Good day, and welcome to the Dechra Annual Results Conference Call. At this time, I would like to turn the conference over to Ian Page. Please go ahead, sir. Yeah. Good morning, everybody. Very disappointing that we're not allowed to do a face-to-face meeting yet. Hopefully, next year we'll all be together. I'm pleased to say that our head office team have joined us in the meeting room this morning, so we at least get to present to somebody face-to-face. I'm delighted to deliver another exceptional set of results, and I'll briefly touch on the highlights before Paul moves into the detail on the financials. As always, I'll give a little bit more detail later in the presentation. In terms of the overall highlight, delighted that all categories have grown well throughout the year, particularly CAP and equine, outperforming. Every country in which we operate has delivered solid growth, and most of them double-digit growth. In terms of acquisitions, although the historic name Mirataz and Osurnia have both also contributed well to the growth that we've seen within the year. Looking at our strategic enablers, these are the building blocks that allow us to deliver our strategy. Technology has played a key part as we've managed to communicate very well with customers and suppliers throughout the COVID pandemic. We've made huge inroads in terms of manufacturing and supply improvements that I'll talk about later. Our people remain our biggest asset, and again, we've invested heavily in people, and we're particularly pleased to be able to pay the living wage in every country in which we now operate. Paul and his team have made a lot of progress on developing an ESG strategy with a make a difference plan with measurable targets. Financially, excellent revenue growth of 21%, which has dropped through to a 29% underlying EBIT growth. On the strength of that, we've been able to propose an increase of 18.1% dividend per share, which is a pleasing development. As I said, I'll cover these operational points in a little bit more detail later on, but for now, I'll pass you on to Paul to cover the financial highlights. Thanks, Ian. Good morning, everyone. It's great to have delivered an exceptional set of financial results. You'll recall at the half year, we thought the year-end would be first half weighted. Trading in the second half was particularly strong. Ian will talk more about what we're seeing in the market later in the presentation. On a constant currency basis, revenue was up strongly by 21%, delivering a 21.3% increase in gross profit. Our operating profit of GBP 162.2 million represents a 29.2% increase year-over-year, with our revenue growth aided by COVID-related cost savings, leveraging strongly to increase underlying operating margin by 170 basis points to 26.7%. Underlying EPS also increased strongly by 19.4%, with a dilution compared to operating profit growth, reflecting the increased number of shares in issue following our equity placing in June last year. In terms of our segmental performance, we delivered excellent year-on-year organic revenue growth, supplemented by the product acquisitions of Osurnia and Mirataz, both of which are performing well. To clarify what we're including where in these numbers, our EU existing business includes DVP EU, DVP International, as well as non-core third-party manufacturing. In EU acquisitions, we have 11 months of Osurnia and five months of Mirataz following its successful launch in February 2021. The North American existing business includes a small 10-month like-for-like from Ampharmco and a three-month like-for-like from Mirataz. In acquisition, we have the balance from Ampharmco and Mirataz, along with the Osurnia product acquisition, which occurred in July 2020. EU Pharma delivered substantial revenue growth up by 20.2% on the prior year. The existing business was up by 16.7%, excluding the third-party manufacturing business that we've strategically exited. The number is GBP 11 million for the year. Expect that to be GBP 8 million moving forward. The business that we've got will retain, so we'll stop calling that out from this set of results onwards. This represents an excellent organic performance across all established European markets and key international business in ANZ and Brazil. Osurnia and Mirataz added GBP 14.1 of acquisition revenues. Operating profit from existing business increased by 19.4%, with operating margin increasing to 32.1% due to strong demand for CAP products and lower SG&A costs as a result of COVID. Osurnia and Mirataz contributed a healthy GBP 7.6 million at a margin of 53.9%, reflecting the gross margin nature of these acquisitions. Consolidated underlying EBIT margin increased by 170 basis points to 32.9%. Next slide onto North American Pharmaceuticals. In North America, our revenue grew by 22.2% to GBP 219.5 million, with our existing business growing by 16.7%, reflecting strong demand for our CAP products in the U.S., Canadian, and Mexican markets. The acquisitions of Osurnia and Mirataz added GBP 9.9 million. The strong increase in revenue leveraged strongly to operating profit, which was up by 27.5% to GBP 75.9 million. The profit performance was enhanced by lower SG&A costs as a result of reps being unable to travel for most of the year. Operating margin on our existing business increased by 90 basis points to 34%. An acquisition margin of 47.5%, again reflects the gross margin nature of these deals. Consolidated underlying EBIT margin increased by 150 basis points to 34.6%. Moving on to R&D. We continue to make good progress on the pipeline, with R&D investment increasing by 17.3% to GBP 32.4 million, which was second half weighted as flagged at half year. This represents 5.3% of revenue, a slight decrease on the prior year due in part to the strong revenue growth of the business, and also as a result of some project spend being delayed due to COVID. Of the total R&D investment, GBP 3.9 million relates to Akston, which remains on track for launch in 2026. Moving on to the next slide, on gross margin. We saw that increase by 30 basis points to 56.9%, with accretion due to strong demand for CAP products, which has fueled growth in the year. Although SG&A expenses increased to GBP 151.3 million in the year due to our investment in people costs, they dropped sharply as a percentage of revenue to 24.9% due to the previously discussed COVID-related cost savings. Moving on to currency on slide 12. It continued to be volatile, with a significant weakening of the U.S. dollar during the year adversely impacting our reported