Good morning, ladies and gentlemen in the room and those of you joining us via webcast today. It is my pleasure to welcome you to the financial results of the first six months financial year, sorry. My name is Sibongakonke Nkosi, and I'm the Group Investor Relations Manager here at Aspen. In today's proceedings, you'll be hearing from Stephen Saad, the Group Chief Executive, who will be providing you with an insightful overview of our results, taking us through the revenue performance of the group and its segments. Notably, we have revised the segmental reporting both in commercial pharma and manufacturing. These new segments give improved insights, understanding, and more granular disclosure. We've also bolstered the appendices to provide more detailed analysis. In the appendices, you will find a comparison of the revenue disclosure between the old and the new reporting segments for commercial pharma and manufacturing.
Also included in the appendices is a table illustrating the currency contribution of the group at a revenue and an EBITDA level. This will facilitate a deeper understanding of the dynamics between constant currency and reported performance. In the financial highlights or as you dive deeper into the financial highlights and the finance cost slides, we've also updated the capital allocation framework, emphasizing that share buybacks fall within the fourth quadrant of our investment options alongside strategic M&A. In the projected CapEx slide, you will see an uptick in the FY2024 numbers. We expect a slight uptick in the numbers in order to meet evolving customer needs and market demands. However, we do anticipate that this will taper down in FY2025, and you should see a resulting impact of lower FY2025 spend from FY2025 onwards.
With that said, I'd like to invite Stephen Saad to provide the overview of the performance of these results, to be followed by Sean, who will dive into the financial review. Stephen will then return to give a strategic overview as well as provide financial guidance. We'll then go into Q&A and request those joining us online to post their questions via the Q&A tab, and it's open already. Thank you, all of you. Stephen, over to you.
Thank you, Sibongakonke. Thank you. Morning, everybody. Thank you for all of you that are here in person, and thank you for your interest in Aspen. And for those that are watching through the screen, welcome to everyone. It's an interesting journey, an interesting position we're in now. I was sitting there while I was listening. You start years and years ago, and you say you're going to build something, and in five years and three months, and in March, this is where you'll be. And it all looks great on an Excel spreadsheet. All businesses look fantastic on Excel spreadsheets. And the trick with everything, of course, the most difficult part is execution. And for those of you that have followed us, we've just been ticking the boxes, ticking the boxes.
And we've got to the exciting part of the spreadsheet, so that part where the merchant bankers sell you the hockey stick effect, and this is business has done this for this period, and it's going to do this for the next period. But we're at the stage now where we're in a position to deliver. We've been patiently building block by block, but hopefully, you'll pick up from today and where we're positioned that this is the period for delivery starts, for real delivery on earnings starts now. Just to we don't like to run each presentation as independent of the past. I've just taken you through. I'd just like to just remind you of the links that we had at the end of last year.
At the end of last year, we said we had some five strategic objectives, and it'll always be an objective, organic growth. There's no better growth than organic growth. Organic growth's really important to our business, and we get good organic growth just because of where we are, the absolute number of people in emerging markets buying more medicines and having more access to medicines. We've had this sword of Damocles hanging over our head for a couple of years in China. It's called VBP, for those that aren't familiar with what it means. It effectively is what people in other parts of the world would call what happens post-patent. And we've had some very big products, and they have been and they are we thought would be impacted. Some were impacted, and we thought some would be.
It all has happened, so we've had to deal with this year after year. We keep coming back here and say, "We really don't want to do badly in China, and we want to keep our business there. It's a good market for us, but we have these issues." So that was a critical area for us to address. The sterile contracts, I think most of you that follow us know this very well. This was a spreadsheet story I was telling you. We were saying, "We're building facilities, and now we've got to get these sterile contracts." A very interesting space at the moment, and it's getting more and more dynamic. And from an Aspen perspective, it's moving pretty positively for Aspen. The API business is a very important business for us, and that is very profitable in our manufacturing area.
Our finished dose form actually runs at a loss until we get all these contracts in. We set ourselves a target of getting an uplift on API profits. It had been negatively impacted during COVID, and we needed to drive that. In emerging markets, we set ourselves targets to achieve some bolt-ons to improve our emerging market footprint or to leverage our market footprint. Let's have a quick look at some of the highlights of H1. We achieved our financial guidance, and very positively, our base business grew organically, and it was enough to absorb both China and the negative effects of Russia and CIS. If I knew I could read that to you two years ago, I might not have spoken to you about VBP and all of that. I would have been very happy to give you those comments.
From a manufacturing point of view, yes, our results were beyond where we had thought they might be. A lot of it was a heparin unwind that we'll talk to you about. We also spoke to you last year about having two shutdowns in this first half to cater for some of the new contracts we have. We delayed one of the shutdowns till March of this year, so that was really a shifting of the profitability. And I remind you, in the prior year, we had grant funding at this level. I think it was about $20 million at this point, and we had ZAR 200 million of residual vaccine income. So a good performance from manufacturing to be able to sort of match the prior year. And then a major shift in the heparin business model. It's a sustainable change. It's very positive.
It impacts both working capital and addresses commoditization risk, and I'll take you through that in a bit more detail. Our outlook for H2, we've got momentum from H1. Not a lot's going to change there organically, etc. But we do have some acquisitive growth as well. So some of the transactions we did, and you'll see our headline earnings per share were affected by transaction costs, etc. Some of those transactions now kick in in this period, most notably the transaction in Latin America and South Africa, which is the distribution agreement with Eli Lilly. We also see the start of material contract revenue, and that's quite an important. The comment we made about mRNA coming online was an important comment for us. It was not easy. It's not an easy tech transfer.
We've achieved that, and so we have a lot of confidence to say the revenue starts, and it's starting in this financial year. And we've got strong cash flows as the working capital unwinds, and Sean will take you through that in some detail. So in summary, this financial year 2024 has been a pretty important year for Aspen. We've had to demonstrate the effective management of challenges in the base business. How do we manage China? Do we just write it all down and exit? But we felt there'd be a massive opportunity loss, so we needed to demonstrate that we could save it, but not at huge cost to all of us and to all the shareholders. We wanted to realize existing contracts.
That's been pretty important in this year, and we want to advance further capacity opportunities, and I'll talk to you a little about those as we go on. Then this year was a really important year. You're setting the table ready. This is the foundation. You've got to have a solid, solid, solid foundation. We set this year because for the growth phase that we move into now. If you understand this, you'll and I'm trying to make it sort of easy on our graphically, then you'll understand where we are and what we're trying to do and where the opportunities are. I'll take you through it. The top line is China VBP. So the red line means it's negative. For 2024, obviously, it's been a negative impact in the first half. It has a negative impact in the second half.
It doesn't have much of a negative impact in financial 2025, but I've put the line there because I would like to demonstrate the offsets later on. Russia had good COVID sales the prior year. It was only in the six months, and so after this, it's washed out of the base. We've done a transaction with Sandoz in China, and that should kick in from May, so you'll see that May of this year. We have base organic growth, which we think we'll achieve across the full year, and organic growth's an important area for Aspen. And because if you take China and Russia out, we've got double-digit growth in our business, so that's something you want to lever. We've got the acquisitions that I've told you about.
In the prior year, we had COVID vaccines and grant funding in the base, but we've had increased heparin sales in this period, in this year, as we unwind this heparin business. There's a working capital unwind too, which we see about a ZAR 4 billion reduction in stock. Then, of course, we've got the sterile contracts, and we've tried to do it graphically, showing them from going from smaller to bigger, starting from Q4 of this year, in other words, from April. So if you look at that and you look at it graphically, where we are as in H1, there's negatives in China. If we go down the page, there's negatives from Russia. There was negative in the prior years, prior year's COVID, relative negativity, COVID and grant funding, offset by organic growth, heparin unwind, and a working capital unwind.
