CSL's (CMXHF) CEO Paul Perreault on Q4 2014 Results - Earnings Call Transcript

Aug.14.14 | About: CSL Ltd. (CMXHF)

CSL Limited (OTCPK:CMXHF) Q4 2014 Earnings Conference Call August 12, 2014 9:00 PM ET

Executives

Mark Dehring - Director of IR

Paul Perreault - CEO

Gordon Naylor - CFO

Analysts

Ian Abbott - Goldman Sachs

Andrew Goodsall - UBS

David Low - Deutsche Bank

Sean Laaman - Morgan Stanley

David Stanton - CLSA

Craig Collie - Macquarie Group

Steve Wheen - JPMorgan

Alex Smith - Citi

Saul Hadassin - Credit Suisse

Mark Dehring

Okay, ladies and gentlemen we will make a start. Good morning and welcome to CSL’s Full Year Results Briefing for Fiscal 2014. I have with me here in the room Paul Perreault, Chief Executive Officer of CSL and Gordon Naylor, Chief Financial Officer. As with past practice, Paul will be providing an overview of the results and operations and Gordon will be picking up on some of the financials.

Please not this is being webcast and we have quite a number of people online, so during the Q&A, I do ask that you use the microphones. And before we start I draw your attention to the forward statement disclaimer contained in your packs.

And with that I will hand over to Paul.

Paul Perreault

Thank you, Mark. Good everyone. It’s a pleasure to present the CSL results, to you all this morning, as Mark said, Gordon will be filling in on some of the financials, detailed financials as we go forward. Please do note the forward-looking statements slide, obviously the forward-looking statements are identifiable and we have called out the risks and the caveats around the representations in this presentation. So, I am very pleased to report that CSL has produced a strong result this year across all of our financials in what remains a very competitive marketplace. When we take a look at the revenues of 5.5 billion, it’s up 8% at constant currency. The EBIT line of 1.637 million, up 11%, up 10% at constant currency and NPAT at 1.307 million, up 8% in the same constant currency. And this result does include the one-off for the U.S. anti-trust class action settlement that we had earlier this past financial year.

R&D investment was up again to 466 million, that’s 11% of constant currency. We continue to invest in the future of the organization as part of our strategy and I will talk more about R&D in a little bit. And our final dividend increased to US$0.60 unfranked and that’s up 15%. So, the operational highlights, we had number of things happening obviously this year and one of the highlights was Hizentra and the approval for flexible dosing for Hizentra. What this means is that you can dose Hizentra once every two weeks as opposed to once a week and we actually have some flexible dosing that’s being submitted to the agencies around even going to more longer dosing interval than once every two weeks. So, the pharmacokinetics of this product really support the dosing flexibility which is great because it does give patients additional options to infuse subcutaneous immunoglobulin with Hizentra at a high concentration.

Kcentra was approved for surgical use so you know the year before last we had Hizentra approved for the reversal of severe bleeding on patients with taking warfarin or Coumadin. And this past year we had the additional indication for those patients in surgery that also were on Coumadin or warfarin that had severe bleeds during surgery. So, an expansion of the label that has shown significant growth for this particular product that I will talk about in a minute.

We continue to expand our facilities to support our growth. Obviously you have to plan these things well ahead of time, facilities don’t pop-up overnight and so you have to do your planning years in advance and we’ve done that on the back of early demand. So, when we see the market demand, we start to invest and make sure that we have enough capacity to supply these lifesaving and life-extending products to patients. CSL362, we had a license agreement in Janssen Biotech this year. This product is for acute myeloid leukemia and actually has utility we believe and expanded indications beyond that. bioCSL our Australian vaccines pharmaceutical business is in the middle of what we termed the turnaround process. We separated this business over a year ago to really get a close look at the financials and the health of this business here in Australia and Gordon will talk a little bit more about that later in the presentation.

In terms of capital management, we are in the process of completing the current share buyback of about A$950 million, that’s about 93% complete at this particular point. And we will have a new foreshadowing of a buyback by the Board of up to another A$950 million once this share buyback is complete and the Board makes a determination. We also are doing a private placement that we are foreshadowing of up to €300 million. And of course we did settle the class action suit which we were able to move on with the business. I think the litigious nature of the U.S. was such that it was really a benefit of the company to settle and move on with the rest of our business.

In terms of the facilities expansion that I mentioned, many of know I visited Broadmeadows in March. We had a bit of tour back in March and I hope you enjoyed the tour there. Certainly, the biotech manufacturing facility that we have opened in Melbourne to really supply our clinical trial material for our recombinant proteins as well as early stage commercial launch has fantastic new facility that is currently in the process of manufacturing those clinical trial materials. And we did announce recently that we are going to be putting a new recombinant coagulation manufacturing plant for full commercialization in Lengnau, Switzerland.