results. I've included some sensitivities as usual to show the impact exchange rate variations have on our numbers, as well as the impact that current exchange rates would have had those rates applied for the full year. The result of this is that EPS would have been 2.5% lower than reported. On to slide 13 on cash flow. We continued to enjoy good cash generation on the back of the excellent trading performance in the year. We've made a significant investment in inventory to maintain service levels during this period of strong demand, and also to support product launches, particularly Osurnia and Mirataz in our own delivery. Moving on to slide 14 on net debt. Net debt increased by GBP 72.6 million- GBP 200.2 million at 30 June due to funding of the Osurnia deal and significant cash tax outflow. The larger-than-expected tax outflow relates to moving from large to very large company status in the U.K., resulting in us needing to pay 18 months' tax in a 12-month period. We're also subject to a Mutual Agreement Procedure across three countries of around GBP 9 million, which we expect to recover in the next six months. You can see the strong cash generation from operations in the bridge, with the other main movements consisting of CapEx and the dividend. The pro forma leverage quoted at 1.1 times includes full year EBITDA pre acquisitions and is on a pre IFRS 16 basis. Moving on to tax on slide 15. Underlying effective tax rate increased to 21.7%, reflecting the regional mix of operating profits. Expect the rate to continue to increase to between 22.5%-23% in FY 2022 due to reduction in Patent Box allowances. The reported ETR of 25% includes the one-off impact of increased tax rates in the Netherlands and UK on our deferred tax balances. We continue to monitor relevant tax legislation internationally and the impact this could have on our ETR. Just to wrap up on the numbers on slide 16, non-underlying items, which are mostly acquisition related, were GBP 78.2 million, with the increase attributable to commencing amortization of the Mirataz and Osurnia intangibles. We incurred a further GBP 1.6 million of costs relating to the rationalization of the manufacturing organization, which concludes this program. The full-year dividend is up 18.1% to GBP 0.145, reflecting our confidence in the business and its future prospects. On banking, we have significant headroom on facilities and covenants, which will enable us to consider further relevant acquisition and investment opportunities as they arise. Come back to Ian now to provide some more detail on the year's highlights. Thanks, Paul. Looking at portfolio focus, probably best to start talking about the market overall. Those of us that live in the U.K. will probably have seen a lot of information about an increased number of pets. This hasn't yet actually been confirmed. A recent study in America by industry commentators, Brakke, is actually suggesting that actually there isn't an increase in number of pets in the U.S. I think what is very evident, though, is people are spending more time with their pets. They're becoming more cognitive of their welfare. They've got more time to visit vets. Also maybe household expenditure's not been as great because you've not been allowed to go out, you've got more money to spend on your pets. What we are certain of is that spend per pet has increased. That momentum has continued into the new financial year. Looking at the trends across both segments, pretty similar really across the EU and North America. We're increasing market shares in most of the therapeutic categories in which we operate. Our communication with customers has been excellent through digital media. We've also improved massively from supply, that I'll talk about in a little while, based on previous years where we had a number of issues within manufacturing. Just a little point on North America, we still haven't seen the ophthalmic products return, which we lost when we had to transfer them into a new manufacturer. We are making good progress, albeit slow, in transferring them to a new site. With a good tailwind behind us, we should get those products on the market pretty soon. Moving on to looking at performance across product category. CAP on the strength of the market clearly continues to be a big growth driver, benefited not only from the organic growth that we have, but as Paul's already mentioned, the addition of Mirataz and Osurnia, which have performed very well. In the U.S., we've also benefited from above expected market penetration from a new product launch, Marboquin, which is a product that came out of the Putney acquisition development pipeline. We've had good growth, above market growth in FAP for a good number of years now, as FAP in international markets has struggled somewhat. We have less exposure in international markets than most companies, so things like African swine fever and avian influenza haven't affected us as much as most. Most of our sales are into Europe, and I think what we're seeing there is a reduction in meat consumption, probably because restaurants being closed. Which has meant that although it's still a decent performance, our number is a little bit slower than normal. Equine, it's been a brilliant year for us. We've done a lot to develop one of our older products, Equipalazone, by a flavor enhancer, and that's proved very, very successful. Also we've got a number of products which have supplemented the overall basket out of the Le Vet pipeline. It's been a really good year for equine. What's extremely pleasing is nutrition. It's been flat at best for a number of years now. A newly formed business unit we talked about last year has made a real big difference. We're now getting more confidence in the range, and we're attracting new customers to the range, and we've launched things such as an organic diet. Also the sustainability nature of the proteins we use fits well to modern ways of living. Looking geographically, not too much to say about our geographical expansion. It's been strong predominantly by the growth that we're getting out of Australia, New Zealand, and Brazil, which are our countries where we've acquired businesses and where we have our own Dechra brand. We've managed to successfully register a number of our own key brands in these territories. Also in Australia, some of the older brands we had were registered prior to acquisition have now come back into our ownership as the deal that we had with the previous distribution partner has come to terms. Great performance in Australia, New Zealand, and