Thank you for standing by, and welcome to the AFT Pharmaceuticals Half Year Results Analyst Briefing. All participants are in a listen only mode. There will be a presentation followed by a question and answer session. Representing the company today, we have our Managing Director, Doctor. Hartley Atkinson and Malcolm Tubby, our CFO from AFT Pharmaceuticals.
I'd now like to hand the conference over to Hartley Atkinson. Please go ahead.
Thank you, Ashley. Thank you, everyone, for joining us today. So maybe just to go through the presentation, if that's okay. So obviously, we have the first page, which is the title page. Page 2, we have the various disclaimers, so please just be aware of those.
They're pretty standard. And maybe then to move on to Page 3, which is the financial highlights for H1 FY 2021. So basically, so look at some top line numbers. The number of countries which we're selling Nexogegic in continues to grow. We're up 21% to 34 countries.
That's an important matrix. Over time, clearly, as we sell it in more countries, then that will improve the volumes and then that will drive international sales. So we're watching that as a matrix. The operating revenue from product sales grew 9%. To be frank, it is quite it is still quite a challenging period with various impacts around COVID.
We were pleased overall to grow sales at that sort of rate. I guess if it hadn't been for COVID, we believe we would have got a lot greater growth. But considering the situation, we were still pleased with that 9%. And then on to normalized operating profit, the answer here is it's $2,400,000 and it's down 38%. There were some other factors in last year's figure that's probably important to consider.
There was a $9,800,000 gain on acquisition of an asset from the partnership around the Tascamere product. And additionally, there was a $1,700,000 R and D credit from a development partner as well. Edwan does look at a pure apples to apples comparison. It was more like a 9% growth as opposed to 38% decline, but just to point that out. In terms of normalized net profit after tax, that improved by 968% on the bottom line.
And then looking at cash, clearly cash is always important. What we have done is we have made the management decision to build inventory and stocks. We believe that it is the safe thing to do. There are still quite a lot of disruptions around the world with shipping. Airfreight, I think, as we all know, has been very disrupted.
We generally don't use a lot of air freight, and we generally have used mainly sea freight. However, boats actually are pretty getting disrupted at the moment, and we've made the decision to look ahead, and we've increased their stock levels just to give us an extra buffer. And obviously, the effect of that is it does use some cash and that is what has happened. Having said that, look, we're in a good position where we have access to additional facilities that need it, which we don't believe we need, and we're well within our banking covenants or anything like that. So that explains that figure in terms of background.
And then shareholders' equity has improved by 73%. To move on to Page number 4, just to look at the breakdown of the FY 2021 interim results, we've seen that sales have improved 11% in the main market, the Australian market. New Zealand, they've been relatively flat at 0%. There's been a slight decline in international. Now that is also pays to just give that some context.
There was we do have licensing income, which does get put into the international overall sales. There was a quite a significant amount received in the first half of last year. So therefore, it's a bit of a lumpy effect that one ignores that one off license well, sorry, it's not one off the licensing income. The actual product sales grew by 53%. So we're still getting good growth in the international product sales, which overall will still be the key parameter going forward.
There was a slight decrease in the sales in Asia. But anyway, overall, basically, we're still considering getting pretty good growth. There's been some lumpiness in income very much from month to month, which has been somewhat impacted by COVID. If we look at MAT figures, which sometimes if you've got lumpy income and annual moving annual total gives you a better indication. For instance, overall sales are growing by 18% on an MAT basis.
But as I said, there's a lot of lumpiness for various reasons, which are mainly related really to COVID impacts. So then moving on to the next slide, Slide number 5. Really, this is just adding on to the last slide with a bit more detail. We can see Australian growth at 11%, New Zealand pretty flat or very slightly positive. Rest of World, as we said, looking like negative at minus 6%, 15.9%, but product sales are still growing at 57%.
Certainly, they would have grown a lot more. We've got orders for a lot more and we're still trying to clear those. There has been still some ongoing impacts of COVID on production of our export orders, which will resolve over time, but we still have a backlog at present. And then overall product sales grew by 9% to $48,400,000 and then including licensing income and the whole, everything together, there was a 4% price. So that's that slide there.
And then moving on to Slide number 6, I'll hand over to Malcolm. Thanks, Hartley. So looking at the consolidated income statement, the abbreviated one, Hollis taking this through the revenue, Moving down to gross profit of $20,000,000 that has been impacted by the lower licensing income. But if we move down to the very bottom of the slide, we're showing you there the gross profit on the product sales. So the margin change of 1% down to 41%, and that's due to the additional freight costs for air freighting product in to ensure continuity of supply.