Our plasma business, we in the commercial start-up of Broadmeadows Privigen facility, we expect that to open in 2016 and the multi-site capacity expansion that we’ve had across rest of our sites including an expansion of base fractionation and additional albumin capacity is well underway. And we expect some approvals in the Kankakee area later this year. In terms of collections of plasma, we opened 18 centers this past year in the United States again you have to collect this plasma well ahead of when you may need it because it takes time to ramp these centers up and really get the donors flowing through the center. But with 18 facilities, that takes our fleet globally to a 106 centers and we also opened a second Plasma Logistics Center in the United States. This is the area where we store the plasma and then ship it out to the manufacturing facility once it’s ready for production.

We did expand our laboratory in Knoxville, Tennessee where we will now be able to perform 64 million tests per year, quite a large facility for testing of the plasma. And we have transitioned to in-house nucleic acid testing in the Europe lab. We did do that in the U.S. in fiscal ’13, so we in sourced all of our NAT testing. In terms of the group revenue and through the product groupings you can see that we have a bit of a broad mix in terms of the products. And the albumin at 13% of our revenues now as well as our coagulation portfolio, so albumin is 13% in our specialty products which account for 15% of our revenue

So, we do have a broad sales reach in terms of where the products obviously are sold and you can see that we called out bioCSL as a segment with 7% of our sales but North America contributing 41%, Europe you can see the number there at 29%, and Asia at 10%. In terms of our outlook for this financial year, we expect revenue growth of around 8% as well as reported EBIT of around 15%, which is important because it really highlights the underlying growth of the business and the reported NPAT of around 12%. And I think that as we continue to look at our EPS growth, we think that that will exceed NPAT growth going forward and that’s driven not only by our underlying growth in the business but also by some benefit from our capital management initiatives.

And I’ve mentioned before and we are foreshadowing that the Board will consider a further buyback to help us maintain that capital management discipline that we’ve had in the past. In terms of the product sales, digging into this a little bit, you can see that we have growth in pretty much all the segments. We had significant growth in specialty products, significant growth in immunoglobulin, significant growth in albumin. Our plasma derived and our recombinant haemophilia portfolio was slightly down and we’ll tell them to give the details on these segments now.

So, in terms of Immunoglobulins, normal IG was up about 13%, IG growth in total was 12% that’s diminished a little bit by the hyperimmune area but in terms of normal IG 13% growth which I think was extremely strong. This was driven by a number of factors including the fast adoption of additional patients in Europe with Privigen due to our new indication with CIDP as well as strong demand in Latin America. We had a very strong demand for IG and Privigen specifically in Latin America this year. So, our Latin American operations continue to help us drive forward. Certainly, the Hizentra as I mentioned before is a key factor in terms of our growth. Hizentra was up 19% this year in terms of growth, so again very strong growth in subcutaneous space. And I think the flexible dosing option in the U.S. has really assisted in that growth as well.

So having that option to be more flexible with the dosing in the label has ensured physicians’ that this is a product that does have a better flexibility in terms of how patients were able to adapt and use it in their treatment. So, we see ongoing demand for Hizentra in the U.S. and Europe and certainly Privigen as I said has shown some very good growth in the second half as well. When we take a look at albumin sales up 16%, you’d expect that albumin would be growing quite strongly because IG is growing and as you know with our economics of our business the albumin growth will come with the IG growth. And so as we continue to grow IG, albumin should grow and it did and we were very happy to see that we had very strong demand in China.

Our albumin growth in China was up 29% this year. It’s a huge number but it just shows that there is a real need and a demand in China for albumin. And certainly our ability to manage our distribution quite effectively, the changes we made in distribution last year with the addition of Cardinal as a partner in our distribution in China and our ability to actually deliver in China through the changes in serialization and the way that the product flows through the pores has been extremely beneficial. We have a very strong logistic team that really helps us in that China marketplace.

In Europe, the solid demand for albumin was still there. There is still a flow on effect from the starches and the downplay of the starches in a number of indications and the addition of albumin in terms of treatment therapies. And in the rest of the world, we have strong demand again LATAM, Latin America was strong in albumin and in Brazil particularly we saw some great strength in albumin this year. Haemophilia was down 4% at constant currency, number of factors here in terms of the plasma derived segment and the recombinant segment.

For plasma derived as you know a lot of the plasma-derived utilization is in countries that are not switched over to recombinant, a lot of the emerging markets and some of the Eastern European markets. Most of these tend to be tender markets, government markets and the tenders are a bit lumpy. The timing is not always aligned with our fiscal years for the issuance of these tenders, so we kind of go up and down a bit depending on our ability to compete in the tenders with our competitors, again a very competitive space.

But we do see growth in the emerging markets and we also did have some impact, we had a number of high utilization patients that were on immune tolerance therapy that resolved the inhibitors and came off of the high-dose therapies in plasma derived. And these patients can actually use million of units a year, so it does have an impact when they resolved the inhibitor. We are happy they resolved the inhibitor certainly but it does impact sales at some point.