Brazil. Also with a number of new registrations, our pipeline's delivering into other countries that we sell through distributors. We're also extending our presence there. Looking at the pipeline, we don't talk about the products that the pipeline delivers, which are numerous every year into several markets, because none in their own right are particularly material. We do tend to talk about the bigger projects such as the canine sedative, which we hope to get to market in the U.S. pretty soon. Akston dog and cat, the proof of concept studies are running well. We're now relying on Akston to develop the manufacturing capabilities to scale up the API. Just a couple of things that have sort of developed since the year-end. The first one is quite a remarkable step forward with Tri-Solfen within Europe. We've already announced that we're putting Tri-Solfen for development in registration for piglet castration across Europe, where legislation is forcing more humane treatment of piglets. We put this through what we call the decentralized procedure, using Belgium as our rapporteur who were very supportive of the project, that would represent us across all the European countries. We decided not to include France, and the reason for that is France don't like polypharmacy. Polypharmacy is where you get a product that has more than one active ingredient. Bearing in mind Tri-Solfen has two local anesthetics, it has adrenaline, and it has cetrimide within it. We thought that France would be an objection to actually getting it registered. Unprecedentedly, they've actually approached us and asked us can we actually include Tri-Solfen within the procedure, and furthermore, they've said, "Can we take the validation batches so that we can start to train vets and farmers ahead of the approval?" They're going to grant it a provisional approval ahead of the final dossier. That's great news for Tri-Solfen. Looking at acquisition, it's probably worth pointing out that sort of platform acquisitions, i.e., company acquisitions, is a very difficult thing to do during lockdown because a lot of what we do and what we do well, is that relationship with people and the diligence process being about getting to know people and getting to turn over stones and see what's underneath them. It's a very personal thing. Clearly that sort of acquisition has not been possible over the last couple of years. I'm pleased to say that we've recognized a number of opportunities and along the sale, the lines of individual products. Perhaps not of the scale of Osurnia, which has been fantastic for us. We knew there was a competitor coming into Europe. Despite the launch of that, we're actually achieving the market share retention that we expected pre-acquisition. In the U.S., we're actually gaining market share from the market leader, albeit at a lower price point. Mirataz, we always knew we could do great things with this product. It's an excellent product, fits perfectly with our portfolio. Didn't have enough coverage from sales team with its previous owners. With the presence we have in the U.S., we've really developed sales extremely strongly. We've now launched in the EU. Sales were a little later than we'd originally anticipated. We had to put it into childproof packaging, but nonetheless, the launch has gone exceptionally well. Also, within the period, we have acquired the final countries where we didn't have the worldwide marketing rights for Tri-Solfen, which was Australia and New Zealand, and we've now started to market the products in these countries. Historically, it did about AUD 11 million. The capital registration has only recently come through, so we should really see some excellent growth coming from those territories. I've already said that we should be getting the product registered in new countries very soon. Going back to the strategic enablers, technology is absolutely key to us, not only from a communication with our customer's perspective, but also education is a big part of what we do and why we develop such strong relationships with veterinary practices. I'm really pleased to say that our academy has been really well used throughout the pandemic, as vets and vet nurses have had more time, and it's also now been voted as best in class within the industry, which I think is an amazing performance given the scale of Dechra compared to some of the big players within our sector. We've also made a lot of progress, which I won't go into detail on the number of other platforms across the organization, which have involved a huge amount of work. We've really been able to develop the infrastructure. Manufacturing causes a lot of problems. About two years ago, we had a lot of out of stocks. We've made a massive amount of progress in systems and in people. We've put a whole new quality management system and quality management team in there, and they're already making a big difference. Back orders of material are reduced, which is a big contributor to this set of results. People are our biggest asset. As I said at the very beginning of the presentation, we're delighted that we managed to pay the living wage, and we've been accredited for this within the U.K. That was ahead of our internal plan, so very pleasing. A recent survey, the Great Place to Work survey, has actually said that we have a very good trust rating. 77% in isolation might not sound great, but for a company with so many blue-collar workers, that actually bears favorable comparison with most companies of our scale. It's a seven-point improvement on the survey that we did three years ago. Just a few things on people, and again, a recent announcement that's not on these slides is the Chairman of five years, Tony Rice, has decided he wants to spend more time on other projects and with his burgeoning family and has decided to step down from the role. He hasn't yet set a timeframe, but we will now start a recruitment process to replace him. Sadly, also, Julian Heslop, after nine years, has to rotate off being the audit chair. Julian's played a huge role in Dechra since he joined us, and he's been a great mentor to me and the team, and has a huge amount of expertise. We're pleased that we brought Denise Goode in, so we've got continuity in the audit chair. One other person I think is worth mentioning is Dr. Susan Longhofer. She's been with us over 15 years. She's reached retirement age, actually, and she's beyond retirement age. I did manage to persuade her to stay with the group for another couple of years while we built an infrastructure below us that could add