Chairman's review

Aspen's long-term sustainability and success will be measured by the value we deliver to society. As a manufacturer and distributor of essential medicines, Aspen is uniquely placed to make a meaningful contribution to the global goals of increasing access to high quality, affordable medicines and reducing patient inequality.

A purpose-driven strategy

The COVID-19 pandemic continues to have a profound impact around the world. The global response to this pandemic has been unprecedented but it has also exposed deep inequality between developed and developing nations in their economic and health system responses. The emergence of "medicine and vaccine nationalism" has seen many of the world's most vulnerable people not receiving access to essential medicines needed to treat patients or COVID-19 vaccines to protect them.

Since the commencement of the pandemic, the Board has remained focused on ensuring the continued supply of essential medicines to patients. The agreement reached with Johnson & Johnson to manufacture its COVID-19 vaccine aligns with Aspen's purpose and, as Africa's largest pharmaceutical company, it was a very proud moment seeing the first batches of these vaccines rolling off the production line at our Gqeberha manufacturing site in South Africa.

Aspen is committed to providing impetus to the common global understanding that "we are not safe until we are all safe". In times like these, it is critical for international dialogue and for the business community, non-governmental organisations and government to work together to find sustainable solutions. We support the discussions underway to address the complex issues such as the waiver of IP rights and technology transfers that could fast track the provision of COVID-19 (and other) vaccines to the populations that need them and provide developing nations with security of supply going forward. Aspen continues to play a meaningful role in these engagements and we stand ready to play an even greater role going forward as we look to expand our manufacture and supply of vaccines.

Kuseni Dlamini
Chairman

Group performance and shareholder returns

The Aspen business model has proved resilient during these exceptional and challenging times, delivering good revenue growth and improved earnings. The Board is pleased to see the continued progress made against our stated strategic vision and objectives, with substantial headway being made in consolidating our strategic position as a global specialty-focused pharmaceutical company.

Following a number of strategic initiatives over the past few years, and with the divestment of the assets of the European Thrombosis business completed, we have focused our commercial efforts on territories where we have demonstrated capabilities and a strong performance record. This establishes a sound base for the Commercial Pharmaceutical business to respond to dynamic market conditions and deliver organic growth into the future. The significant capital investment in our sterile manufacturing capability across three significant sites in South Africa and in Europe, positions the Group to pursue opportunities created by the increase in demand for sterile and vaccine manufacturing capacity. These strategic investments have cemented our manufacturing capability as a strategic differentiator, poised to deliver improved security of supply and margin benefits as the increased capacity is filled with our own anaesthetics products and other contract manufacturing volumes. The Group continues to deliver on various organisational transformation and efficiency projects designed to increase organisational effectiveness and reduce operating costs.

Aspen remains highly cash generative and this, together with divestment proceeds, has resulted in a further reduction in the level of borrowings. Acknowledging the strong financial performance of the Group, the strengthened balance sheet as well as our proven resilience to COVID-19, the Board was pleased to declare a dividend of 262 cents to shareholders registered as at 23 September 2021, resulting in R1,2 billion of retained income flowing to shareholders.

Our ESG performance

The Group's sustainability commitments remain a cornerstone of our business strategy. As a signatory to the UN Global Compact we seek to align our efforts with the United Nations' SDGs. By delivering on our purpose, Aspen makes a meaningful contribution to the global goal of "ensuring healthy lives and promoting well-being for all at all ages". This year, we have indicated our commitment to equity, diversity and inclusion through our signature of the United Nations Women Empowerment Principles. Work is progressing in the development of a Group climate strategy and, acknowledging there is still much to be done, the first climate-related financial disclosures aligned to the TCFD framework have been provided. Aspen has continued to respond to the needs of the communities in which we operate, with efforts focused on responding to public health challenges in the face of the pandemic. Aspen's Mandela Day activities, which are implemented annually across the Group, provide an opportunity for employees to volunteer in initiatives within their communities. We have engaged with key stakeholders on a number of material ESG-related topics and continue to work towards achieving improved transparency in our engagement and disclosures. The Remuneration & Nomination Committee held a number of engagements with investors to better understand expectations with regards to remuneration at Aspen and are progressing initiatives to meet these. We continued to retain our position in the Top 30 of the FTSE/JSE Responsible Investment Index and we are a constituent of the FTSE4Good Index.

A focus on the health, safety and well-being of our employees

The health and safety of our employees remains the highest priority. Vigilance in ensuring that the workplace measures that have been put in place across the Group's operations to minimise the risk to employees of contracting COVID-19 while at work have been maintained, while initiatives to facilitate employee vaccination have been implemented. Interventions to address the mental and social aspects impacting employee well-being during these very challenging times have also received increased focus.