In terms of Helixate, I think the movement in sales mix, the multiple clinical trials that our competitors are running which allows patients to go on product free of charge because they’re on the clinical trial material, eats in to commercial markets. This is not commercial product that patients are currently on when they are in the clinical trials, so it has an impact across the marketplace in terms of recombinants. And obviously we have had some new entrants and people that have not currently been in our space that are now entering in the market like the biogenetics of the world.

So, a lot of competition in the space but I have say we’re very placed for the future with our recombinant portfolio and we still have a strong plasma derived portfolio as well. So, we will continue to push forward and we don’t mind the competition. We are just ready to get into the game. In terms of specialty products, another very, very strong performance this year in our specialty products portfolio, up 18% which was a tremendous effort. Kcentra and Beriplex, so it’s the name in other markets is Beriplex, in the U.S. it’s Kcentra, grew by 98% this past year, so tremendous effort in terms of the growth of Kcentra. This shows the actual medical need of these products in terms of resolving patients bleeds when they didn’t have options prior.

The other thing about the specialty products was Berinert continues to grow. We saw 25% increase in Berinert sales this past year across the globe. Zemaira grew 10%, fibrinogen was in the 6%. So, the specialty products continue to show this growth based on the medical need of these rare diseases that these products actually help resolve. So, I can’t say enough about specialty product portfolio, we certainly with our broad breadth of products in our portfolio it’s a real advantage to have this great cadre of specialty products to be able to continue growing over the next number of years.

bioCSL, this is in Australian dollars just to remind you now that we’re switching back to bioCSL which is really the Australian business for pharmaceuticals and vaccines and flu vaccines, so we do look at it in the Australian dollar terms. The business turnaround is underway. The influenza sales this year were AUD125 million. We did see increased U.S. demand. We did have a partner Crucell exit market in the EU and they were a good customer for us in terms of antigen sales, so that went away which depressed our flu sales a bit. But the seasonal flu business continues to go well and so far this year we’ve seen strong demand in the U.S. and Europe for the Northern Hemisphere season which is just underway.

Next, I will move onto the IP segment, an intellectual property. When we take a look here, you can see that the HPV royalties were US$190 million that was down on an annual basis of about 7%. As you vaccinate more and more people obviously the opportunity to vaccinate people as they come into age is lessened based on the catch up programs which we’ve had in the past. So the royalties from the HPV were down about 7%. However, we’re excited that 9-valent vaccine was submitted this past February to the U.S. authorities and will be submitted to another jurisdictions and this will cover five new potential cancers with the 9-valent which is I think a great growth opportunity.

So, we expect to hear something within this financial year back from the agency or Merck does on the 9-valent. CSL362, I mentioned briefly earlier and certainly in AML, we think this is a fantastic opportunity. Janssen is a great partner and they certainly have the expertise in oncology to take this product and really develop it the way it should be developed. I think that when you take a look at the benefit that you get from CSL362, you actually are able to take and generate killer cells from the natural immunity system within the body against the AML, the cancer cells. So it’s a fantastic product really.

When we take a look at the AstraZeneca arrangement that we have in rheumatoid arthritis, this program continues to advance and we’ve completed or AstraZeneca has completed the multiple Phase II studies and so far the results have been extremely promising. So, we are looking forward to continuation of those programs within AstraZeneca. And then in terms of ISCOMATRIX, we continue to see benefit, the Merck Dengue study is ongoing and there is a New England Journal of Medicine article that showed the effects that ISCOMATRIX has able to generate not only on antibodies but in terms of dose sparing. So, very good outcome so far for ISCOMATRIX.

Quickly move just to look at a bit of the R&D update and the highlights there. Certainly our recombinant portfolio in terms of recombinant factor IX fusion protein, our recombinant VIIa fusion protein and our recombinant factor VIII single chain product are all moving through development and many in the later stage. So the factor IX program which, the pivotal phase III study enrollment was completed this past year, the pharmacokinetic data supports 14-day treatment regimen. So, again a very significant change from the market leader today BeneFIX and I think we can compete quite readily with the Biogen product as well. So we are looking forward to putting that submission through hopefully this fiscal year and we will see where we go but certainly the data is very, very strong.

The recombinant factor VIII program, the Phase I/III study supports twice weekly dosing. The first patient was enrolled in the pediatric study and we do have to have some pediatric patients as well so that continues to move and our recruitment is strong in this particular product as well. So, very pleased with the way our clinical group has been performing there. With recombinant VIIa fusion protein, we have the Phase II/III trial, is due to commence this year, so this calendar year and we are moving that forward as well, very exciting product because again the fusion protein technology is very similar to what we are using for our factor IX product where we are seeing the every two week dosing.