So then you move into the second half, and you will see a lot more greens coming in, the Sandoz-China-Lilly-LATAM deal, and the start of the sterile contract. So we're moving from sort of having half red, half green to more green. And then by the time financial year 2025 comes in, it's actually all green and almost green because Sandoz-China comes in, it offsets any China VBP issues, and then all the other greens start. But the steriles grow pretty dramatically as they go from ZAR 500 million of contribution in this financial year to no less than ZAR 3 billion next year and no less than ZAR 4 billion the following years. And we'll spend some time on that. So effectively, the red line, as I said, in China VBP shouldn't be there because Sandoz, for example, will be additive off this base.
With that, let's have a look at the numbers, but I think that's an important slide. I mean, if you want one slide to understand where we're going, what we're doing, it was the previous one. All we're going to do now is talk about those areas, the greens and the reds. We've had double-digit growth in group revenue, and it's driven by manufacturing. And we'll show you now within the manufacturing that a lot of that growth comes out of heparin. If currency tailwinds, how do you tell currency tailwinds when you look at constant exchange rate as a couple of percent, and then you see our reported and it's 10%? That difference is the relative strength/weakness of rands against our trading basket of currencies, and that's what we call a currency tailwind.
And then you'll see we suffered some knocks in China and Russia around our injectable portfolio, and we were fortunate enough, one, to do really well in Latin America in terms of offsetting some of that injectable losses, and the growth in prescription OTC certainly assisted us there as well. So I think that's one thing you should look at, Aspen, is in terms of diversity, diversity of currencies, diversity of products. So this one, I think, is the advantage of having a diverse product range. This gives you a picture of a diverse geographic range. So you look geographically how we're performing, and you'll see Europe CIS, which is effectively a Russian impact. That's negative there, and the negative in Asia relates largely to China and the VBP influences there. But that's offset by the other geographies to be able to give us some growth.
So really good to have that geographic diversity as well. So we have product diversity, it has geographic diversity. And we're going to have a much stronger second half because, one, we'll have those we have the organic growth sustained, and we have the acquisitions. The prescription business, and this is I really like this disclosure, and I hope you'll also like it as well because it gives you insight. I know when I was an auditor, there was nothing more the biggest thing that you didn't do with auditors is getting them more information because I asked more questions. So I didn't know if I was being so wise. I should have taken my own advice in those days. But here it is. It really gives excellent insights into the business. And our whole IT framework, our whole data and information from financial framework keeps improving.
When I think where we were and where we've got to now, it's been unbelievable. I can tell you from my computer a product in Vietnam, one SKU, exactly what it does, what is gross margin , and how much it sells away and how it sits on your computer, in local currency, constant currency. So very, very, very a lot of good information, certainly very helpful, and we're trying to share as much of that with you as we can. So prescriptions are things where you need a doctor to script for. You can't walk into a chemist and get it. Once again, a good performance across almost all regions and all geographies here. The negative here was in Australia. We had mentioned in our last set of results that there was an impact from the PBS.
The PBS is the authority, the pricing authority, and they had made unilateral pricing cuts across the market. It's quite a tricky market in prescription in Australia because of that. The authorities are very involved in pricing. The H2 will be very strong. This is the section where you're modelling. You should model for some pretty large growth here. It'll be driven by the LATAM product acquisition. And you'll see right through this presentation how Latin America is becoming a bigger and bigger part of the Aspen business and could quite possibly be the largest part of the business by even as early as the second half of this year, in the half itself. And a much stronger half from South Africa. We've had SEP increases, which was just under 6%. We have good organic growth there. We've got an ambitious budget for the second half of the year.
And, of course, we've got the opportunity to add the Lilly products into the Aspen portfolio. So this will be a driver of growth for the second half, prescription. OTC is a great business. Think about OTC. It's a bit more like a it is a consumer stock, I suppose, how you might think of some of the big consumer companies. It's a good business to be and often not regulated by pricing. So you don't have, for example, the price cuts in PBS that don't touch OTC products. We've really had a good performance across almost all the regions. Middle East was a strong performer. That product in the red you see up there, Solpadeine, a big product in the Middle East. And with improved supply, it'll get even bigger.
Very positive as our European business is on the front foot here too as well, a lot of it driven by the derma products, so the skin products. So you'll see we talk about pain and hormonal creams. EMLA for pain is something you rub on. It was an anesthetic cream you rub on your arm, leg, wherever you're going to even if you're going to have a vaccination, it sort of anesthetizes. Ovestin are hormonal cream. So our ambition is really to sustain this growth that we've had in the first half into the second half. Injectables is probably the area that we should spend a little bit of time on.
We talked about the sort of sword of Damocles over you, and I think what you'll see here is our ability to catch a falling sword and how this injectable is an area that has to be strong for Aspen. We've pinned down colors to the mask on some of the steriles, and this will be an area where you see some pretty big turnarounds in financial year 2025. So it'll be a strong rebound here. We'll talk about that now, but the big drop there, you can see that Asia's down 27% and Europe CIS is 18%. So it's a common theme. It's the China VBP impact and Russia CIS. Fantastic performance out the Americas. We've managed to start making supply.
These hormonal injections are not easy to make, so this is like testosterones and products like that, and we've managed to get our supplies up and fantastic offtakes already in Latin America and certainly cushioned the blow in this area because Asia was the largest contributor in this area. It still is, and we took a big knock with the VBPs. And I think you will see it'll continue into the second half. I think you'll see more of the same in the second half. However, for H2, you won't have the impact of Russia in there, so Europe is growing, so it should go back to growth, the Europe part of Europe CIS, that is. And LATAM, it's going to be sustained. It's really we've got our manufacturing up on the hormonal injectables, and we're in a good space there.
The real area to concentrate on here is the pipeline here. Mounjaro, we intend launching in financial year 2025. If we get stock, we think it'll be the single biggest product in the South African private sector. Mounjaro, for those of you who don't know, is one of those key products in the obesity sector with Eli Lilly and a really exciting IP for a company like Aspen to get hold of and to be partnered and trusted with, with a company that's just short of a $1 trillion market cap. Then we've got the Amgen products for South Africa, which are a lot of injectables, and then we've acquired Sandoz in China where the two key brands are also injectable. You should see a lot of Asian turnover restored and some good growth, particularly around Africa, Middle East.
In terms of manufacturing, we've had a strong performance in this area, 33% growth in it. I think when you're looking forward, this is an area if I were in your shoes or trying to analyze Aspen, I'd be looking very closely at that FDF line because that's where the sterile contracts go. As you know, we put all the overheads into our facilities, so as those sterile contracts come in, you will have a very high contribution to profitability. So APR growth was important. It was one of the things we set out to achieve, and we've got back to where we want to get to. There's always room for improvement, but it's good to see that business moving forward positively. The heparin sales is a pretty big jump. It's nearly ZAR 1 billion in jump, and that's part of the stock unwind.
We will spend a bit of time on that. For H2, I think you will see that heparin sales will increase even further. It will be more. We'll sell more in the second half than the first half even, and you'll see the contract sterile revenues impacting finished dose, which we'll cover in some detail later. I think it's worth a separate slide, the resolution of heparin and the working capital and commoditization risks. So what's changed? I think I was on TV yesterday and something. People get confused. Sometimes you've got a stone, and you think it's a diamond, and you can gloss it up, and you believe it's a diamond, and then it creates value because someone tells you that stone is valuable. And the product that goes into heparin is something called mucosa, and it's something you throw away in the process.