continuity into the business, and Susan Longhofer will leave us at the end of December. The fourth strategic enabler is ESG, and as Paul runs the committee, I'll just pass you back to him for a few moments. Thanks, Ian. Last year, we refined our ESG strategy, which is based on the four pillars you see on the slide. This year, we started to execute that strategy by setting out how we're making a difference in each of those four areas. For our people, we've delivered a year early on our plan to be a global living wage employer, as well as launching our Thrive Global wellbeing program, which will support and promote physical, mental, emotional and financial wellbeing. For our business, we've initiated a sustainability review of all existing and pipeline products, while also providing over 77,000 hours of CPD to veterinary professionals across the globe. Our target is to increase that to 100,000 hours in future. For our environment, we've reduced the proportion of waste going to landfill and have a target of zero to landfill by 2025 and net zero emissions by 2050 through our commitment to the Science-Based Targets initiative, which we signed up to this year. Finally, for our communities, we've targeted the provision of 100,000 community hours by 2030, equating to one full day per annum for every member of staff across the globe, as well as establishing local giving committees, improving engagement with employees and local communities, ensuring that our cash and product donations go where they're needed most. Okay, thank you. Just to finish on the outlook, trading has continued with the same momentum we saw in the second half of the last financial year into the first two months of this financial year. It's early days, but looks very promising for some contained excellent growth. We continue to identify new strategic opportunities, and we hope to deliver on those, maybe new products or maybe new things into the pipeline in the not-too-distant future. The infrastructures we've made into people and to the resources, particularly in manufacturing, will also continue to pay dividends over future years. With the capabilities of our people, we strongly believe that we're in a position to continue to execute our strategy, and we have every confidence in our future growth prospects. On that note, I shall pass you back to the host who will organize questions and answers. Thank you. If you would like to ask a question, please signal by pressing star one on your telephone keypad. If you're using a speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment. Again, that's star one to ask a question. We will now take our first question. It comes from James Gordon of JP Morgan. Please go ahead. Hello, James Gordon, JP Morgan. Thanks for taking the question. My first question was just on COVID-19, please. There was some comments from and the question in the U.S. on more spend per dog. I've seen Bloomberg suggesting that you're cautious on the U.S. outlook. Is the intention to be cautious on that? Does it actually matter whether it's in the U.S. more spend per dog or more dogs? Going forward, what's the significance of which of the two it is? Maybe just continue on COVID-19. As there's some return to office occurring, are you seeing a bit of a headwind coming up from that with less time being spent with pets by their owners? Is there lower recognition of their medical needs, or are you confident that you're going to have a more normalized growth rate off that permanently high base. That was the COVID-19 question. Can we just take- The other one was the M&A. Can we just take that question and then come on to your next one? Sounds good. Yeah. We're not trying to make any statement of caution at all. We're just trying to say that as yet, nobody's truly defined what the numbers are within the marketplace. We're very clear that spend per one animal has continued into this new financial year as it did in the last financial year. As to where we end up with this, I think we probably will have seen a structural change. Spend per one animal has actually increased year on year for as long as I can remember, and that's quite a long time. I don't see there being any fundamental negative aspect of the market going into decline. I think we might see the huge levels of growth that we're seeing at the moment fall a little, but I still think the fundamentals remain in the marketplace that will sustain growth going forward. Thank you. Final sound, greatly. The intention is not to be cautious on it. It wasn't a cautious forward projection, it was more trying to explain what was going on or what might have been going on in the period that's already passed. Yeah, I think what I'm trying to say is that it's not yet defined. All the information about extra dogs and empty dog homes is all anecdotal. Nobody has yet absolutely defined what those dynamics are. It definitely isn't a note of caution. No, I think as we get clarity. Thank you. As we get clarity, then if dog numbers have increased, that should be a tailwind for the business, given our portfolio on focusing on chronic illness, critical care, as those dogs get older. Got you. Thank you. Just sort of quick ones. One was M&A, talking about further investment opportunities and that you haven't been able to do maybe quite as much M&A because it's been hard to do the diligence. Realistically, could you put a lot of the balance sheet to work in the next period? Could you go to a couple of turns of leverage? Are you in discussions with enough deals that that's possible? Is it still likely to be a bit more minor in terms of the contribution this year? Acquisition isn't an exact science. As you're aware, there's not many players within our marketplace. In terms of platform acquisitions, it's always been a little bit lumpy. I think the message we're trying to give is that in terms of company acquisitions, that's proven difficult. In terms of smaller individual product term acquisitions, we've got lots of opportunities and lots of ideas that will either bring new approved products into our portfolio or products into the pipeline to add to our development opportunities. In terms of guiding on what the leverage would be, you know that's a really difficult one to call because as I said, you're not quite sure when the next major acquisition will come along. I think in a lot of respects, James, as we've shown with the Osurnia and Mirataz, if we can get the right product deals, we actually prefer them because they're a lot easier to integrate. We got the established infrastructure in Europe