So we are looking for some excellent results there. In terms of Hizentra, the administration options in the EU and the U.S. in terms of that flexible dosing has been really helpful for patients and we see the growth that we experienced with Hizentra this year, that was done with pharmacometric modeling which was quite a unique way to approach the agency without having to do a full scale clinical trial because the data actually works. And we have some very intelligent scientists in our group here in Australia that took a look at the modeling from the data that was in the clinical trials and we were able to put a submission together that the agencies were well prepared to receive. In terms of the approval in Japan for primary immunodeficiency and secondary immunodeficiency, this also has another way of the expansion obviously of our portfolio across our geographies. This is the first and only subcutaneous IG available in Japan.

Kcentra, I’ve talked about and certainly the expanded indication in surgery was extremely helpful in terms of driving additional utilization in the hospitals. Zemaira we have the efficacy data from our Phase III/IV study and that submission has been put into the U.S. regulators and the EU regulators. In the EU, we are looking for approval of Zemaira, in the U.S we are looking for expanded labeling with the data that we have. Berinert, the pivotal Phase III subcutaneous prophylaxis study has started. Berinert has, as I mentioned before, grown at 25% this past year and when we look at a high concentration in the subcutaneous administration, it would be a big benefit to patients who currently today only have the IV option with C1-esterase inhibitor.

Going into CSL112, another very exciting program for us in terms of development. The Phase IIa supports our mechanism of action and we presented that at the American College of Cardiology this past year. And our global Phase IIb program is initiated now, so we’re initiating the Phase IIb program that will kind of have approximately 1,200 patients and we will look to drive that as quickly as possible. This is a unique product that can actually cause the efflux of cholesterol out of flack after a heart attack and that’s really when patients are most susceptible for second event and potentially death. So, in this time period after the first heart attack, patients really need to be stabilized and that’s where we see a lot of utility for CSL112, assuming that all of the trials continue to progress as we’ve seen thus far. Risk is always in R&D, but certainly exciting in terms of the opportunities.

And with that I am going to hand it over to Gordon and Gordon will take you through some of the financial detail.

Gordon Naylor

Thanks Paul. Good morning everyone. As Mark mentioned, I will talk you through some of the financial detail behind the results that Paul has announced this morning. In addition to the accounting result, I’ll also cover some thoughts on the development of margin structure, which is always a popular topic, and talk about management of the balance sheet, cash flow and then finish up by talking about progress we’re making with bioCSL.

So, you’re all aware now that our reported NPAT result was a shade of 1.3 billion for the full year. On a reported basis, that’s up 8% on the last financial year and pretty much the same growth in constant currency terms. You will recall that FY13 was especially strong, helped by few special items, including the boost in albumin sales in China, following the change in distributor model at the beginning of that financial year. But far the most significant influence on the FY14 result was a settlement of the long running U.S. class action. The cost for the settlement was US$64 million or $39 million after tax as the expense was tax deductible in the U.S.

Our EBIT growth for the full year was 11% or 10% in constant currency terms. Obviously EBIT was also adversely affected by the class action settlement. The main reason the EBIT grew more strongly than NPAT in FY14 was due to a step up in the reported effective tax rate from 17.1% to 18.5%. As I foreshadowed a year ago and confirmed in February, we did successfully complete the strategic decision making around manufacturing of the recombinant haemophilia portfolio which was followed by migration of the ownership of these assets to Switzerland. The transfer itself nets out in the consolidated accounts but there is a tax effect that you can see in the reported ETR.

Similarly, our current thinking and expectation of ongoing clinical success with CSL112 or rHDL is to make the strategic manufacturing decision, so that asset in FY15 and to follow that decision with migrating the asset to the appropriate location. This will also net add in the consolidated accounts but again will tame to insight the effective tax rate given that year of migration. That’s the main reason our EBIT growth guidance is stronger than impact gross guidance for FY15. In larger base one-offs EBIT is probably more indicative of underlying profit growth and the Company’s operational performance.

In past years, when we reported in Australian dollars, we saw a significant volatility caused by currency fluctuations. In the main, the change to U.S. dollar reporting as well as our active management of our natural currency hedges continues to dampen these effects in the reported accounts. So that a moderate transaction headwind an issue for the year just completed has been more than offset by translational tailwind to give us a small mix tailwind of only 2.2 million of the NPAT line. Different parts of the accounts are affected differently by currency.

For example, the general depreciation of the U.S. dollar against some other major currencies has inflated the balance sheet slightly by about 4%. You can see this in the movement of the foreign currency translation results. In these accounts as of the half year, we have adopted AASB 119, the accounting standard which deals with our defined benefit plans. The standard has a modest net effect upon the reported figures but also required us to restate the prior period, reducing the FY13 reported profit by about 5 million. Finally, you’ll note in the accounts that the inventory write-downs were up a little this year but still within the usual 5% of COGS. The write-down is already in the reported cost of sales and as it’s mainly the result of an accounting shift in personal cost allocation, the cost will continue to occur in the future.