And there was a very small a little bit of foreign currency at the very start of the financial year. If we look at the operating expenses, they continue to decline as we get our operating leverage. So they're down to 36.7 percent of revenue. Long term, we see that, that will there will be a continuing decline or improvement, if you like, in that percentage as the international sales grow. There will be a little pause in the short term as we launch the new products that we've got lined up for Australia and New Zealand.
So looking at the underlying profit of $2,400,000 that's 5% of revenue. And last year's normalized operating profit of $3,900,000 If you took that 1.7 percent one off contribution to R and D out, it's about the same, around 5%. The big improvement we can see is in the savings we're generating now in the finance expenses, which I'll talk to when we get on to the balance sheet. And that's what's driving that's helped a lot to get us into more positive profit after tax. So GBP 1,200,000 If we move on to Slide 7, the abbreviated balance sheet, The main call outs here are the current assets, and that's an effect of us building our inventory levels to protect ourselves through these difficult times.
The other two factors, one of them is the debt. So we've now got 3 year facility in place with the local bank BNZ, and so that moves into current and is declining. We've reduced that by $3,000,000 in the 6 months. And then if we look at our total equity up to €30,000,000 which is the result of the profit in terms of profitability and the equity raise we did during the period. Moving on to Slide 8, the cash flow.
So the negative 2.7 percent in operating activities, that's a combination of our operating profit, the reduction in debtors from year end and then offset by the inventory build. In the investing activities of GBP 3,800,000, that's our R and D program and registrations. And then the financing activities, the net GBP 6,700,000 is the equity raise of 12,000,000 less the debt reduction of 3,000,000 and then 2,500,000 for finance costs, which is primarily the equity raise and interest. So cash stays about the same, around $6,000,000 Moving on to Slide 9, which is our normalized operating profit progress. That's remains the same as it was at year end.
So through that period of from when we became a public company where we invested in the R and D, back into profit again in 2019, generating $11,000,000 last year normalized operating profit. And we're leaving our guidance unchanged for the full year of $14,000,000 to $18,000,000 So I'll hand back to Hartley to take us through Slide 10. Yes. Thank you, Malcolm. Look, what's also important is our development program and our licensing program.
So just to start with the development program, Nexogezic, we're continuing to advance that. We received a complete response letter from U. S. FDA, which basically cleared all our questions and issues other than the remaining requirement for a final GMP order before it can be approved in the U. S.
So that was actually very positive though, literally getting down to no questions. I mean, the original file that went in was literally 23,000 pages of data and FDA like reanalyzes all the study data and everything. So it's pleasing that we've got that result and now the key thing is to work with them to complete the GMP audit and we're currently in communication with them over that. Then we have successfully completed the IV registrations now in 20 countries, which is a big advance, and we're working really hard on rolling out our approvals with Nexogeesic IV, and that's certainly a key target that the team is focused on. The oral liquid, we're still awaiting our first registration, so we have a number of filings, but nothing yet finalized on that one.
The hot drink sachets is like the cold and flu. That product has been filed in December 2019, and we're progressing the first registrations. But it's still only a few months after the filing date, so we would not have expected to get any approvals yet, but that's underway. The Nexogegic Rapid, so the important part about that is it's another tablet product. It's very fast dissolving with special technology we licensed then from a U.
S. Company, and it's got an additional patent position as well with a file patent that if that's granted and everything goes to plan, it would only expire in 2,039. So that one has been successfully developed, and we are working on it first filing in the second half of next year. Next strategic cold and flu product has been filed, so the first filing has been made for that in Australia. Our other programs, TASKINEA and Nasosurf, basically a large global multicenter study is currently underway in Australia, New Zealand, United States and also across Europe.
That's been quite challenging in some ways with the COVID epidemic. Our team has been able to order remotely the various sites. So there's been a lot of late nights or early mornings working with the U. S. Good progress has been made on that, and we're confident of completing that next year.
The NATO SERP, we also continue to make good progress on that. We've completed the engineering batches successfully. And at this stage, we're just organizing with a U. S. Company for development and manufacture of the first dose form that we can then move into clinical trials and registration following that.