It costs you money if you're a slaughterhouse. But because of things like African swine fever, COVID, which used a lot of these heparin products, there was just this incredible demand, and the price literally went up fourfold. And as much as you try and talk to someone and say, "Look, that's just a stone. This is a diamond. This is the new gold." And then it all went away because everyone was stocked up, and now you get this sort of supply and demand story, which everyone's fully aware of, and now we've got from excess demand has changed to excess supply, and literally have to throw it away. So we took this opportunity to change the current model. We de-risked from commoditization because we went to those same slaughterhouses and said, "Yeah, we'll buy from you.
We'll keep buying, but we are going to share with you, on whatever basic formula, whatever we get from our end customer. We're not outlaying money upfront. We're not going to. This thing grows from 10 to 50 or 60, and it takes a year to make, so you've got to take a guess at 10 whether it's going to keep going up or go down. We were fortunate. I mean, you've got to know when you're lucky and when you're skillful, but we were fortunate the price kept going up, but at some point, it was going to turn down. We managed to get some long-term partnerships with those slaughterhouses on some profit-sharing mechanism based on the product selling price.
From a customer point of view, the people that buy the heparin from us, they've been paying $100 for heparin, and now you say to them, "Listen, we can charge you $50, but we'll give it to you for five years. You match it with whatever your supply contracts are with the slaughterhouses." So they've got certainty on pricing, which is something I always have wanted when we control finished dose forms. So it makes sense for them. They're excited because they bear in mind most meds and prices are regulated, so if this thing starts going up and down underneath there, you have no control over your margins. You can't go to Europe and say, "We're having a price increase." It's pretty hard anyway. So for pricing security, giving that security, our ask of them was, "We can give you this, but then you must hold the stock.
So all the heparin that we used to hold, you've got to hold, and we just want to do toll manufacturing." Heparin touched its just short of ZAR 5 billion on our balance sheet. It's a lot of money to have in heparin stock. So the heparin business, in short, will go into what we call a working capital light model, and we're trying to do that with all our manufacturing, with more predictable profitability, and Aspen's stockholding will decline materially, and Sean will take you through that. I think, yeah, that's my bit. I'll come back. I'll talk to you a little bit about strategy, but I think a very clear and I hope those segments made it really clear, but a very clear indication of where the challenges are, how we've managed those challenges, and what we need to do going into the second half.
Good luck, Sean . Thank you.
Thank you, Stephen. Just to summarize there, it's been a tough but very rewarding first half, and you can see from Stephen's presentation and the one that'll follow mine that we are building momentum into the second half and beyond. So we're on a strong growth curve, and it's a very exciting time for the Aspen Group. Been a long time in the making, and a lot of hard work has gone into it, but we're poised for that position. Turning then to the financial highlights, if we start with the bars on the left, the revenue bars, you can see we've grown turnover 10%. Stephen's already covered that in a lot of detail, and we have guided that we'll have a strong half two growth, stronger than stronger half two growth driven by both the commercial pharma and the manufacturing segments.
Our normalized EBITDA ended the half year at ZAR 5.2 billion, 2% up on the prior year, and well exceeded the guidance where we guided the flat position, so we were very happy to be over by 2%. The interesting one, and I think intuitively everyone thought that our finance cost line would spike in this half, and you can see from the graph here, we ended the half with normalized net finance cost of ZAR 566 million, which is lower than both half one and half two last year. There are two moving parts in there. We'll unpack them a bit later, but big picture, we have had a pressure on our interest rate and interest costs, but this has been heavily more than counteracted by the lower level of Forex losses we've incurred in this half.
If you recall last year, we picked up over ZAR 400 million of Forex losses over the financial year, about ZAR 200.5 million, and we've had a much better profile, and I'll take you through some detail on that later. So that certainly has helped our finance cost line. Then moving across to the normalized headline earnings per share, 1% up on the prior year aided by these lower finance costs, also beating market consensus. I think the consensus in the market was a slight decline in normalized earnings, so it was pleasing to be able to beat that and end up ahead of last year's normalized NFs for the half. Onto the operating cash conversion rate. We ended the year there at half year at 89%, significantly up on last half year over 58%, and even ahead of last year's full-year number of 88%.
As you know, Aspen is a very cyclical business. We have a much stronger cash flow generation in the second half, as you can see from last year where we moved from 58% to 89%. So we're very confident that by the full year, we will exceed the 100% operating cash conversion target, which will bring us back to our historical consistent trends of over 100%, which we've demonstrated consistently over most of our financial years. From a net working capital, as a percentage of revenue perspective, ended the half at 49%, nicely below last year, and it's the first time since financial year 2022 that we've dipped below the 50% ratio, and I will also unpack that in a little bit of detail later. That was heavily driven by the heparin unwind, the sharp reduction in our inventory investment in heparin.
The combination of our strong cash flow conversion and our net working capital ratios drove a very strong performance in operating cash flow per share, and we ended the half at ZAR 5.53 and a significant increase of 44% over the prior, and we do look to see that trend continuing into the second half. From a net debt perspective, just to perhaps just qualify what net debt means, net debt is our bank borrowings, and it's also the loan we've got from MSD for the inventory. I think you will recall we had that loan of ZAR 4 billion, which is now ZAR 3 billion. So that's also embedded in that net debt number, and that's gone up ZAR 5 billion from June to December. We'll also unpack that a bit in detail later, but big picture, we've spent just over ZAR 6 billion on acquisitions this half.
We've generated free cash flow of ZAR 1 billion, so the net increase is around ZAR 5 billion, and ending the half year, ZAR 27.3 billion. Leverage ratio has upticked from 1.9x to 2.4 x, but it's well within our guidance where we guided that we'd always like to be within the 1.5-2.5 range, depending on where our acquisitional activity curve is. So we're very comfortably within range there. Onto the commercial pharma gross margins, and perhaps just to sort of talk you through the graph before we unpack all the segments, what I'm comparing is the current half's gross profit margin to half 2 and half 1 of 2023. We've also, as Stephen mentioned, we've now been able to restate all our comparatives into the new segments, so you get a good glimpse here of what our comparative ratios are for all the three commercial pharma segments.
So if we start with the prescription segment, which, as you saw from Stephen's slide, is our largest segment and is the one that's going to drive growth in our second half, we ended the half year there at 61.6%, nicely up on both halves of the prior year, and that was driven by a favorable sales mix, which more than offset the price cuts that Stephen was talking about in our Australia business. So really happy with the outcome on the gross margins there. OTC really steady, ending at 58.8%, nicely up again on the halves, and enhanced portfolio sales mix there ensuring a very positive trend. On the injectables side, that margin has dropped down to 58.9%, and that's been impacted by the impact of VBP in China.
We do have some offset with our continued site transfer savings in bringing our anesthetic products in-house, so there has been some offset there, but net-net still a negative impact from an overall gross margin perspective. If you just look and sort of step back quickly and say, "All right, let's look at these three segments and how do they stack up," you can see they're quite nicely the range of margin is very tight. Looking at OTC at 58.8%, injectables 58.9%, and prescriptions, so they're all relatively in the same range of gross margins, which means we've balanced our segments quite nicely, and any performance in all of those segments will drive good growth on the bottom line. So it's not surprising then when you look at the overall commercial pharma margins that we've got a very, very steady gross margin.
Notwithstanding the negative impact in our injectables, the uptick in our prescription and OTC has more than offset that, and you get a very steady gross margin percentage trend when you put the three segments together, and that's all part of our whole portfolio diversification strategy. Onto manufacturing. There we ended the half at 5.3, slightly down on last year's 7.1. Sorry, I forgot to mention these are constant exchange rate gross margins, not reported. We like to look at our gross margins in constant exchange rate, so in reported, I think last year's half was about the same, it was about 5.2%. The reason for that dilution is the high heparin sales we've had in this half, but we're happy to take the dilution because it did benefit our sales growth, and then, as you saw, it benefited our operating cash flows as well.