and the U.S. that we can sell more product through the existing infrastructure. Thank you. Final question, just on Tri-Solfen. Could it actually be a material boost to earnings by material, could it add a percentage point of EPS growth or anything this year? Is that going to be a material product this year or is it a few years out before Tri-Solfen actually starts to make a difference to your EPS growth rate? Do you know, it's a big unknown. I think we'd expect it to add a few million within Europe just for pigs alone within the next three years. The reason we're not being more specific to that is because a lot is to do with changing attitudes towards animal welfare. We're seeing a huge move towards improved animal welfare. For instance, castration of piglets in Germany, it's now compulsory to provide pain relief. That's a major step forward. Obviously with what I said about France, then clearly they're thinking along the same lines. Yes, it could be material. How long it takes to be material will depend on how quickly people change attitudes, and particularly in some of the major countries like Brazil. There's got to be a big step forward in terms of the thought process in Brazil for it ever to be a material product there. I guess at some point in the future, if you get supermarkets and major retailers that will not take meat unless it's been ethically treated, then there might actually be a lobby that forces this agenda through quicker. It's a bit of an unknown. What I think we do know is that Tri-Solfen will deliver growth for many years to come. Thank you. We'll now take our next question. It comes from Anand Date of HSBC. Hi. Welcome. Hi, morning guys. I've got a couple as well, if that's okay. The first one is around distributor inventories. If you could just talk a little bit about that and then sort of related to it, the growth you're seeing in online or direct fulfillment, how your relationships with the bigger vet groups are progressing. I think you said in the past you're sort of channel agnostic as long as they're prescribing your products. I'll take that one second and I'll let you take the first question after. Yeah, we are pretty channel agnostic. Our products are predominantly prescription-only medicines and the route to market has to involve a veterinary surgeon. As long as we have a relationship with a veterinary surgeon, but it's up to the vet what route he decides his clients are going to actually take to order the products. Paul. In terms of distributor inventory and what's in the channel, I think, conferring with what Elanco said recently in the U.S., that we don't believe there's any excess in the channel. Strong demand, part of the reason we've stocked up. As you'll see in our working capital numbers to make sure that we can tap into that demand because we don't believe there's a lot in the channel. In Europe, we talked a lot at half year about Brexit, and that's unwinding in the second year. That took a couple of months, maybe into March, April before we saw it return to normal. We're also confident that within Europe now, stock in the channel is normalized. There shouldn't be any volatility in our two major markets, Europe and North America. Ian, if I can just ask on the bigger vet groups, any sort of changes in the relationship or how they're behaving? No, nothing material to report at all. We still have an excellent relationship with all the major vet groups in Europe and within the U.S. and they are key customers to us. Okay, cool. Is there still runway for growth for the salesperson sort of creep, in North America, please? Yeah. I've always said this, and I've said it for many years, that there's no step change to be made in the U.S., but there is always scope as we get more products, we need to reduce the number of practices that each representative sees. We will continue to see an increase in the number of representatives, in the U.S., but not a step change. As you're well aware, and, we always look for revenue growth above cost growth so that the operational leverage is the point you're probably getting to will remain. Yeah. Just on the SG&A of your salespeople. Clearly, you've already told us that it will be returning much closer to normal next year, which we would expect, but could you talk a little bit about any kind of digital gains, any reason why that should be better going forward from what you have learned over the last 18 months? Yeah, it's early days yet to see how it develops. We strongly believe in face-to-face meetings, representatives part of the way they operate is on a lunch and learn meetings in front of a full practice, which is a lot easier face-to-face than it is trying to do through a Zoom meeting. I do think we'll see some reduction perhaps on historic levels, Paul. I think that digital communication has definitely changed. I think we made the point in the statement, we've increased slightly the number of people within our U.S. telesales team, we'll see how it evolves over the next 12 months. Clearly, we don't want to spend money if we don't have to, we do still feel that people-to-people relationships is hugely important. Yeah. I think, as Ian said earlier, we've got a great platform that we could probably do a lot more with. Whilst we've delivered 77,000 hours, the target to get up to 100,000 proves that we think we can do more with it. Particularly given we're a relatively small player still in the market. It does give us the opportunity to reach a lot more people, in a way we don't necessarily have the volume on the ground. Yeah. Very last one. Just on platforms. You got Putney, well you did Putney in North America, you did Venco in South America. Is it as simple as we just need an infrastructure base for, I don't know, Africa as a whole or APAC? Are those the remaining platforms you would ideally like or are there ones you could plug into sort of the existing platforms, if you know what I mean? There's two ways to expand geographically. We can do what we've done in a couple of countries such as Poland or Canada, where we develop sales through a distributor and when we get the critical mass, we can then on the back of that critical mass, set up our own sales and marketing organization or as you say, we can acquire. I think the problem with acquiring is trying to find the right company that provides that platform. Without naming countries or companies, yeah, clearly we'd like to buy other companies that would give us a foothold into new territories. Cool. Got you. Thanks very much, guys. Our next question comes from Max Herrmann