.

JIMMY MOYAHA: That is quite a nice headroom to have, especially from an accounting perspective and from a balance sheet perspective. Hopefully that continues to serve the business well as the business focuses on its strategy into the new year.

All the best to you and the team, Sean. We look forward to seeing another strong year from the Aspen business.

We’ll leave the conversation on that note. Aspen Pharmacare Holdings Limited chief financial officer Sean Capazorio joined us to reflect on the year they just concluded from a financial perspective, and how they fared.