We do predict the second half to have double-digit margins again in manufacturing, so that's something that you should anticipate for the second half, and that's obviously supported by the strong growth that we expect from the manufacturing division in the second half with the sterile contracts starting to tick up in Fourth Quarter . If we put the full business together and you look at the left at Commercial Pharma, you can see that as we saw earlier on, the margins are very constant on manufacturing, slightly down but pretty much aligned. So the only reason that our overall group margin has reduced is purely because of the increased manufacturing mix, because if you look at the two separate business segments, very well aligned, and it's really a factor of mix that's dropped our gross margin percentage down by 2 % . Onto EBITDA.
Just to maybe just walk you through the construct of this slide, it sets out our revenue, our gross profit, operating expenses down to normalized EBITDA on the left, and we're comparing our first half to last year's reported first half. On the far right, we've also got the constant exchange rate comparisons because internally, that's how we do measure ourselves on constant exchange rate. I think if we first focus then on the revenue and the gross profit, we've heard from Stephen, we've had strong underlying organic growth. Unfortunately, that has been negatively impacted in this half by the VBP impact in China and the lower sales demand in Russia. On Russia, we know now that that's the last half of high Russia sales, so that's out of our base.
If you take those two factors and you combine them with the increased manufacturing mix, that's what's caused our gross profit to grow at 4% relative to turnover growth of 10% and leading to that overall gross margin dilution that we spoke about earlier on. On our expenses, still very tightly controlled, and if you look at it in constant exchange rate terms, a 2% growth, well below inflation rate, so we keep a tight handle on expenses because that's important to be able to optimize our EBITDA. On EBITDA itself, we ended the half at ZAR 5.2 billion, growth of 2% over last year in reported terms. You will see that the EBITDA margin has dropped just under just over, sorry, just under 2% from the prior year, and as we spoke about earlier on, that's predominantly driven by the increased manufacturing mix in this half.
We do anticipate that trend to continue into half two, and we will see a rebound of EBITDA margin percentages into FY25 as commercial pharma, the annualized benefit of all those new deals come in, and also the sterile contribution of ZAR 3 billion that we guided for FY25 kicks in. So EBITDA margins, you'll see a big rebound in 2025. Onto finance costs. This table just depicts the components of finance costs. So we start there with net interest paid. We've got the effective rate underneath that, and then the foreign exchange losses, which all make up the normalized net financing cost line of ZAR 566 million that we spoke about earlier on, and as we saw, it's lower than both of the halves of last year. So if we just first unpack the net interest paid, that has grown.
If you look from last year, we've grown it from ZAR 352 million to ZAR 522 million, so ZAR 170 million increase in our interest costs. From an interest rate perspective, we've gone up 119 basis points. But just to put a marker in that interest rate, the 4.4%, that has been protected by our loan with the IFC. If you remember, we've got a loan of ZAR 600 million with the IFC with a 0% base rate, so that certainly has helped to continue to protect our interest rate in the increased rate cycle. Cost of interest increased, obviously, because of the increased interest rates, and also, as you saw, our debt levels have gone up, so the interest would have gone up as a factor of the higher debt levels as well.
From a guidance perspective, we remain; we're happy to continue to guide that we think that interest will be 120-150 basis points above FY23, so that guidance remains unchanged. From a foreign exchange loss perspective, we ended the year only a loss of ZAR 44 million, last year ZAR 234 million, so ZAR 190 million improvement in foreign exchange losses, and you can see that that more or less more than counteracts the ZAR 170 million increase in the interest cost. The reason for the lower losses is the emerging market currency volatility is a lot lower against the euro this year than last year. So if you cast your eyes to the right and go to that bottom graph, that's the FY23, all the emerging market currencies relative to the euro.
You can see the one with the green arrow, that was the ruble that shot the lights out in December last year. We actually couldn't fit the whole thing on the graph, so we just put an arrowhead there. But if you then cast your mind to the top, to this six months, you'll see a lot more consistency in our currencies relative to the euro, so that's certainly been a big driver of our lower finance cost. Unfortunately, we don't control our foreign exchange losses, so we'll just see how to but at this stage, it seems to be less volatile. I think one of my favorite slides of the deck, working capital. So we ended this bridge really seeks to bridge you from June 2023's working capital of ZAR 22.2 billion to the far right where we ended the half year at ZAR 20.6 billion.
So just taking you through the sort of high-level components, and then we'll unpack the working capital cash flow in a little bit more detail. From a high-level perspective, if you look there, the cash flow investment in working capital was ZAR 88 million. Last year, we invested ZAR 2.2 billion in working capital, so you can see there is the driver of your positive cash flow, a massive drop in working capital cash flow investment, and you'll see that in our cash flow statement if you have to go and have a look. We also had som
e funding in terms of the portfolio acquisition in LATAM of just under ZAR 1 billion. That was non-cash, part of the whole transaction for the LATAM portfolio of just under ZAR 1 billion, and then we had forex and non-cash impacts of around ZAR 700 billion to end us at the ZAR 20.6 billion.
If we then have to unpack the ZAR 88 million, which is the real cash element, we've dropped our heparin inventories by ZAR 1.1 billion, and that's as a function that's due to this transition to the new toll manufacturing arrangement. We have, on the other side, on the rest of manufacturing, grown at one point, ironically, the same value, but we do see an unwind of that. It is a cyclical unwind. Manufacturing business generally does have a bigger stock build in the first half, and we do see that unwinding, particularly in our APR business in the second half. If we look at our commercial pharma, you'll see that's grown about ZAR 600 million this half in terms of inventory, where we've had to take on the inventory in terms of our new acquisition, so that drove quite a lot of investment in the inventory.
Unfortunately, Australians, they give you price cuts and they also then ask you to hold more safety stock so you don't ever run out of stock. From a regulated perspective, we had to hold more stock as well. The Aussies are really being nasty to us, but we're going to teach them a lesson when we grow the OTC business, which is where they can't touch us. On the unwind, if you look at the bond exit, the 570, you can see a nice unwind in our receivables. If you remember, from FY23, we had quite a high level of manufacturing receivables at the end of Q4 FY23, and we did guide that that would unwind, and that has unwound.
So the net effect of that unwind of the investment in inventory gives you that net number of ZAR 88 million and a very solid performance on working capital. If we then look to the graph on the left, the operating cash conversion cycle, what this graph depicts is what our operating cash conversion rate is over the period from H122 to H124. So perhaps if you look at the green line first, you'll see then H122, we were at 50%, and then it goes to 117%, then H123 58%, H2 115%, and this half, as we know, we ended at 89%. So you can see the first half of every year is always below 100%. That's just the seasonality of our business, and the second halves are always below 100%. What's interesting, the red dotted line is just the 100% target that we set ourselves.
What's interesting is that dark blue line that runs through it, that measures our 12-month moving average, and you can see that 12-month moving average. Now if you take H2 2023 combined with H1 2024, we're back over 100, we exceed 102%. And there's no doubt that we will exceed 100% because of our seasonality in the second half, so very, very good performance on the operating cash conversion. On the net capital, as a percentage of revenue ratio, we ended, as we saw in the first slide, at 49% for the year. If you cast your eye back in FY2022, we were at 45%, and we're targeting to get to at least that number by the end of this year, that ratio, back in FY2022.