In June 2021, a significant fire was experienced at our site in Hyderabad, India and, thankfully, no injuries were sustained. No occupational fatalities have been recorded for the Group for eight consecutive years and health and safety incident rates continue to trend downward. Any safety incident is, however, viewed in a very serious light and initiatives to further embed a health and safety culture in all operations continue to receive focus. We congratulate the Nairobi manufacturing site on achieving its ISO 45001 and ISO 14001 accreditations this year, joining 10 sites which have previously achieved and continue to maintain these accreditations.

While every effort has been made to protect employees at work, the nature of the pandemic has meant that we have experienced the loss of a number of employees and the loved ones of employees to COVID-19. We are saddened to hear of each and every loss and on behalf of the Board, the executive and the entire Aspen staff, I wish to convey our heartfelt condolences to the families and friends of our colleagues who have succumbed to this virus as well as to other causes. To those still battling the infection, or its effects, we wish you a full and speedy recovery.

Executive leadership changes

The Board, supported by the Remuneration & Nomination Committee, has continued to focus on establishing a senior executive team positioned to drive the performance of the Group, ensuring succession planning for key executive roles. During the year, an organisational redesign was performed at the Group level and this included the review of the senior executive structure and related portfolios. In addition, a formalised Group Executive Committee was established (refer to Group Executive Committee). Further senior executive appointments are under consideration. In February 2021, Gus Attridge announced his intention to retire as Deputy Group Chief Executive, Financial Director and member of the Board effective 31 December 2021. Following a structured selection process, the Board is pleased to have appointed Sean Capazorio as an executive director and the Group Chief Financial Officer with effect from 1 January 2022. The Board is confident in Sean's financial skills, technical expertise and deep corporate knowledge of the Group and wish him well in this future leadership role.

Ethical leadership and governance

Aspen is committed to ethical conduct and good governance. Over the past year, the Board and its committees focused on steering the Group's strategic direction and corporate performance during this challenging period. Our Board is diverse in its skills, thinking and composition, which assists in balanced decision-making combined with the ability to add value to the strategic direction of the Group. I was especially pleased with the outcome of The Ethics Institute's assessment of Aspen's ethical culture, which was confirmed to be at "Advanced" level. The results of the assessment will be used to focus interventions on specific areas required to further enhance our approach to ethics.

Sindi Zilwa has confirmed her intention to retire as a non-executive director and will not make herself available for re-election at the forthcoming annual general meeting and, as a result, she will retire as a director with effect from 9 December 2021. The Board wishes to express our sincere appreciation to Sindi for her dedicated service to Aspen as an independent non-executive director since her appointment to this role in 2006. During this time, she has also served the Group diligently and with distinction as the Chair of the Social & Ethics Committee since its inception in 2012, and as a member of the Audit & Risk Committee, from which she stepped down in October 2020. The Board is pleased to confirm that Ben Kruger, a current independent non-executive director of Aspen, will succeed Sindi as Chair of the Social & Ethics Committee, with effect from 9 December 2021. The Remuneration & Nomination Committee has initiated a formal process to find a replacement Board member that will further strengthen the collective skills and experience of the Board.

By virtue of his retirement as Deputy Group Chief Executive, Gus Attridge will also step down from the Board with effect from 1 January 2022. On behalf of the Board and all Aspen employees (past and present), I would like to express our deep gratitude to Gus for his exceptional leadership and service to Aspen over the past 22 years. There are no words to capture the immense contribution that Gus has made in the growth and success of Aspen and the positive impact he has had on so many people. As a co-founder of the business he has also been a wise and pragmatic member of the Board from Aspen's inception. We thank him for his exemplary conduct over his term. We are pleased that Gus will remain available to the Group in a new role which will, among other duties, include supporting and mentoring the leadership team.

Poised for performance

The strategy of the Group is delivering results and the measures implemented to achieve sharpened focus have created a strong foundation for Aspen to build on. Following the decisive steps taken to reshape the business, the Board is confident that Aspen is well positioned to achieve growth and sustain long-term value for our stakeholders. The business model has proven robust through the COVID-19 crisis and the reduced gearing of the balance sheet provides capacity for value-adding investments when suitable opportunities are identified.

The Board has confidence in Stephen Saad and the senior executive team to lead Aspen in what promises to be an exciting phase for the Group, as it positions itself to further increase the positive and sustainable impact it makes through the delivery on its purpose: to enhance the quality of life of all people by manufacturing and supplying high quality, affordable medicines. We acknowledge the outstanding effort of Aspen employees, our business partners and stakeholders in achieving these outcomes.

I wish to thank my fellow directors for their wise counsel and support and acknowledge the substantial additional time and effort they have spent attending to key issues during these challenging times. I also extend my thanks to our shareholders and other stakeholders for their ongoing engagement and support.