So we're making good progress on our R and D pipeline. So if you look at the next slide, the next strategic global update, basically, we've got 3 colors. White is where we're still to license, blue is where we have licensed and yellow is where we have launched. So we are getting more launches underway at the moment with recent launches in Germany. And then also as well, we are still working on licensing agreements in larger jurisdictions such as United States, which is underway.
And we're also getting ready for a big launch in Canada, which is going to happen soon. And then furthermore as well, we're also working on registration and launch in Korea, which is also another interesting market. And Russia is progressing well with a successful remote GMP audit of our manufacturing site by the Russian Health Ministry. So that has been successfully completed and it's under registration in Russia, which is a pretty significant market with 140,000,000 people. So really, we're just continuing to make progress on this to fill in some gaps, like even places like Pakistan, where we had not originally envisaged interest.
We've got a good distributor there. So really it's just carrying on with us, so there should be more blue and more yellow as time progresses. So that's that slide. Moving on to Slide number 12. This is the Mexages of countries where we are selling in and or have orders for.
So basically, we had targeted 66 countries this year. We just want to draw your attention to we're thinking at the moment it's going to be more like 50 countries with sales in 43 countries and orders for a fair to 7. We may be able to improve upon that, but there has been quite a lot of registrations in some territories have been slowed down quite significantly by COVID where the health ministries have pretty much kind of slowed down and haven't done a lot. So there has been something that's been difficult for us to influence, of course. But despite that, we're still making progress and these countries with sales and orders are still going to keep on ramping up regardless.
That's Page number 12. Page number 13 is effectively our sort of summary cheat sheet, which shows you the progress. So we've slightly increased the Nexogeesic tablets, the number of countries with registrations. The obvious big one is the United States, which isn't on that table yet, but we're confident that it will be. And then also, Solven, we've increased that by 20%, and then we'll further increase it with more countries in the second half.
Next to GZ IV, making good progress on that. We've increased the registrations now from 3 countries to 20. We launched in the first three, and we have a whole pile of launch orders then for a lot of those other countries such in Europe, like Germany, which is a good sized market with 80,000,000 people. So we're working on that at the moment. And as part of that too, we've also set up an European office based out of Ireland.
So this is some of the moves we've made really around COVID. We basically opened up the European office. We've seen well, we didn't send I guess, one of our staff went to Switzerland, and she's now working out of Switzerland for the remainder of this year and probably most of next year. We've been able to pivot and do remote audits on our clinical side and G and P audits and things like that. And then as well, I mean, the other thing that we haven't got a slide on it, but just to talk about is that there probably has been an impact on the Daigou market in Australia and New Zealand.
As those of you will know, the local students primarily from China certainly do buy quite a quantity of Australia and New Zealand goods and then ship them back. What we've done to counter that decrease in Daigou's is we've opened up a Tmall site, and that's well underway with pleasing initial sales. And then other programs as well, we've got a big promotional program based around the new Jackie Chan movie and the actress in it called Mila, and she'll be promoting her vitamin C lipo sachet. So it's just programs like that. We've been working really, really hard around the whole COVID area that even though there's some challenges and curveballs and there's a lot of them, we have worked really hard to make sure that we mitigate any impacts.
So flicking on to the final slide, Page 14, sort of what the outlook is. I guess it's important really to focus on that other than some tactical changes, things are really still focused on what we're focused on a year ago. It's driving those international sales, which will be accelerating the new countries that we're launching in and also adding in the line extensions. We were certainly pleased about 6 months ago to see the independent market research company Delve Insight predicted that Maxigesic IV could be a mini blockbuster and the biggest injectable analgesic product launched in the hospital market over the next 10 years. So that's also put a lot of focus for us onto the Massachusetts IV.
We're also looking at extending international licensing agreements, so countries like China, Japan, Latin America and United States. The licensing deals, to be frank, did get slowed down quite a bit in sort of probably the middle to later part of this last 6 monthly period. But it's as though everyone's suddenly kind of woken up now, and we've got a lot of work on with various licensing deals. You would have seen that we've announced a few kind of smaller ones in places like Hong Kong, Thailand, Ireland, the UK, etcetera, Pakistan and Ecuador, which is still useful, but obviously we're also focused on the U. S.
As well. So we continue to work on that and we would hope to be able to announce something in the future. And then also it's focusing on commercializing in these new territories that we've added, such as Canada. For example, we've mentioned Germany, we have launched in and places like Switzerland as well. We're just finishing off registration.