Interestingly, if you look at the number excluding our APR inventory, you can see we're actually back at FY22 already at 38%, so it's really that inventory unwind. I think that we spoke about that will bring us back down to the 45%. So that's our target for H2. Onto heparin. Stephen covered heparin in a lot of detail from a model perspective, so I'm not going to go through the detail there. So what I'd like you to look at is just the graph on the right, and that graph on the right shows our heparin investment in inventory, I mean, our inventory investment in heparin. So if we start with the first blue bar there, the FY23 number, that's the number Stephen was referring to. At the end of last year, we had ZAR 4.8 billion invested in heparin.
At the end of this half, we've dropped that by ZAR 1.1 billion. As we transition to this toll manufacturing arrangement, we're down at ZAR 3.7 billion. Based on estimates from volume and existing customer mix, so no new customers, we do anticipate potentially getting new customers with a new business model. It's just existing customer mix. We do anticipate ending the year at ZAR 1.8 billion, so further ZAR 1.9 billion reduction. So cumulatively, over this financial year, we'll have dropped our inventory investment in heparin by ZAR 3 billion. And based on the new model and the sourcing of heparin at better pricing with the partnership we have with the slaughterhouses, we think we can get our heparin investment right down to ZAR 0.8 billion next year, so another ZAR 1 billion.
So over the two financial years, we're predicting a ZAR 4 billion reduction in heparin, which obviously will drive cash flow and profitability.
So just to guide you from a sales perspective then, we do anticipate that sales for FY24 are going to spike, so we're predicting sales for the full year to be around ZAR 3.6 billion. I think half one was ZAR 1.6 billion, so another ZAR 2 billion potentially in the second half. Then back to FY25, where the transition is complete, we see ourselves back in the range of ZAR 1.1 billion-ZAR 1.3 billion, but that's just existing customer mix. Obviously, with a new model, we seek to be growing that business. So that's just to give you a bit of a sense of the heparin trajectory. So a very exciting time for us. Taken a lot of hard work and many, many, many phone calls, many hours, but I think we're on the right road there now. Onto net debt.
So if I unpack the net debt slide, if you look at the first bar on the left, we started the year at net debt of ZAR 22.2 billion, and that was made up of two components. You can see there are bank borrowings of ZAR 18.4 billion, and there is the MSD loan, the inventory loan of ZAR 3.8 billion. If you then cast your eyes to the far right graph bar, you'll see we ended the year at ZAR 27.3 billion, and you'll notice that the MSD loan is now ZAR 1 billion less.
We've had to pay ZAR 1 billion in this half, and as you know, we've got to pay ZAR 1 billion in September 2024 and ZAR 1 billion in September 2025, and then that loan will be fully expunged. So if we then bridge the moving parts of cash flow, we had a strong operating cash flow here of ZAR 4.5 billion.
We had some investment in PPE of ZAR 1.9 billion, dividends of ZAR 1.5 billion, but if you take the net of that, we've generated ZAR 1.1 billion of free cash flow this half, which I spoke about in the first graph. Then on the acquisition side, ZAR 6.3 billion spent on acquisitions, the biggest one there being the LATAM portfolio acquisition of ZAR 5.3 billion, which was funded from both operating and investment cash flow. So that's been the main driver of the increase in debt. However, we have fully paid off that transaction in this half, so there's no further payments to be made in terms of that acquisition. There's no deferred payments. From an overall perspective, as we said, we ended the year, half year, 2.4 x leverage ratio.
We're projecting at the end of the year to be less than 2.2, so that's our target, and we're comfortable that that's where we will end. Onto ESG. Aspen remains committed, fully committed to all our ESG objectives, and it's supported by 4 key pillars: people, patients, environment, and society. And if you recall from our capital markets day presentation in November last year, our core part of our DNA is patient access, and I think you'll all remember the slide where we took you through our journey of how we've helped patients access critical medicines over time, right from ARVs to COVID medicines to the soon-to-be pediatric vaccines. We're going to do a Serum and the recently announced Novo deal for the production of insulins, where we target to try and reach over 4 million people. So that just really demonstrates our promotion of providing access to medicines.
From a KPR perspective, some shout-outs. We didn't want to go through every single KPR, otherwise we'd be here for a very, very long time. And I do encourage you, if you want to go through all of our ESG initiatives, there's a lot of detail set out in our capital markets day presentation. But some key shout-outs. From a female representation perspective, our percentage of females in top management positions has grown from 17% in 2019, which is our baseline for our ESG KPRs, to 35% in 2023. Over that same period, we've withdrawn 37% less water over the same time period. We've also reduced our scope one and scope two carbon emissions by 28% over that same baseline period. So we're very good progress on these KPRs, and we remain well accredited by all the sustainability agencies, which we've put down in that far bottom right quadrant.
As part of our carbon emission reduction strategies, we've got a lot of focus on renewable energy projects in our facilities, one of them being solar projects. So you can see those pictures on the right. That's our facility in Gqeberha. You can see you can't see much of the roof. It's full of solar, and we're really harnessing the power of sun there. And I think those of you that came to the NMB capital markets day would have seen the solar panel, the solar farm that was out in our facility there. So those are good initiatives that are driving good value. And then very exciting is our I think we probably spoke about this about two or three presentations ago, is our recycled waste to energy project, where we recycle plastic to gas to create electricity, called pyrolysis. I hope I pronounced that correctly.
And that's still scheduled to come online in early calendar year 2025, which will be able to take our Gqeberha facility off the grid and at attractive energy costs as well, so a benefit of cost and a benefit of off the grid and lower carbon emissions from that initiative as well. So a really exciting time for the facility. So I think that's all I've got to say. And now for the exciting part, the strategic review, so I'll hand back to Stephen.
Well done, Sean. Thank you. So you get your point, you've got your spreadsheet, you get to the point, now you have to dance. This is the part always easy to talk in theory, but here, what you'll see now is what we have to do and what we have to do now. It's all in the short term. We had a strategy to de-risk the commercial base, and we focused on two things: to drive organic growth and mitigate VBP. The H1 growth was 3% in commercial pharma. Without Russia and China, Russia/CIS and China, organic growth was 11%. So that's quite important in setting a strategy that, logically, if you can deal with Russia and China sustainably, you've got opportunity to really grow your business at a much higher rate. So what is the sustainable solution to VBP?
It was to acquire the Sandoz business in China. They also went through VBP and decided to exit the country because they didn't see a value in staying there. So we were able to acquire their business. We gave them some assets in Europe. We swapped some assets in Europe. We bought some assets in Europe. There was an offset. But we managed to do it without blowing the bank. Our net consideration was just EUR 28 million, and if you'd given me that opportunity and told me that would happen, I'd be very, very pleased some time back with it, but a lot less angst in the presentations that I gave you before.
The competition approval is expected in May, and we track that approval process, and we're moving, and it looks like 1 May could or should be the start date, and the annualized sales would be about ZAR 1.8 billion. And this will offset VBP impact from financial year 2025, and we see there's no more VBP impacts in either portfolio of any consequence. So that is the sustainable solution. You don't want to be doing all your hard work organically to offset it here. That will provide a sustainable solution. And most importantly, if you remember in past presentations, I was always concerned that you end up having an opportunity last year because they're like, "That's it.
We're out." But we'll manage to keep a very strong team in China, and that's going to be pretty important because a lot of people are exiting, a lot of people don't know how to get into China, and we're already getting people who want to come onto our platform and license products into that platform. So I think we're in a strong position there. We don't have to talk about this again because I think we find a sustainable solution there. We're going to get a much stronger growth in H2. LATAM and Lilly LATAM products and Lilly will be the big drivers here of the major differences. We effectively only had six months or six weeks of LATAM turnover in H1. Momentum will continue organically.