of Stifel. Morning, Max. Morning. Thanks very much for taking my questions. Three, if I may. Firstly, just on Mirataz. I think I noticed that the contingent consideration expectations have gone up a little bit, in the year. It sounds like the product is performing well, and I just wondered what your view is now on the potential for the product longer term. Also on that one, Mirataz, whether there's any sort of halo effect in terms of getting in vet practices with a highly differentiated product such as Mirataz and whether that helps the rest of the portfolio in the CAP arena. Secondly, just on Brazil, what the next opportunity for growth in that market is. Have you got all your products registered there, or are there some major ones still needing registration? Finally, just on Ampharmco and the transfer of third-party manufacturing in-house in the U.S. and how that's progressing. Thank you. I would start with Brazil because that's an easy one. No, we've nothing like got our entire portfolio registered there. It's only a few products. The Brazilian regulatory authorities are underfunded and are very slow, unless there's an absolute clinical need to get products registered there. It is still predominantly a vaccine business, but we've got good growth opportunities on the companion animal side there. Mirataz. Halo effect. Well, I think we're well known already for having an excellent novel and niche portfolio. Clearly, the more novelty we can add to our portfolio gives us better reasons to see vets. Vets will want to see us more if we can provide an educational support, which on the back of that, we can tell our broader portfolio of me-too and generic plus type products. Adding innovative products like Mirataz, I'm not really familiar with the halo effect, but I think I know what you mean, but does add to our credibility within the marketplace. In terms of aspirations for this product, we believe every veterinary practice should have the product on the shelves, because a lot of illnesses that cats get are extenuated because the cats don't eat. We see it being a widely used product in the fullness of time. I think we've said it should be a GBP 10 million plus product comfortably within a few years. We're not moving away from that. You asked on Ampharmco as well, Max. We're continuing to invest in that side, exit third party and move our own manufacturing in-house. Currently we're around 40%, which has taken a bit of a step down because clearly Osurnia and Mirataz weren't manufactured by us when we acquired them. The plan is to try and get that back above 50%, predominantly moving the new products into Skipton or current third-party products into our facility down in Zagreb. You'll see in the CapEx, we continue to invest to get that site up and available to take more capacity of our own product. In Bladel, we're still unfortunately waiting for FDA approval. They've been delayed because of COVID. We've been unable to get anybody to inspect the site. That site is now ready for inspection, and we've done everything we can. We're just waiting on a visit, which will then allow us to manufacture product in Bladel for the U.S. market. Steriile. Sterile injectables for the U.S., yeah. Great. Thank you. Our next question comes from Kane Slutzkin of Numis. Morning, James. Sorry, most of my question was taken. I'm just having a quick squiz. Yeah, sorry. Last one I wanted to ask, just on your peer group. It seems sort of recently Elanco sort of cited increased logistical costs and inflationary pressure in their annual results. You guys don't seem to mention anything. I'll assume you haven't experienced anything like that. Just out of interest, is this something that we should be factoring into our thought process at all? No, it's nothing that we're seeing to date, Kane. We will continue to monitor it. Yeah, we've not seen any significant pressure in terms of inflationary increases from logistics providers. No, not at all. Okay, perfect. Internal pressure, of course, because we've significantly increased salaries in places like Brazil, but these are all the planned activities. Okay, great. Thanks. Our next question comes from Charles Weston of RBC. Hello. Three questions, please. First on Akston, you refer to new data on cats and dogs. Just wondered if you could elaborate on that, and in particular on the cats, where I seem to recollect it was that side where there was some dosing difficulties, I suppose. Trying to sort that out. On Akston, the R&D phasing, just wondered if we can get a sense of how that R&D will progress. On launch, you talk about 2026. I may have been mistaken, but I thought we were aiming for 2025. Has there been a delay there or was I just mistaken? Second question on Tri-Solfen again. Appreciate you're not going to give us a specific number in terms of market opportunity. If we just pick piglet castration in Germany, I don't know how many pigs are castrated in Germany, but what would be the market potential in that one market that we could think about perhaps extrapolating over time? Lastly for Paul, what could be the tax rate longer term, please, assuming the regions develop as they have been? You caught us on the ground there, Charles. If you cover Akston first in terms of phasing of spend. Well, we're not saying there's any new news. We're just saying that the trends we've seen in the proof of concept have continued. There's nothing new to report on dogs at all. We are very much beholden now to Akston doing their part of the partnership, which is increasing production of the API for us to put it into a clinical trial. In terms of the cats, we're still running the dose-ranging trials because it isn't a problem that it doesn't work, it's that some of the cats go into remission. They get better, but we're finding that they only get better for a period of time. It just becomes a hugely complex clinical program that we need to put into place. The part in the game now is entirely down to Akston to allow us to move into a clinical phase, and that's to get a stable API that's produced in the right quantities that we can also put through a CMC application for the U.S. market. In terms of spend, Charles, I think I said before, it's always going to be lumpy because of the milestones and if they fall, in which period. The overall cost hasn't changed. Your point on timing, I think we said with a fair tailwind sort of pre-COVID, we may squeak this into FY 2025, but the first full year would be FY 2026. It is going to be FY 2026, which I don't think has changed significantly. In terms of