So it's really focusing on driving all these towards sales and then improving the sales. The other one is upfront payments. So licensing income, as we sort of talked about, can be lumpy, and we've seen we had a good chunk of licensing income in the comparable time period last year. It hasn't quite fallen in this period, but we will still see further licensing income coming through for this financial year. And we've got various agreements that we're working on at the moment.
And clearly, swing factors will be larger territories, such as the U. S, which attract much larger upfront payments and milestone payments than, say, smaller territories such as in Europe or something like that. Driving Australia, New Zealand sales look is pretty important. And what we're really pleased to say is, I think we said to you a while ago that we're really focused on in licensing products for Australia and New Zealand, and we managed to achieve 23 new registrations in the last 6 months, which is an outstanding result by our regulatory department, and that's been set to platform for growing those Australia and New Zealand sales going forward. So it's driving maxagesic sales in Australia and New Zealand, the new OTC launches.
For example, we just launched in Australia a new day night analgesic. We licensed the patent of the local Aussie pharmacist last year and we're able to get it registered and approved and we've literally just launched it and it's going sales are going really, really well. So that's just an example of the new product launches. We have had some COVID-nineteen related product launches as well. I've been able to pivot around that with some specific items, and that sort of helps to fill in any gaps in the sales channel because we have seen some movements in sales with some products sales have increased a lot, like we've mentioned, the vitamin C, lipo sachet.
But then some other products actually have decreased. So things like products that one of their products that kiddies use when they go to the doctor, a lot of parents are actually not sending their kids to the doctor during lockdown periods because they don't want to risk them sitting in a waiting room where they might catch COVID or something like that. So we have seen some kind of impacts on some products. But overall, you'll see that we work hard to make sure we still keep on growing the sales, which we have. And then in terms of profit growth, we've always made most of that profit or just about all our profit in the final 6 months, and we don't see this year has been any different.
If anything, this year is more accentuated towards the back end than most years. And we're still confident of $14,000,000 to $18,000,000 which will be a 23% to 58% growth over last financial year. We are still targeting that additional cash flow to reduce our debt. As Malcolm has mentioned, though, we have taken the prudent pathway in the short term by using some cash to purchase additional stock, which we still think is the, by far, the safest thing to do. So we've done that.
But long term or medium term, we would still see we'd be able to reduce our stock holdings as things start to smooth out going forward. And then things like we asked about dividend policy, that hasn't changed. So once we get that debt down to a reasonable level, it's certainly what we've always never said it would be this year, but certainly towards the end of next year, it's certainly something that we would look at very carefully. And if possible, we would look to pay a dividend. So look, thank you for your attention.
And hopefully, that is a reasonable overview of where we're at and happy to try and answer any questions for you now. Thank you.
Thank you. Your first question comes from Chelsea Lee Bitter with Forsyth Bar. Please go ahead.
Thanks. Good morning, Hartley and Malcolm. I guess a few questions from me, maybe firstly centered around the outlook and sort of your guidance statement, etcetera. I'm trying to understand a few things. Firstly, in terms of license income and is there anything factored into that guidance for license income in the second half?
Yes, we've got quite a lot of business as usual license income, which we would see as falling more in the second half, because we've got a number of milestones and things from existing licensees. So there will be some business as usual licensing income flowing within that second half, yes. Okay.
And just to clarify, would that be something around the sort of $2,000,000 mark? Or am I far off the mark with that thought process?
Yes. Half yes, half of 1.5000000 to 2000000. Yes. Yes.
Okay. And then maybe just to understand a little on the actual core kind of Australasian markets, if you like. I mean, you mentioned the 23 new product approvals, which is clearly a big number. Should I be thinking about sales and revenue from those products coming in that second half? Or is that still a bit of time before you actually start selling some of these products?
Yes. Launches will certainly be underway. There's normally a good lead time well, not good. There's a lead time of a good 4 months or something like that. So there are some launches underway at present, and there will be some additional launches in during the second half, yes.
Okay. But I guess I should assume by the sound of it that we may see an acceleration in growth in Australia and New Zealand in the second half. Is that the right way to be thinking about things?
Yes, it's what we're planning on. I mean, it's sort of what we planned on anyway, though. We've always planned, as we've said, on doubling our Australian business back in almost $50,000,000 doubling to $100,000,000 and that process is underway at present. And part of that is fueled by new product launches. So it just depends on timings as well with freight shipments and things like that.