Diprivan, our biggest product, has been confirmed to be in VBP, and we expect H2 sales to show much stronger growth over H1 and over H2 of the prior year. We've got some really good pipelines in Aspen, a stronger pipeline than we've ever had historically. A lot of it's inherited pipeline, or you acquire sort of Amgen, you get a pipeline. Same thing with EMLA, Lilly, etc. But Mounjaro is definitely going to be a standout launch for us, and I think it will all depend on how much stock we can access. We also have some licensed products that we will be bringing onto our Chinese facility over this next period, and we'll help give good growth into that area. Oh, sorry. From a business perspective, we've got a very attractive emerging market footprint. We say this again and again.
People are going to want to join us and put products on. I think you're starting to see it. You're seeing more and more of it. And we're in the process of executing, have executed, and executing on current transactions. But I think you should be expecting more of this to follow, that there will be more and more people who say, "Listen, we've actually got these very expensive drugs. They only really fit in a few markets. How do we access emerging markets?" And our risk of Foreign Corrupt Practices Act. We can trust Aspen on that, and compliance is critical. We can trust Aspen on that, and they start there, by the way.
Then they say, "Well, and commercially, we better be partnering Aspen than running it ourselves and running it complete our own expense base in that area." So I think you'll see more and more of those opportunities for Aspen. Manufacturing. So this is an area that's had a lot of focus from internally and externally. And we've told you before, we've secured contracts on a Take or Pay. What does Take or Pay mean? It means if someone says, "Let's deal with what it isn't." So you do COVID, and someone says, "We're going to give you 1 billion, 1.2 billion injections, and you're going to pay you $7.50," and then it goes away, and it just goes away. Take or Pay means you reserve capacity at an Aspen facility, and you pay for it, whether you use it or don't use it. So you have certainty.
The progress here is tangible, and it will impact this year. And we also, there have been some positive amendments to contracts where people have changed volumes, existing contracts, and it's raised some of the base values we gave you historically. Very proud to be on Novo Nordisk's, to be right in the sort of front of the annual report talking about their partnership with Aspen and how many patients we hope to access together. So really, when you look at Novo and you look at Lilly, between them, they've got a market cap well over $1 trillion, and it's very great that they entrust Aspen and back us in such a way. The serum products will be a meaningful contributor.
We're starting to see some real movement, and it's in GAVI. GAVI are people who procure vaccines globally, and they've given unequivocal support for African manufacturers, and they're favoring now Africa to Africa. They've set up a fund of over $1 billion to support sustainable African manufacturers, so they'll give you preferential prices or subsidized prices to ensure that there is a meaningful contribution from African manufacturers to supplying into Africa. I think Aspen will be a large contributor to GAVI. No, sorry. The GAVI, and this is a normal business. It doesn't have take or pay volume, so you have to this is a normal sort of trading business that you don't have certainty of offtakes or other people paying for working capital. This is, as one might understand, a normal transaction of buying and selling.
I think for us as a company, we try and move quite quickly, and we're trying to do things quite quickly, but timing is uncertain, and there is a degree of frustration, whether we're dealing with Indian drug authorities to release this or to there are lots of hurdles along the way that are frustrating. But what I am happy to tell you is that to have guidelines, and the guidelines that are being used in GAVI have shifted very strongly towards the products that Aspen acquired. So we did quite a bit of research in what we were looking for, and I'm not going to take you through the individual products, but there's big shifts to the products that we have. So we're going to be very relevant going into the future with our range. We're on track for a successful transfer of all projects.
The mRNA platform products transfer was completed. That was very important, the very tricky technical transfer. Very happy to have it through the gates. There's the contribution that we see. We've told you about the ZAR 500 going to at least ZAR 3 billion and at least ZAR 4 billion. We say at least ZAR 3 billion and ZAR 4 billion because to that we would have to add serum, so that is, we're giving you guidance without serum before we gave it to you with, and that's because there's been a positive uplift in some of the volumes in our base contracts. And there's potential for new contracts to impact those years, and we'll talk about new contracts now. The timing of the serum licensed products offtakes are unclear. It's not if we get a contribution, but when.
Looking at where the volumes are, we expect their contribution to be no less than ZAR 1 billion once we have all four products registered and in, and we expect our first registrations in this financial year 2025. The H2 Heparin, we called it an inflection point. We called it last year. We said, "This would be an inflection point. This is when we start seeing revenue in manufacturing," and we see the, as we literally put here, the big wheel turning. Heparin unwind has been a major achievement. The rebound into a profitable APR chemical business is also a great achievement. However, I do also point out to you that, for those of you that know, our APR business has a peptide capability. It's a very important capability, a very well-respected capability, and a very highly valued capability.
When you go and look at companies that only specialize in peptides, they trade at very high multiples. The technology's tricky. It's where all the new oncology products are, and guess what? It's where the obesity products are as well. The obesity products are you talk about we spend our time talking about Finnish fuel shortages, but there's quite a big shortage and a capacity limitation in manufacturing the ingredient, the APR, that goes into the weight loss products. So we've got that capability. The volumes of these products are if we've got 10 products and we're doing kilograms, the volumes of these products run into tons. So it's a potential opportunity for us in the chemical space as well.
For the finished dose form, in other words, the filling of the products, it signals. I think we're going to see the beginning of the big contracted revenue flows, the sort of Novos, the mRNA products as well. We have got limited CapEx, so these bring strong cash flows for us as well and strong profitability. I think in the past, we have given you guidance that the contribution to EBITDA is about 70%. I think it was at least 70%. So existing contracts that we have are expected to exceed ZAR 4 billion in 2026. We've also told you in the past that our capacity that we have signed in is probably a little less than half of what we have, so we have a lot more capacity to sell.
The thing with capacity, and I said it about four years ago, I can still sort of see the presentation. I had one with a little knife. You can only sell your capacity once, really, because you get long-term contracts. You can sell it once. You've got to make sure you sell it to the best of your ability. And what do you do when you do the best of your ability? You look for the volume. You look at price. You look at certainty of the contract and period and duration of contract and the partner that you're looking for, and do you have the capacities or capabilities to bring that capacity online.
So somebody says, "I'll take a whole line," is a real positive for you because, for those of you that saw the factories, when you take a line down, it goes down for a long time. So you want to limit your changeovers. The sterile landscape is shifting all the time and positively shifting for Aspen. The value in this business is people who have capacity now, not people who can build capacity in three years' time or four years' time. You would have seen in the market that the Novo Nordisk Foundation bought the Catalent facilities. Catalent's a contract manufacturing business. I think they paid EUR 16 billion for those facilities, and that's largely to secure well, it was to secure capacity for their weight loss obesity products.
Of course, those factories weren't empty, so there's a lot of people now scurrying around saying, "Oh my God, Novo, when my contract's up, I'm going to have to find someone else to make our products for us." So the capacity's actually tightened as a result of that, and it's caused quite a few ruptures in the market. And as Aspen, we're weighing up our options and optionality here, and hopefully, within the next few months, we'll be able to give you some outcomes of where we get to.
I think successful closure of what we're looking at will result in much of our remaining capacity being utilised, and it's obviously a key focus area for us because of all the good things, all the expenses in place, and to just put contracts with volumes and income on top of something that's already paid for is obviously a very beneficial place to be at, both for cash flows and profitability. A key focus area, probably the focus area for us in this period, is managing the additional capacity. You also don't want to be running through the yard trying to grab at every opportunity that comes your way, so we've tried to be solid. We've pushed hard now that we know that we've done successful transfers with the other products. We've bedded those down, and we can move our teams on to the next projects.