So moving on to margin, we always get a lot of questions about the strategic development of the Group’s margin structure. Broadly speaking, however, there are two confounding factors that are important to understand. The first is that half year figures tend to move around a bit, not surprising given that the working capital cycle of the business is about nine months. So that 1.5 times the six months of reporting period. As usual, we do recommend that you focus upon the full year margin figures, which tend to more reflective of the underlying trends.

The other issue that plays out from a short run margin structure is the influence of the investments that we make back into the business to ensure long run sustainability. From a financial perspective, these investments are mainly into R&D and also operating assets. As you know, we expense R&D investments in the period in which they are incurred and capitalizing business and operating assets. These investments are many and varied but have two common characteristics that tend to be lumpy in nature as it driven by business needs rather than accounting periods. Secondly, they tend to be long term. The investment projects have take three to 10 years to implement and the useful lives of base assets can span decades.

So this chart is a rough attempt to show pre-basement view of the profit structure of the Group. We view U.S. dollar reported figures over the last 10 or so semesters and simply backed out the whole R&D expense from EBITDA to give us this chart EBITDA, which is the pre-tax profit of the Company, if we hypothetically ceased reinvestments in the business. So it’s clearly unsustainable. But it’s still interesting to look at the chart and make some observations. So I’ve got two comments to make about the trend line.

Firstly, although there is some noise around the accounting periods, the effect is relatively muted. Secondly, you can clearly say the long run benefits of operating leverage, as we gradually improve operations overtime to allow unit costs broaden the product portfolio and gain the benefits of business scale.

If I can now to turn to the classic EBITDA margin view, which we presented a few times in the past, but now updated with the FY14 reported results. This is now a more sustainable pre-tax and financing deal of the business. So all of the reinvestments are now incorporated in these figures. The basis of the calculation is a sign, but the curve is more bumpy corresponding particularly to the timing of R&D investments and when large operating assets come online. Over the long-term and looking through the short run volatility, you can see that whilst it’s fairly meaningless to consider half year margins in isolation, we are sustaining and maybe even expanding slightly the operating margin structure overtime. This is a quite remarkable given the growth of the business in such a strongly competitive environment.

So I can move now on to the balance sheet and cash flow. We do continue to be very focused on the financial fundamentals of the business. Operating cash flow of 1.4 billion, so exceeding impact was strong for the year, especially in the second half. At the period end, we’ve got good cash balances to support operational needs the buyback and dividends. CapEx for the year came a little over 400 million consistent with our expectations.

Paul has given you some details of our current capital investments. Looking forward, our anticipated capital investment for FY15 will be approximately 450 million, driven by the ongoing capacity expansion programs and what we anticipate will be the early spend on the new recombinant haemophilia facility in Lengnau, in the Canton of Aargau in Switzerland. And I’ll provide an update on this at the half year. We have continued to keep the balance sheet efficient by managing working capital carefully. You can see that the modest reduction in working capital circle, which we achieved, was driven by more efficient inventory management. And the cash beyond what we need for liquidity is being returned to shareholders. As a result of these measures, free cash flow was particularly impressive for the year.

As Paul mentioned, the current AUD950 million buyback is going well. We’re now 93% complete and we will resume buying sometime in the next few days. This program fits into the strategic context of working toward a lose target of net debt to EBITDA ratio of about one times to ensure that the balance sheet is prudently efficient. The chart shows our steady progress toward this target over the last few years, so that we’re now sitting at about 0.7 times. As Paul has mentioned, we do anticipate that during the coming financial year we’ll look to tap the U.S. private debt markets again as part of this strategy.

It’s also interesting to note that if we look back all the buybacks that we’ve undertaken since 2005 and excluding the Talecris transaction that was roughly a neat wash, you can say that the accumulative buybacks have boosted earnings per share by about 19%, which is real value to shareholders. As Paul mentioned, the turnaround of bioCSL does continue to make good progress. But we do have a little way to go. We’ve taken our responsibility for the distribution of flu in the important Northern Hemisphere market. And as Paul mentioned, this season’s distributions are running well to-date.

In the second half, we were successful in gaining two important new in-licensing agreements and two logistics customers that will help to secure those parts of the business. Behind the scenes, we are working hard to reduce the unit cost base of the business, especially in flu and in business infrastructure within bioCSL. These initiatives are a key to making the business, especially flu, more nimble and competitive in a demanding global landscape. It is especially important that we’re efficient given that the majority of our production operations are in Australia, which, as you know, has a consistently strong currency. These changes are all expensive to the transition phase and we expect it might take a few more periods before the business is fully performing as a whole. But I’m very confident that we can return bioCSL to sustainable profitability.

So I’ll hand over now to Paul who run you through our strategic final work for the Group.

Paul Perreault

Thank you, Gordon. I appreciate the excellent job that you did in explaining all those financials in detail. And I hope every as was clear as I was to hear to about them, so not that I didn’t hear about them before.