Certainly, it is more difficult to airfreight stock in at the moment. We're often historically would have airfreighted in the first amount to get sales going early, but airfreight is quite difficult at the moment. So sometimes that's delaying our launches by about a month or something like that.
Okay. I appreciate it's a bit of a moving piece at the moment in terms of the logistical side of things and getting product to market. I mean, I guess while we're on that topic, you talked about the backlog of orders in your export markets, etcetera. Is there any way you can quantify kind of the impacts of that in this period? And maybe, I guess, help us understand how long you think it might take for that to actually ease?
Yes. It's a good couple of million. I mean, we added it to the figure, I think we said we had 57% product growth. If we haven't had a backlog, we would have been up to over 100% product growth, which is really what we were targeting. So it definitely has had some impact.
So basically, there's a number of we're not just sitting there watching it. So there's a number of things that are happening. We're expanding 1 of the key manufacturing sites, but also adding manufacturing sites as well. That takes a little bit of time to come online. That would start to come online towards the end, if not the end of this second half, to have a bigger impact on next year than this year.
Okay. No, that's clear. And so I guess the way I should be thinking about things is maybe this year has been a little slower than you would have liked, but your kind of building blocks are still creating some good momentum and therefore your opportunity ahead of you is still reasonable when we start going into next year.
Yes, yes. I mean that's the thing. I mean there have been a lot of curveballs and we don't want to wimpy moan about it, which we're not, but there have been a lot of curveballs and we've navigated that, but we've also focused real hard on setting up things to make sure as soon as things normalize too, we're going to really take off again as well. Okay.
And I guess, are you concerned about ticking waves and markets globally, etcetera, that could kind of disrupt you again? Or is that not something you're seeing as an issue or risk at this stage?
Well, we're still planning around it, I guess, on taking measures. Part of the reason we've increased our stock holdings and staff have been I think we still have to be cautious and anticipate there could be some sort of second wave coming out of our summer in Australia and New Zealand. So we're adopting a cautious position. I mean, we're told in Europe that, yes, as you know, there has been a second wave, but we're told by people we work with closely, it's beginning to start to ease off. And we're seeing our trial sites and stuff are still working okay, so people seem to be adapting.
But yes, there is some risk mainly around shipping, which we're looking to mitigate by spending less extra 1,000,000 on extra stock.
Okay. No, that's helpful. Thank you. I'll leave it there for now.
Thank you. Thanks, Chelsea.
Your next question comes from Christian Bell with Jarden. Please go ahead.
Hi, Hartley and Melton. Hi,
guys. Hi,
guys. Just firstly, just following on from one of Chelsea's questions, you're talking about the BAU milestone payments of $1,500,000 to $2,000,000 Is that so that would actually be included in that $14,000,000 to $18,000,000 range? Like the guidance states that it's before upfront licensing fees, but any BAU milestone payments are actually in that $14,000,000 to $18,000,000 Yes.
It's the those bigger, chunkier ones are the ones that aren't in there. Okay. Okay.
So the licensing payments that you got for this period, is it basically just for those 10 IV agreements that were kind of like, I don't know, a couple of months ago?
It's a little bit of that one. And there's the what we have to do with the another piece of license income is the registration, where we get a milestone on registration. And under the accounting standard, we have to recognize that over the period of time from when we've completed our obligations through to when the event actually occurs. So there's a little bit of the other side of it. That's what it is that's in there.
Okay. So does that include the U. S. Thing as well? Because I'm assuming that you're okay.
So you
It's only where we've got a license if we've got a license signed up and for a milestone for upon registration, and if it's in the process of being registered, then we have to start recognizing the revenue for it then.
Right, right. Okay. Cool. And just on the U. S.
I mean, do you think do you expect to sign on a licensee in the second half?
Yes. Look, I think the thing is we've never really wanted to predict those ahead of time. I mean, I can say that we're working on it. And we'll obviously announce it to the market when we're able to achieve that milestone. But I don't think we can kind of put a line on the stand and protect it until it's signed on the dotted line, really.
Okay, cool. And what would be the for a deal as a bit of it for the U. S. Because we're seeing it for the U. S.
What would be the quantum of the outright pay, just to give us an idea?
Yes. I mean, it's certainly in the I don't really want to necessarily put an exact figure on it, but it's certainly at the multimillion.