But very competent, very capable teams. The feedback I get from these multinationals is incredible in terms of their support for our teams, and the respect they have for the capabilities and ability to move at the speed we move is something that we're really proud of. Now, to the summary and to guidance, to give you some sense for what to expect going forward, the EBITDA is anticipated to grow in mid-single digits. The inventory investments, we expect our inventory to drop by ZAR 3 billion in financial year 2024 and a further ZAR 1 billion in financial year 2025, and we'll have permanently lower working capital ratios, and this would be augmented by the sterile contracts we have, which are really toll contracts as well where we receive the ingredients and the products largely almost from all the multinationals or people we trade with.
Shaun's taking you through interest rates and emerging market fluctuations. We're in the hands of the gods on those. The operating cash flow conversion, Shaun has told you, will be expected to be over 100%, and that will also help contribute, obviously, to a lower leverage ratio in H2. Both commercial pharma and manufacturing will show growth. The H2 revenue for commercial pharma, we expect to grow by ZAR 1 billion, underpinned, yes, by more of what we've done in the first half, but together with the acquisitions, and will also represent the last half of any material impact on VBP. And the Sandoz acquisition will restore the revenue from financial year 2025. So when we say restore, it's not that it balances where it was. It will take us back to where we were before these VBP impacts.
That emerging market footprint is well-positioned for future acquisitions and partnering opportunities. In terms of manufacture, we've had very good growth in this period, and we expect double-digit revenue growth for the second half only, and that would also be led by the finished dose form, the contracts, in other words, coming online, and Heparin. The Heparin revenue will be over EUR 3.5 billion in 2024, and the commercialization of the contracts start with contribution of at least EUR 500 million in this year and then going to EUR 3 billion and EUR 4 billion in 2025/2026. I remind you that that EUR 3 billion-EUR 4 billion is only based on existing take or pay contracts. So any revenue from Serum would be additive. Any new contracts that we sign that come in those periods would also be additive.
We're working very hard on the sterile contracts to fill the balance of our capacity. I use the words under discussion and diligence. Diligence is an important word to use there. It means you had discussions. It means you are progressing, and now you literally say, "Does this stopper fit on here? Does it bring water into the product, and the product can't have any water on it or it can't have any acid?" Whatever it is, we're in that level of discussion, so hopefully, we can bring some of those to closure over the next period and let you know. But a lot of hard work to get here. It doesn't get here by accident. We've been slowly building away, chipping away, year half on half, year on half, year day on day, but we are here, and it's now up to us to deliver.
It's in our hands to deliver off this base. So thank you. Thank you for all your time, and thank you for listening to our story, and hopefully, it makes sense and it's clear to everyone. We're going to move to Q&A, Sean.
Yes. Thank you. Thank you both for taking us through the performance and the financial review of the results. We'll now move on to the Q&A part of the presentation, and we welcome questions to those joining us online and those who are in the room with us today. If I can just request that those who are in the room wait until they receive the mic for the purposes of those joining us online before they ask their questions. We'll take questions from the room first.
Morning, everybody. Morning, Stephen. Morning, Sean. Thank you again for your presentation. I have quite a few questions, I think three of them, but I'll start with two. The first question for me is more well, firstly, my name is Letlotlo Lenake, and I come from Investec. I think it's rude not to introduce yourself, so let me do that. My first question, probably more to understand the growth margins in your manufacturing business outside of the guidance you've already given with FDF and how much you're going to contribute or the new sterile contracts are going to contribute. How should we be thinking about where that business goes, where the growth margins in that business grow will end up over the medium term, right? That is the first question.
I'd say maybe even more over the shorter term, how should we be thinking about that business and the potential closure that you spoke about yesterday in your commentary of the European business, of the NDB facility? Is that going to have some sort of a negative impact on profitability and growth margins over the short term into the second half?
Sorry, the closure. Sorry.
Yeah, or the plan shutdown.
Oh, the shutdown.
The plant shutdown. Yeah, how much of a negative impact is that going to have? And then the other question, what I wanted to understand is, Adcock and their results spoke a lot about pressures relating to port congestions, etc., and it's not something that you've spoken about in your presentation. So what I wanted to understand is, because you've built up all the sterile manufacturing in South Africa, are you less exposed to those types of risks from a port congestion because of all the inputs that you're getting? And if you're not as exposed, what are the factors that kind of negate your business versus Adcock's?
Okay. So lots of things. I hope I'm going to try and remember some. So let me first start in deciding how you model manufacturing. If I were an analyst, so I would start off, and we've given you in the past to tell you that we lose in our finished dose form over ZAR 1 billion. I think it's about ZAR 1.2 billion. You could model something like that. Okay? We don't capitalize it, those losses. I mean, we could really make our results look good. We could say we're capitalizing, because we've got these contracts that would follow. We don't do that, so we write it off. That loss is counted by the profitability in the APR business. That's why we say the APR business profitability is important. In modelling now, we've given you numbers: EUR 500 million, EUR 3 billion, EUR 4 billion.
You can take 70% of that, you add that to the manufacturing profitability, and you can say, "Listen, I know there's a loss here, but by the time they get to EUR 3 billion and EUR 4 billion times 70%, it turns into a profit in that particular space." So I think that's how I would my suggestion to you of how you would how I would do it. That's how I'd do it in my head anyway. Sean's probably the right person to have answered that question, but that's how I would look at modeling manufacturing. And so instead of having one business profitable and being weighed down, you sort of say, "Oh, manufacturing's useless. It's got no gross margin." It's got potential to have very big shifts in the gross margin because a lot of your revenue goes straight to profitability. The ports.
Adcock's problems in the ports, and there's load shedding, and Transnet doesn't work, and you can go through all of those things, but you've got to manage all of those things. So we've probably have and in fairness, on a relative basis, Adcock have their whole business in South Africa, almost all their business. From an Aspen perspective, maybe 15%-20% of our sales come out of South Africa on a relative basis. Of course, we have all the same problems any South African company will have, but we try and mitigate it, one, by holding a little more stock; two, we will take ourselves off the grid, so we try and manage issues.
But if I had to give you all the list of issues, you don't want to know about the motor bomb that's come over from Ukraine and hit our office and everything that goes across the world, and China's got massive anti-corruption laws so they can't get into hospitals so your sales are down because they're so worried about buying something that's on or off VBP. If I took you through every problem across the globe, I think we'd all be very depressed. So there's problems and there are opportunities, and you get your balance right, but if you want to keep moving forward, you've got to hang in and fight like hell, and that's what we do, so. We have the issues, but they're not probably as material in our life of port congestion as they are in Adcock, but I'm not saying we don't have problems.
We have problems everywhere across the globe. We don't have enough testosterone to supply all of Latin America. We don't have enough Solpadeine to supply into the Middle East, and these are big products that are growing for us, but so lots of issues, lots of challenges around supply, the supply of sterile products, and factories close on you in Europe, and this one has a deviation. So there's issues everywhere, but you pay us to manage those issues for you. Did I answer all your questions?
The plant shutdown or?
Oh, the other shutdown. Yeah, it's a swing. It might be, but I wouldn't worry about in modeling. It's a swing. There might be EUR 100 million rand across sites. I mean, I know in the scheme of big numbers, it's a big number. It's a big number, and bear in mind, we started from a zero base, so every number looks massive to me. But from a modeling, I know that's where you're coming from, modeling base. I wouldn't worry too much about it.
Okay. We'll move on to questions online. We've got a question from Christella from Bateleur Capital. Can you give us some insights on the performance of the Eli Lilly products relative to the EUR 450 million in sales in 2022?