spend, Akston next year, we expect to be in the region of GBP 6 million, and in 2023, about GBP 9 million. Again, that is subject to change, but we'll keep you updated as and when things change. In terms of the tax rate, up to 22.5%- 23% next year. What we're seeing in our major markets, the U.S., Netherlands, the U.K., appears to be a convergence around the 25% mark getting out to 2024. I think in the fullness of time, that's probably where we can expect to be. Obviously, it's changing and depends on legislation going through. Yeah, I think around the 25% mark in all major territories is where we'll be. In terms of piglets in Germany, I'm sure people in our team will know how many there are and how many castrated a year. I'm sorry, I don't know that figure off the top of my head. It is feasible that all those piglets, of course, could be treated with Tri-Solfen. There is some debate because Tri-Solfen is actually applied after incision, whether actually the legislation says that you actually need to use a pre-incision pain relief. I think depending on where we end up with that argument will determine how big the product can become in Germany. I think if it's a figure that's important to Paul, I'm sure we can find out off one of our team and come back to you and let you know how many piglets there are. One thing to note about Tri-Solfen is because there's no clear economic advantage to the farmer, that in Australia, they priced it very low, they got huge compliance. It's only pennies per dose. I guess if legislation forces the use of it, there may be an argument to actually increase the price a little bit. At this point in time, compliance is key. Okay, thanks very much. Our next question comes from Mike Mitchell of Panmure Gordon. Morning, Paul. Morning, Ian. Morning, Mike. Just a quick one from me on Akston, that's actually just looking at the manufacturing capability that's already in place on their side with regard to the diabetes program. Presumably, it's all commensurate with the current status of the program. I'm just wondering about how we get to commercial manufacture. I'm just thinking about the additional investment and process development to be required on their side to get to potential launch volumes. What sort of size and shape do I think about that from Akston's perspective? They are responsible for building the synthesis unit that produces the API. That's a huge investment on their part. And do we have- Sorry, Mike. I'm aware that they've been involved in doing some work in relation to COVID, which should be good news for us because that's brought things forward and hopefully ironed out a few issues early in the process. They're actually finding that out with other people as opposed to us with the diabetes product. Okay, got it. No, that's fantastic. Thanks, guys. Our next question comes from James Vane-Tempest of Jefferies. Morning, James. Yes, good morning. Thanks for taking my questions. Three if I can. I'll just take each in turn. You talked a bit about R&D, I think some costs being pushed into full year next year, and also there was GBP 4 million on savings for travel and entertainment. Just curious how you see the cost base evolving into this financial year. You mentioned no inflation on logistics, is there any sort of full year catch-up effect on the wage inflation? Is it fair to say that this could pressurize margins this year? That's my first question, I've got two others if I may, please. Thank you. Yeah. On that, James, I think we've said throughout that we believe there's in the region of GBP 7.5 million-GBP 10 million of costs that would go back into the business once we're traveling, we're attending congresses, reps are back out on the road, which will go back in. I would expect sales and marketing spend as a percentage of revenue to return to close to 26%. Not all the way back to historic levels, but pretty close. That will impact on margins. I think we've been pretty transparent throughout in this year that the number has been flattered as a result of cost savings. We'd always flagged that those would go back in. Having said that, as Ian said earlier, one of the key targets that we put on all businesses is to grow the top line faster than the cost base and deliver some operating leverage. That remains. In terms of R&D costs, there has been some slippage in terms of costs. Whether we can catch some of that up in the next financial year remains to be seen. Guidance remains unchanged on that. I think we'll probably be in the region of GBP 40 million overall, including Akston in FY 2022, probably a bit more, GBP 44 million-GBP 45 million FY 2023. Although there's been some delays, not significant delays to key products in the pipeline. That's great. Thank you. My second question is. Great to see the nutrition business really start to improve. I'm just curious, it is a very competitive space, so I'm just wondering how much of that was low-hanging fruit, or does this need much more investment in order to maintain the current momentum? Well, we've got very low market shares in the first instance. This is space dominated by the big boys, Mars with Royal Canin and Hill's Science Diet. There's also a bit of a headwind that vets have got a bit of fatigue with selling diets because they generate demand and then the clients go and buy through the internet because, of course, these products are not regulated, so they can be bought through any channel. I'm not answering your question directly because it's something that we don't have an exact forecast on. We're just delighted to have seen some growth, and I think we are convincing vets that there is a place for them in selling diets, because we don't put our products through retailers. Hopefully we can see some momentum maintained. I wouldn't say it's low-hanging fruit at all, no. It's been extremely hard work for the team to get some attrition within these products. One thing I always say about this is, it's not a distraction to us. We've got an excellent third-party contract manufacturer that causes us no problems at all. We've got an excellent supply chain and logistics set up for this. The products are sold alongside the pharmaceuticals, and a lot of them actually complement the pharmaceuticals. Although we call it out as a different part of the business, in reality, it dovetails very well with our companion animal portfolio and our companion animal sales teams. Understood. That's very helpful. My final question is, the European business has done well, but as you point out, this includes the international business. I'm