Certainly, the strategy for the Company is solid. When I take a look at the strategy that’s been employed over the past number of years and looking what’s paying off today, it’s really a credit to the people in our organization that are focused everyday on making sure that we deliver these life-saving and life-extending therapies to patients. And it really starts with the base of the business. So at the bottom of the triangle in terms of our core products, this relentless commitment to really being efficient and productive in everything that we do and to really build on our core of albumin and in IG growth but also continuing to expand into our recombinant and specialty products. I mentioned the specialty products earlier, which have a real benefit to CSL in terms of our ability to access new patient therapies and new patient markets and addition markets around the globe.

So the continued development of our recombinant portfolio, our investments in R&D, which needs to continue because in this business you have to innovate, and you have to product differentiate. And by doing those things in our strategy at that next level, it’s going to help sustain CSL and our growth tracks that we’ve had in the past.

Certainly, it’s a competitive market and you also have to look for new things that are in the horizon. And so our biotech, our antibodies, the research that we do here, Bio21, where we share space at Melbourne University is extremely important to our future of longer term investment in R&D. And things like CSL112, which we think can be transforming in a market where patients continue to pass-away based on this horrible disease in cardiovascular area is a real opportunity for us should it continue to progress the way that the early trials have gone, so really building from our base of strength, continuing to focus on the basics of the business.

Sometimes people say, well it’s a bit boring, and I say that’s okay, it’s a very strong boring business. So it’s boring in the sense that maybe from a strategic perspective that we’ve talked about our strategy for a number of years, but the nice thing is that we are able to deliver on it. And that really does talk about the credit of the people that are focused on making sure that we hit all of these individual items day-in and day-out and commit to the patients that we serve. It’s a wonderful Company. I appreciate all of your support and your interest in CSL.

And with that, I think Mark we’ll move to questions.

Question-and-Answer Session

Mark Dehring

Ladies and gentlemen, we will take some questions here, first in Melbourne and then we’ll take them online. So just pass the microphones around. So Ian why don’t go first.

Ian Abbott - Goldman Sachs

Great, yes thanks, Ian Abbott from Goldman Sachs. Kcentra was one of the standouts in the result. Just wondering where you are in the sort of the launch of that product in terms of the ramp up? Have you got to a point where you'd regard it as sort of reasonably steady state or do you still see a fair bit of ramp in that through fiscal 2015?

Paul Perreault

No, I would say Ian that we continue to see in Kcentra. Because there is over, in the U.S. for instance there is about 5,000 hospitals. And we focused the first year out of gate on the largest institutions, which taken-off a lot of time because the approvals that they have, the committees that they have to go through, they have these pharmacy and therapeutic committees that you have to get approvals for any new product that comes into these institutions. And so there is a process you have to go through. So we’ve accessed 100s of those main hospitals and we’re moving into second tier but it’s going to take time before you get everywhere. The problem with these patients that bleed is that they just don’t live around all the big hospitals. And so you have to then expand and get to all of the hospitals around the country.

The other thing is it’s a new therapy. There hasn’t been anything like this in 50 years. And so you have to get physicians understanding exactly what the product is. There has to awareness of the product. And you have to get the science out there in terms of what this product actually does for patients. So it is spreading well. I would say it’s certainly the uptake has been strong, but there is still more room to grow. And we are continuing to register and launch in new countries as well. So there is room for growth in Kcentra.

Ian Abbott - Goldman Sachs

Thank you. And as I just to switch topics, subcu is a big area of growth as well. One of your competitors has had some initial positive news -- hasn't had the final positive news but it has had initial positive news. To what extent does your guidance capture some of that risk into 2015?

Paul Perreault

In terms of the guidance, we certainly have taken highcu into account. So we don’t assume that competitors won’t be successful. And so when we look at our numbers and we look at our growth and our strategy, we take competitors’ activities into accounts. So I would say it’s covered. And as you say, the final approval from the agency hasn’t come yet but they had a good response from BPAC committee.

Mark Dehring

Thanks Ian. Andrew Goodsall.

Andrew Goodsall - UBS

Just trying to understand volume growth, historically I think you’ve told us that, look at albumin, gives you a bit of indication obviously China help that. So I guess if we skip China, could you give use a sense of sort of where your volumes were for the year?

Paul Perreault

Across just albumin or?

Andrew Goodsall - UBS

I think just overall fractionation throughput.

Paul Perreault

I would say Andrew the most of the growth was volume. So when you look at our growth the pricing is fairly steady. It’s up and down in different markets. But I am always cautious talking about price gains because I think that in this environment in the health care environment where governments are big payers and you’ve got specialty distributors and pharmacies as well that are under pressure to deliver to patients. The pricing is going to move around a bit. But I wouldn’t look to our growth and so it is going to come from price.

