2 0 2 4 ANNUAL REPORT
"AFT is a growing multinational pharmaceutical company that develops, markets, and distributes a broad portfolio of pharmaceutical products across a wide range of therapeutic categories."
Contents
FY24 Financial and Strategic Highlights | 04 |
Chair and Managing Director's Report | 06 |
Business Focus: | |
- Regional Performance | 10 |
- Research and Development | 14 |
AFT's Global Reach | 16 |
Sustainability | 18 |
Reconciliation of EBITDA to GAAP | 39 |
Governance | 41 |
- An Experienced and Skilled Board | 42 |
- Our Senior Management Team | 44 |
- Corporate Governance Statement | 46 |
Remuneration | 62 |
Consolidated Financial Statements | 69 |
- Independent Auditor's Report | 70 |
- Consolidated Income Statement | 73 |
- Consolidated Statement of Comprehensive Income | 74 |
- Consolidated Statement of Changes in Equity | 75 |
- Consolidated Balance Sheet | 76 |
- Consolidated Statement of Cash Flows | 77 |
- Reconciliation of Profit After Tax | |
with Net Cash Flow From Operating Activities | 78 |
- Notes to the Financial Statements | 79 |
- Statutory Disclosures | 104 |
Appendix 1 - Climate Resilience | 108 |
Appendix 2 - The Material Sustainability | |
Matters Definitions | 121 |
Directory and Financial Calendar | 123 |
This report provides a summary review of AFT's operational and financial performance for the year to 31 March 2024.
It should be read in conjunction with the company's financial statements on pages 69 to 103 of this report. The information provided in this report has been compiled in accordance with relevant law, rules, and corporate governance recommendations for investor reporting. Financial information has been prepared in accordance with appropriate accounting standards and
has been audited by Deloitte Limited. Throughout this report we have focused on what we believe matters most to our stakeholders and our business. We have endeavoured
to ensure all information is accurate through internal verification and other approval processes.
2 | W O R K I N G TO I M P R O V E Y O U R H E A LT H
Investing for the future - we have extended our reach around the world, expanded our product range, and added new medicines to a research and development portfolio that promises better health outcomes. We have delivered, and continue to
focus on, long-term sustainable growth.
AF T PHARMACEUTICALS ANNUAL REPORT 2024 | 3
F I N A N C I A L A N D S T R AT E G I C H I G H L I G H T S
Record Revenue and Earnings
Strong Global Growth
$195.4m
Total revenue up 25% lifted by growth across all territories
and $8.5 million of licensing income
$26.2m | $15.6m |
EBITDA1 reaches record | Net profit after tax |
up 22% from $21.4 million | increases 46% from $10.7 million |
$16.2m | 1.6 |
cents per share | |
Net debt2 down 45% from $29.9 million, | Dividend per share |
now below EBITDA gearing target | |
increases on FY23 | |
OUR STRATEGIC ACHIEVEMENTS
Launched
our products
in 12 new countries taking the total to
73
Launched
Maxigesic IV®
and now poised
to launch
Maxigesic Rapid®
in the US
GAINED
REGULATORY
APPROVAL
to sell antiseptic
Crystaderm®
in China's
domestic market
ESTABLISHED
NEW
BUSINESS
HUBS
in the
UK, Canada, and the US
Our research and
development
portfolio extends to
7 PROJECTS
- after four projects commercialised and 3 new projects added
Assessed our
carbon footprint
against the
new Aotearoa New Zealand Climate standards and further evolved our sustainability strategy
1 EBITDA is a non-GAAP measure of financial performance. It is defined and reconciled to AFT's standard profit measure under New Zealand GAAP of Net Profit After Tax on page 39 of this report.
2 Net debt is net interest bearing liabilities less cash and cash equivalents.
4 | W O R K I N G TO I M P R O V E Y O U R H E A LT H
F I N A N C I A L A N D S T R AT E G I C H I G H L I G H T S
AUSTRALIA
Revenue:
$108.2 million
up 15%
Operating profit
$15.5 million
down 20%
Key growth drivers:
OTC medicines across all seven therapeutic categories, with investment for growth diluting earnings.
NEW ZEALAND
Revenue:
$48.7 million
up 11%
Operating profit
$7.3 million
down 10%
Key growth drivers:
Strong growth across
all channels, with earnings diluted by investments for growth
ASIA
Revenue:
$10.7 million
up 57%
Operating profit
$2.5 million
up 177%
Key drivers:
Growth in the
hospital channel
INTERNATIONAL
Revenue:
$27.8 million
up 138%
Operating profit
$8.5 million
up from $0.3 million
Key drivers:
Strong growth in Maxigesic sales and $8.5 million of licensing income.