just kind of curious if you can give us a feel as to what proportion that international is now, and assuming obviously no further M&A, what the international business could be as part of that segment, say, in five years, if those ambitions materialize, and at what point would it be a consideration to split that out separately? Thank you. Yes. We are considering splitting that out, so appreciate it would be helpful for investors and people who review the numbers to see that separately. At the moment, we don't need to under the accounting standard. It equates to approximately 10% of our business. Difficult to say where that would be really in five or 10 years because our European business, as you point out, is still performing really well organically. I think it depends on how quickly those markets develop. If you take a market like Brazil, there's a huge number of dogs in Brazil, but then how many of those actually see a vet on a regular basis, and how many of those who see a vet actually have owners who spend a lot of money on them because a lot of our products are higher end. We have seen markets move quite quickly. Poland is a really good example. I think it depends. It may be five years or may be slightly longer. Who knows? I think the important point is that we've done a lot of work getting our key products registered in those territories. All of our key cat products are now on sale in Brazil, ready to tap into that demand if and when it starts to take off. I think it would probably take a material acquisition for it to step up above 10%, because although the international part is growing very, very well, of course the rest of the business is also growing very well, so it never increases. It doesn't materially change as a percentage of sales. I think it would take a major acquisition for it to change significantly that we'd have to call it out separately, but we'll be there. Yeah. That's really helpful. Thank you. Just a quick clarify. When you take 10%, is that 10% of that European segment or 10% of the overall company? The overall company. Yeah. Overall company. Overall company. Brilliant. Thanks very much. Our next question comes from Anand Date of HSBC. Yeah. Hi, morning, guys. I had a slightly weird follow-up. It's a bit conceptual. If you tallied up the number of product registrations you have across all the sort of countries, could you give us an idea what that number might be? I appreciate you probably don't have that number to hand, so that's fine. What I'm trying to figure out is how many of those are sort of dormant registrations versus really active. I think you said in the past you've got quite a few registrations waiting for cat markets to take off, aside Vetoryl in Mexico and stuff like that. Just trying to get a sense of what that sort of latent opportunity is. Following on from the question earlier. Are any of the FAP-led countries you're entering with FAP, are you seeing any of them beginning to turn more to cat? I think you talked about Poland in the past, but are there any others? Thank you. We believe we've got around 1,800 registrations, there are a lot of them that are just regional, such as in the U.K. or Germany from historic acquisitions. We've probably got about 1,000 products you would class as current registrations that are of interest to us. We have been culling the lower value, the tail-end products even ending up with that many registrations. We don't have inactive registrations. Everything that we put into registration, we will then eventually sell within a six-month period. I wouldn't see it as being a latent number of registrations. In terms of markets turning more CAP than FAP, strategically, our international business unit Started to focus more on CAP registrations than FAP. By default of our own activities, rather than changing markets, they are becoming more CAP. Okay. I suppose the first half of the question, what I'm trying to figure out is, just as one example, you registered Vetoryl in Mexico. Mexico is not presumably a big market for that yet. Correct. Are there many opportunities for these products when the markets take off? Yeah that are already registered, you already have the SG in place? Yeah, that strategic growth driver is what we call portfolio focus. It's entirely what it's about. There's no question that companion animal markets are developing around the world. I think they will continue to do so for some time. The pet in developing countries where dog was once on the menu, dog is now a status symbol. You know that, Anand, that attitudes are changing. We use South Korea as a classic example, where we're beginning to see a huge amount of growth, admittedly from a very low base, because the attitudes towards dogs are changing. Okay. Thank you. Once again if you would like to ask a question, please signal by pressing star one. We will now take our next question. It comes from Andrew Whitney of Investec. Morning, Ian. Morning, Paul. Morning. Just a quick one from me following up on previous questions on manufacturing. I saw in the release, and you've alluded to it, the FDA audit at Bladel. I think you're waiting on TGA approval in Australia. Yeah. I was just thinking, how material are these decision-making events? My understanding is there's lots of capacity in Genera or lots of potential capacity for that sort of in-housing of manufacturing. Are those two approvals a part of that process, or is that just sort of incremental to the overall strategy of getting stuff in-house? It's overall. It's a slow evolution. We first of all look to make aseptic products, sterile products out of Skipton. These are terminally sterilized as opposed to aseptic fill. Bladel is our only aseptic fill facility, which is why that is priority to go through FDA approval at the moment. In terms of Zagreb, you're right, we've got a huge amount of capacity, and we will be looking to add more production capabilities there over a period of time. It's an evolution rather than a revolution. The Genera facility is still the sort of big in-housing opportunity in Europe. Yeah. That's the key piece, is it? It doesn't have an aseptic fill facility. Our aseptic fill capabilities are entirely based in the Netherlands, in Bladel. Got you. That's very clear. Thank you. Okay. It appears we have no further questions at this time. I'd like to turn the call back to Ian Page for any additional comments or closing remarks. Thank you, everybody, for the questions, and thank you for attending the meeting this morning. I think we ran to schedule, one hour. Thanks a lot, and goodbye.