We assume pricing to be fairly flat. In our projections it’s all about the volume which is why we have the major capacity expansions underway, because we see the demand. We still think IG is growing globally in the 6% to 8% range. You can look at snippets of data at PPTA and others in see where you get the ups and downs. I think the most recent data was somewhere around 10%. But there is lagging indicators in that, in those numbers as well, but still a strong demand for these products overall. The key aspects are do you have enough plasma to manufacture these products and do you have enough capacity to actually put the plasma through your plants. So I think we’re well placed.

Andrew Goodsall - UBS

I guess just if we skip out second half it looks to us like your IG was actually up close to something like 17% in second half. So again just trying to understand dynamics that was volume or just mix shift I guess the most.

Paul Perreault

No, it’s mostly volume and it’s based on a number of initiatives that we had underway in terms of our penetration into the IDN market in the U.S. And we had some very good growth in Brazil as well in the second half and other areas of Latin America that we didn’t have in the first half. So I think that there are a number of factors around that. Some of it was part of the strategy, some of it was really some opportunities that rose in markets where we had infrastructure.

Andrew Goodsall - UBS

And just a final one from me, I guess just on Kcentra, picking up from Ian’s comment. We are actually hearing that some people wanted more supply, and I know you’re building another unit in Germany. But I guess just, were you constrained at all during the half or early year?

Paul Perreault

It’s hard to see 98% growth is constrained, but I would say that we have certainly been looking at where the product is placed. So we manage it, because this is a product that because of the success that we’ve had some people want more than others and most of it’s in the distribution channel and we wanted in the hospitals, because that’s where the patients are going to show up. So we’ve been watching it very closely.

Mark Dehring

Thanks Andrew. And we’ll now take a few questions online. So we have David Low from Deutsche Bank.

David Low - Deutsche Bank

Just touching on the pricing comment that you made Paul, it looks to me that the revenue growth was dramatically above what your larger competitors reported from their plasma businesses and Gordon obviously touched on margins. But would it be fair to say that average pricing is down in the second half because of the geographic mix and product mix versus what we saw a year ago or in the first half?

Paul Perreault

David there is always mix in the markets and mix in the products. I mean we did see Carimune for example. If you look at that area, that’s our fighting brand and there are some competitors trying to move into the U.S. market and discounting and so we use Carimune in that. So there is some pricing mix there that probably was a bit different than Privigen for instance which stayed mostly flat.

So there is some price mix that goes on, but the bulk of it was volume. I mean when you’re seeing volume demand in the marketplace at 6% to 8% on a global basis, that’s pretty significant on the base of IG volume that’s currently out there today.

David Low - Deutsche Bank

And the growth in countries like Brazil and Latin America, I mean are emerging markets typically at lower price points?

Paul Perreault

It just depends, some yes, some no. It just depends on the market place and really the treatment methodology that physicians are using in those markets. And what the governments are willing to pay for, because again all the governments have a different aspect. So for instance if you look across Europe, we know that the IG prices in Europe are traditionally less than they are in the U.S. The products are used for the same indications, but that’s where the market had evolved at that particular point. Japan still has some very good pricing. Even though they put a lot of pressure each year on manufacturers to lower price or mandated actually. They still started a higher base. So it just depends on the market.

David Low - Deutsche Bank

So just the last question I had was on the hemophilia products and development, particularly the SingleChain factor VIII. We’ve now seen a fair bit of data and pricing from Biogen. I was just wondering if you could talk in terms of what the latest data that CSL is seeing from their product. How it compares in terms of dosing with the extended half-life products that we see out there and we see coming?

Paul Perreault

I think we compete extremely well. Let’s say it would be a very competitive product to what’s out there in terms of the data that’s being presented. Because we understand coagulation extremely well. I mean it is in our heritage all the way back to the Behringwerke days in Germany, that’s where there are coagulation expertise really started. And when you look at the data in detail and you start to sort through the actual results and certainly our people look closely at that, I would say we compete extremely well.

David Low - Deutsche Bank

The [Technical Difficulty] extended half-life therapy effectively the dosing looks comparable.

Paul Perreault

I’m sorry, you broke up I didn’t hear the whole question.

David Low - Deutsche Bank

I just wanted to make sure I understood that you think the dosing is comparable to what Biogen has presented and is out there in the market.

Paul Perreault

Yes, I would say based on what we’ve seen it’s going to be very competitive. And I would say that long-acting factor VIII is something that everybody continues to work on. It’s not like factor IX where we’ve already demonstrated 14 day dosing intervals. Factor VIII is a very difficult molecule to characterize and to actually develop into a longer acting vein. That’s why we’re seeing that, you’re reducing a dose or so a week but you’re still dosing every week. It’s a tough molecule to work with and so everybody is -- nobody has gotten there yet, so we’ll keep after it. Certainly we have programs ongoing. But in the first step it’s to reduce the dosing at least once a week, which is important for a family where they have a child with haemophilia or multiple children with haemophilia which a number of families do. Trying to get them out in the morning and on to the bus, when they have to stop and put a needle in their vein. Sometimes it’s not the most convenient thing for mothers and kids to be doing. So, it’s one of those things where even one less dose per week is significant in terms of patient convenience.