A Growing Contribution From Our Global Operations
FY23 Revenue | FY24 Revenue | ||
New Zealand | 28% | New Zealand | 25% |
Australia | 61% | Australia | 55% |
Asia | 4% | Asia | 6% |
International | 7% | International | 14% |
Extending Our Record of Growth in Revenue and Earnings
AFT Pharmaceuticals Revenue
NZ$ MILLION
$200 | $195 | ||||||||||||
$180 | |||||||||||||
$157 | |||||||||||||
$160 | |||||||||||||
$140 | |||||||||||||
$130 | |||||||||||||
$120 | $106 | $113 | |||||||||||
$100 | |||||||||||||
$80 | $85 | ||||||||||||
$80 | |||||||||||||
$64 | $69 | ||||||||||||
$60 | $49 | $56 | |||||||||||
$40 | |||||||||||||
$20 | |||||||||||||
$- | |||||||||||||
2014 | 2015 | 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | 2024 | |||
FULL FINANCIAL YEAR | FIRST HALF FINANCIAL YEAR | SECOND HALF FINANCIAL YEAR |
AF T PHARMACEUTICALS ANNUAL REPORT 2024 | 5
C H A I R A N D M A N A G I N G D I R E C TO R ' S R E P O R T
Record Profits and Strong Cashflows Investing For the Future
Dear Shareholders,
AFT Pharmaceuticals has delivered another stand out result for shareholders.
We have generated record profits for the March financial year on the back of strong topline growth across all territories, especially in our International and Asian businesses, extending the company's decades long record for consistent expansion.
AFT Operating Profit*
$35 | ||||||||
$25 | $20.4 | $24.2 | ||||||
$19.7 | ||||||||
MILLION | $15 | $11.4 | $10.7 | |||||
$6.1 | ||||||||
NZ$ | $5 | |||||||
$0 | ||||||||
-$5 | ||||||||
-$15 | -$10.1 | |||||||
FY2018 | FY2019 | FY2020* | FY2021 | FY2022 | FY2023 | FY2024 |
OPERATING PROFIT (EX LICENSE INCOME) LICENSE INCOME
Moreover, we achieved this result while reducing debt and continuing to significantly invest for the future with the expansion of our product development portfolio, our presence in new markets such as the UK and North America and support for a strong programme of new product launches.
The result underscores the strengths of AFT's approach to international expansion and sustainable growth. We've benefited from growing demand for our products in both our home markets and further afield, reaping the rewards of careful and consistent investment into research and development and the product pipeline.
With the recent launch of the intravenous form of our Maxigesic® pain relief medicine in the US and the impending US launch of the line extension, the rapid dissolving tablet Maxigesic Rapid, our proprietary products are now positioned in a significant number of the world's major healthcare markets.
This achievement marks a significant milestone in our journey towards becoming a truly global pharmaceutical company and it is a major achievement for a New Zealand company.
- Operating Profit excluding non-recurring gain of $9.8m related to the valuation of the Pascomer intellectual property
We have meanwhile positioned the company to build on that record with investments for the future. These growth projects have included the establishment of new business hubs in the US, Canada, South Africa and further investment in the UK and Europe. We have extended our existing products to new territories, signed 122 new in-licensing agreements for markets around the world, and expanded our product development pipeline.
We continue to see considerable potential in all of the markets we operate, and we are pleased with the progress we have made capitalising on it.
Financial Results
Revenue from the sale of existing products,
new products and product royalties grew by 20% to $186.9 million from $155.8 million, with the company's family of Maxigesic pain relief medicines and the Australian over the counter (OTC) business making the strongest contribution.
Growth has also been supported by ongoing investment in product marketing including the launch of the Maxigesic tablets and intravenous (marketed as Combogesic®) dose forms in the UK and our E-commerce platforms.
Total revenue, which included licensing income of $8.5 million, rose 25% to $195.4 million from $156.6 million in the prior year. The majority of the licensing income came from a milestone payment of circa $6 million from the US licensee Hikma Pharmaceuticals following the launch of Maxigesic IV in February.
Operating profit rose 23% to $24.2 million from $19.7 million in the prior year. The result was in line with guidance issued in February 2024, but lower than our initial guidance of $22 million to $24 million which excluded the Hikma license income, due principally to slower than expected Australian sales from newly launched products and our decision to accelerate our investment into important growth projects utilizing proceeds
of the Maxigesic IV milestone payment.