Well, what we in February said, it's two months. We've had it from January, so in two months, yeah, they're performing in line. They may be a little better, but I'd hate to take a couple of months. The Competition Commission approval was in January for January, so we've just had January and February, and I think we're a little better than the base. We have performed better.
The next question comes from Gail Daniel , apologies, from Ninety One. Is the Mounjaro contract signed and sealed? Is there anything outstanding? Can you export from SA to other regions? How much do you expect it to contribute?
Yeah. We have Sub-Saharan Africa as a region, so it's part of the overall region. Very hard to pin where it will be because of supply and the dosage form. So what's happened globally on Mounjaro is it comes in something called an auto-injector in the U.S., which is so you get three forms. You get a vial, which you've got to take an injection, pull it out. The second form is a pen, which is sort of what you get used to when you take insulins, and they've got something called an auto-injector, which is an automatic thing. You push it, and it goes. And the auto-injector was what they wanted to use globally, but the demand is so high that they've had to move to both vials and pens. So it depends what dosage form we're going to get.
I think initially, it will come in vials and then move to pens because that's what I've seen in Australia and we've seen in Germany, so it would depend there and depend on supply. I can't call supply at this stage. There are global challenges around supply.
The next question comes from Rajay Ambekar from Excelsia. With the lower heparin sales in 2025, please explain how the GP margin is affected?
It's positively affected because now you've got more sales with limited gross margin. Now you have less sales with a decent gross margin. So your overall gross margin is positively impacted because you have less sales, but you have similar profitability because this is really a stock unwind, a lot of it, and it becomes a lower portion of your total sales. So manufacturing becomes a lower portion of sales. That part of manufacturing, then it's positive because your commercial pharma margins are higher.
We have the next question from Anuja Joshi from Standard Bank. Two questions from her side, one on sterile manufacturing contracts and one on tech transfers in SA. The first one, management had previously indicated that it is hopeful to get selected in obesity/diabetes market opportunity. You have now guided that the outcome for additional sterile contracts is expected in months. Can you comment on what sort of new sterile opportunities other than the potential obesity contracts you are looking at, and should we expect an announcement relating to potential obesity contracts soon?
So the question is you're asking, "Should we expect obesity contracts, but then don't tell us about obesity? Tell us about something. Contracts, but then don't tell us about obesity. Tell us about something." So I think I've tried to say where we are. The obesity market has opportunity in itself for Aspen. Clearly, it has opportunity for Aspen, but the obesity market is also displacing a lot of other customers in the markets and creating other opportunities as well. So I think I can't say more than that because you sit up here, and we only tell you what we're trying to do, but these things are very binary. You either get it or you don't get it. But what we're telling you is, given how tight the market is and tightening, we're seeing an increased opportunity to fill the balance of our manufacturing.
A second question is, can you comment on where you are with regards to the tech transfers for the Novo Nordisk human insulins and the Serum vaccines in South Africa?
Yeah. As you said, we've progressed them all, and we will get revenue in this financial year from all the contracts that we announced earlier. So all contracts, the one that Novo Nordisk is a sort of more standard product to make than a mRNA, and so there was less angst around making a vial or a cartridge, but the mRNA was very important for us from a capability and making sure that we have a tech transfer that works. There's a lot of work. There's a lot of things you have to do. It's frozen. There's a lot of complexity in there. The advantage, though, is that once you have an mRNA capacity and capability, so let's say you start with the COVID vaccine. You don't need more tech transfers for the additional products.
So if you've got an RSV vaccine or a flu vaccine from the same people, you actually can use your existing Tech Transfer. You can simply add products on top here, which is a really big plus for being able to not have your lines down for prolonged periods for new products.
The next questions. We've got three questions coming from Richard Garrard from AVIOR Capital Markets. The first question is more of a clarity question. Was the guidance provided at the capital markets day for ZAR 550 additional incremental Non-Heps in FY26 based on existing signed manufacturing contracts, or did that include filling remaining capacity available?
The existing. It's the existing only.
The second question, what is the duration of existing manufacturing contracts, and what is the minimum duration you would accept on future contracts to fill remaining capacity?
Yeah. We tend not to go below five years, so they go somewhere between five to 10 years.
And then the last question from Richard is, are there additional commercial pharmaceutical acquisitions in the pipeline, or is the bulk of recent acquisitive activity complete?
I think there's always. We're always looking and doing things, and we're looking to what we try and do is leverage what we've got. So we spend all of this time building this whole platform out of different entities across the world. You don't want to start building more and more platforms. So we're trying to find products that we can put on top of a base in China or on top of a base in South Africa or Australia. There are always ongoing discussions across many areas, but we're looking very closely at partnerships where people say, "Gee, this is a base we want to leverage or we want to put our products on top of.
The next question comes from Rowan Campbell . What would you expect the timeframe of integration of new contracts that are under discussion or due diligence should there be a need for a tech transfer? If contracts are secured in the near term, would that be FY27 contribution?
No. I think that it depends what you've got. So if you've got a product that's already registered, say, for example, an obesity product, so it's already registered, then it's just a change of the manufacturing site, and that process is a lot quicker when it's already registered and your site is already approved to make it. So those products, you could be commercial within probably nine months if you already have. So, for example, if you want FDA approval so every regulator's a bit different, but let's talk about the FDA because that's where the big volumes and values sit generally. They've approved our French facility. They've approved the line. Then it's just a transfer onto that line, a tech transfer onto that line, and approval. You'd wait. So you do the batches. There's no new technologies. There's nothing tricky in it.
If there was, they've worked it out in their own sites or different or in the site that the product comes out of. So you transfer with 100% certainty, and you've got approvals. You're pre-approved because your site's pre-approved. So you've got to just wait for stability. In other words, check that the product looks, feels, does the same in the lab that it should do, and then you're approved. And that process can take nine months. So you could, to answer Roy's question, and that's why we said you could have income in financial year 2025 if you do something now. It'll be the latter half, and financial year 2026. So that's why we put on the slides plus Serum plus new opportunities.
The next question is from Steve Minnaar from ABAX. What is your margin for manufacturing heparin? What do you mean with contribution for new FDF business? Is this EBITDA?
What we've guided is that the contribution converts to EBITDA. When you take your contribution number, you should multiply it by about 70% to work out what your EBITDA is.
The last question is from Alec Abraham from Sassfin Wealth. You're doubling down on LATAM. What is different now that makes you comfortable that the past difficulties will not be in relation to write-offs won't be repeated?
Hello, Alec. Alec's followed Aspen from the day we bought South African Druggist, and he told me that he thinks he's talking about the mouth swallowing the elephant and what happens. So Alec's going back a very long time, but if you follow our business in Latin America over the last 10 years, it's grown in double digits. We had issues maybe 15 years back. I'll tell you how long exactly. I was 17 years because we won the World Cup that year. I was there to watch it from Brazil. We had problems in 2007. We went through a stretch there, but subsequently, for the last 10 years, we've had double-digit growth in LATAM. It's been by far our best-performing region. If we look at our internal, it's our best-performing region and has the highest returns on sales.
Final question from Christella from Bateleur Capital. Are you still comfortable with previous guidance of flat margins for manufacturing for FY24 given the delay and technical shutdowns?
Yeah, we are because whatever so the delay, it's in the same financial year. It's shifted between the halves. So there will be no for the year, there won't be an impact. There's a positive impact in H1 because it was delayed, and there'll be a negative impact in H2, but we had it the other way around in what we guided. But overall, it will be the same. There's no change in the absolute year for the year.
Thank you, Stephen. That's all we have online. Thank you all for your time.
Yes. We did all the questions. Phew, must be glad we had a thank you. Thanks, everyone. Appreciate it. Thank you.