Okay. Cool. That's cool. And then just one of your last comments there, Hartley, just saying that the second half is going to be even more seasonal this year. And just noting that doesn't include any upfront licensing fees.
Base. What's kind of driving you to say that the second half is going to be more seasonal? Is that just sort of adds you expect COVID conditions to become a lot easier than they were in the first half?
Yes. I think things are going to ease up a bit. And then also, too, we sort of got programs to do our winter pre sell and things like that, which I still think people will sort of want to buy up decent quantities of stock for the coming Australasian winter. So those sort of things are and we've had quite a lot of interruptions during the first half, which have now receded. So we see that as positive going forward.
It will be more geared towards the second half than normal, slightly, not excessively, but a bit.
Just a bit. Yes, yes, okay. Got So just on the Tmall sales, you said the Tmall sales are looking good. Are you able to provide more color on that? Or
Yes. Look, I mean, it's early days, so we had the 1st month of sales, and they're certainly going okay. And then we've got a number of programs in. I mean, some quite exciting ones. There's a new Jackie Chan movie, and we've got the actress out of that, who's quite a big name, and she is doing a promotion with our products.
So things like that that we're working on that so I think over time, it's these things don't also happen straight away. We build sales, but sales at this stage are going pleasingly well.
Okay. And so just one final one for me for another. Just thinking about the second half licensees and you're saying that you've got a lot of things in the pipeline there. Is that kind of distributed across IV and tablets equally? Or is it sort of more IV stuff or
Yes, mainly IV actually. Yes, yes, yes. So it's mainly IV. There's a little bit of oral as well, but it's primarily IV. It's a big kind of licensing push at present, yes.
Okay. Cool. All right. Cheers, guys. That's it for me.
Thank you.
Your next question comes from John Hester with Bell Potter.
So guys, the guidance at the moment looks a long way off, dollars 14,000,000 to $18,000,000 of operating profit versus $2,400,000,000
for the half.
I suppose we're nearly 2 months into the second half period. And I suppose I'm just interested to hear a couple of concise statements as to why you think that guidance is still achievable.
Well, historically, we've pretty much made all our money in the second half, I guess. So yes, based on our figures that we're working on, we still believe $14,000,000 to $18,000,000 is what we should achieve.
Okay. And how have things gone for those 1st couple of months? I mean, what's the sort of run rate for sales at the moment? Are you able to sort of comment on that or give us sort of any indication of how things may have changed in the last 60 odd days?
Yes. I mean, they're starting to I mean, we're seeing the sales growth on a month by month comparison with prior year. The numbers are getting bigger. So they're starting to pull away. So I mean, that's positive.
And so we're seeing that there's a recovery. And obviously, there's a few potential bumps like South Australia we saw last night, but fortunately, sales wise, it's a relatively small part of the income.
Yes, yes. What about in South Australia, but in other jurisdictions, New South Wales, Queensland, Victoria, I suppose it's come out of
Yes. Victoria, obviously, we did see some impact, but sales come away well. So really, it is we've got a lot of promotions, a lot of programs on in the second half. So that's what we believe will deliver the result.
And that seasonality that you see with that strong always, you consistently get that strong second half result, and you've got the inventory build that has satisfied that demand when it does emerge. Can you elaborate on just 1 or 2 points as to what are the key drivers of that seasonality?
Yes, we certainly always have a big sell a very big sell in March based around our winter products. So the rents sort of have always sold those. Wholesalers as well have actually tended to buy up around about then because of Easter teams that disrupt and interrupt sales as well or not sales, interrupt shipping and things. So they've always bought up in March to avoid any kind of impacts around Easter with freight and things. So usually March sales have always been very strong.
December sales are usually pretty strong as well. Due to Christmas, we sell a lot of analgesics in December for various reasons. And allergy as well, and certainly in the New Zealand market, we're the leading allergy company, so we always have strong allergy sales in the New Zealand market.
Yes. Yes. Okay. Christian, Malcolm, is there do you make a margin on the sales of those MaxiGeographic products to international customers? Or is it Australia factories that make costs?
Yes. No, we make a margin. So it's there's 2 types of to the margin. When we sell the product, we make a margin. And then we pick up or when they sell the product, we get a royalty from their sales.
Yes. Excellent. Okay. Thank you. That's all for now.
Thank you.
Thanks, John. Thank you.
Amy. There are no further questions at this time. And that does conclude our conference for today. Thank you for participating. You may now disconnect.