Meanwhile, we saw what we believe is a short-term reduction of margins in Australasia due to some overstocking and subsequent price discounting of some key high margin lines, stronger sales of lower margin products plus some stock write offs including some one off's dating back to the pandemic.
EBITDA of $26.2 million was 22% higher than the $21.4 million in the prior period, while net profit after tax increased 46% to $15.6 million from $10.7 million.
6 | W O R K I N G TO I M P R O V E Y O U R H E A LT H
C H A I R A N D M A N A G I N G D I R E C TO R ' S R E P O R T
"We've benefited from growing demand for our products in both our home markets and further afield, reaping the rewards of careful and consistent investment
into research and development and the product pipeline."
Dr Hartley Atkinson | Co-Founder and Managing Director David Flacks | Chairman
AF T PHARMACEUTICALS ANNUAL REPORT 2024 | 7
C H A I R A N D M A N A G I N G D I R E C TO R ' S R E P O R T
International Expansion
AFT has significantly expanded its international operations with the establishment of business operations in the US, Canada, UK, Europe (through our subsidiary based in Ireland), Singapore and Hong Kong. Additionally, we are setting up a new subsidiary AFT Pharmaceuticals South Africa.
A number of product licenses have been acquired in the UK and European markets in order to accelerate future sales growth. For example, in Europe, AFT Pharmaceuticals Europe successfully bid for six product licenses from an insolvent company in Germany.
AFT is on track to offer the world's largest range of combination paracetamol and ibuprofen products globally. Maxigesic is now sold or ordered in 73 countries up from 61 in March 2023.
The launch of Maxigesic IV in the US, the world's largest market for pain relief medicines, was the most significant of the year. It delivered AFT and our development partner Hyloris Pharmaceuticals a US$6 million milestone payment that we share 65:35. The launch is also expected to deliver
an ongoing and growing stream of payments from our profit share agreement.
AFT's entities are commercialising Maxigesic tablets in the US, Australasia, and the UK, along with Maxigesic IV in Canada, Australasia the UK, Hong Kong, Singapore and Malaysia.
We are meanwhile using our hubs in Canada, UK, Hong Kong, Singapore, Malaysia and Europe to beach head selected medicines we have in-licensed.
We are finalising our US strategy for Maxigesic Rapid with a focus on AFT Pharmaceuticals USA securing distributors for specific market channels. We are also advancing plans for launch of the recently approved, Maxigesic IV in Canada through the newly formed AFT Pharmaceuticals Canada.
We offer a total of ten different Maxigesic line extensions: Tablets, Oral Liquid, Rapid Dissolve Tablet, Day/Night Tablet, Oral Liquid, Hot Drink, Dry Stick, PE version, Cold/Flu & Sinus Pain Kit and Intravenous and these will be launched
in target markets.
Finally, following regulatory approval for the sale of our Crystaderm antiseptic cream in China late last year, we are planning for the launch this year in the world's second largest pharmaceutical market.
Research And Development
Research and development expenditure in this financial year was steady at $12 million. In the short term we continue to work on launching our already available pipeline into more markets: additional Maxigesic line extensions such as the Maxigesic IV US launch; Crystaderm antiseptic cream; Kiwisoothe tablets and sachets; Micolette micro enema; ZoRub Osteo and HP analgesic creams. Commercialization of these products will help to drive short to medium term sales and offset ongoing expenditure. Extensive work on this latter group of products has been funded from existing cash-flows.
Our research and development pipeline now extends to seven projects. Four projects in the pipeline exited the development phase and moved to commercialisation and we added three new projects over the year. The new projects include treatments for Burning Mouth Syndrome and Vulva Lichen Sclerosis, in collaboration with our Maxigesic IV development partner Hyloris Pharmaceuticals.
Last month we also announced we had extended our collaboration with Massey Ventures and the Gillies McIndoe institute, adding the development of a treatment for Keloid scars to the existing strawberry birthmark medicine project. These additions bring our pre-commercialization R&D pipeline to a total of seven projects, some with multiple indications. This pipeline offers opportunities to significantly drive our global expansion as well as growth in our Australasian markets.
We continue to work to finalise one further agreement for a commercially significant late-stage R&D project which would require a large clinical study.
"The research and development pipeline offers opportunities to significantly drive our global expansion as well as growth in our Australasian markets."
8 | W O R K I N G TO I M P R O V E Y O U R H E A LT H
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AFT Pharmaceuticals Limited published this content on 24 May 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 24 May 2024 01:05:01 UTC.