Mark Dehring

Thanks David. We also have Sean Laaman from Morgan Stanley online; do you have some questions Sean?

Sean Laaman - Morgan Stanley

Just a couple, first one just on some of the dynamics in the albumin market in China. We understand that surprisingly I suppose Baxter had some missteps in that market. I’m wondering if you could just describe if you’ve seen any benefit sort of baked into your numbers as a result of those missteps? It’s the first question, and whether that’s sustainable. And then secondly, just first cut of numbers, so excuse me if they are wrong. But I’m getting about 40% or so second half growth in your Pib franchise.

And I’d say that you’ve stopped reporting separately the wound healing but ex the perioperative bleeding it seems that we're getting about mid single-digit growth in the second half. So, I’m wondering ex-Kcentra, essentially what’s sort of the sustainable growth especially products going forward?

Paul Perreault

I don’t think I caught the numbers that you said about the growth of first, where you said you calculated a growth of.

Sean Laaman - Morgan Stanley

Around 40% in the second half.

Paul Perreault

Which group?

Sean Laaman - Morgan Stanley

The perioperative bleeding.

Paul Perreault

Yes, I mean that’s mostly in the Kcentra area and as you know for full year we were up 98%. So it’s about half of that I guess, so it’s about right. But I would say that I continue to see growth in that franchise. The wound healing is mainly Japanese marketplace for us in terms of wound healing, and there are new competitors in Japan in the wound healing, not everything grows in specialty products. So, when I said 98% growth in Kcentra and 25% in Berinert, you should say maybe it should be growing at 40% in specialty products. But indeed Zemaira grew at 10%, fibrinogen was growing at 4% to 6%, and fibrinogen also is in the perioperative space as well in the number of countries.

So, how you characterize these products in terms of the categories is one thing, but I would say it is sustainable. The specialty products are a growth driver for us, fairly. And I think there is a lot more to be done as we move into new countries and continue to expand the labeling on some of these products as well. So, it’s a very good franchise for us and I can simply see that.

In terms of your other question around China, I really can’t comment on my competitors and what’s happened there, I don’t know any of the details really. All I can say is that when I look at where we started in China 10 years ago now look at where we are today, there weren’t really other competitors there that may have had a problem, we’ve been competing with locals in China as well as additional people that have come into China. And we really haven’t missed the beat in terms of our growth.

So, I think there is still sustainability. There is a lot of people in China, as people continue to move out of the agricultural areas and into the urban areas, the Tier 2 hospitals are getting more and more business, there is migration into the cities. And so we continue to see growth and access to products and albumin is certainly one of them.

Mark Dehring

Alright Sean. We have David Stanton from CLSA next.

David Stanton - CLSA

Just perhaps ask in a different way from what Sean said. Should we really be thinking specialty products can continue to grow at about double system in line with historic, would be my first question.

Paul Perreault

I think we still have room to grow in the double-digits with specialty products. When we look at the numbers and we’ve said for the last couple of years, we should be growing around 15% to 16% in specialty products. For the last few years we’ve been able to deliver that. And I do think that we’ll continue to see opportunities there. Will it be drop to 12% or 11% versus 15% or 16% or 17% or 18%, but it will move around clearly. But there is opportunity. Because again inherently in the term specialty is the fact that they are special.

These are products that people have not had access to they are for rare diseases in specialty utilization areas. And when you need it, you need to have it and if you don’t know about it and now you get access to it you’ll see the growth continue. So I have a very -- I’m quite bullish on our specialty product portfolio. I look at the utilization and the need and the benefit that patients have from these products and very, very outside strong opinion that we will continue to perform in that space.

David Stanton - CLSA

Thanks. And my second question wouldn’t want Gordon to miss out, so could you give us any color in terms of D&A and tax rate for ‘15 that would be great. Thank you.

Gordon Naylor

Thank you, David for thinking about me. Look, I think on D&A, it might go up a little bit because we do have a few assets coming online. I can’t quantify that’s off the top of my head. But I think that would be the trend as one of those lumpiness things that I’ve talked about whether these assets come online you get hit by the depreciation, just an accounting effect the economic cost is different of course. And then on effective tax rate I think I sort of implicitly -- you can work out the numbers from the difference between the impact growth numbers and EBIT growth numbers. But we do expect it, I forgotten exactly how it works, but it will tend to be a bit elevated I think in the coming year because of that transfer we anticipate for 112.

David Stanton - CLSA

Just lastly then, so we should bake that in probably as ongoing thing at least for next couple of years in terms of that elevated tax rate?

Gordon Naylor

I think I’ve said in the past that we’d expected over the longer run that our effective tax rate will probably sit in either in the order in 20%, something in there. And that sort of the why it’s being playing out. We’ve got a few moving pieces there. You get a bit of mix effect. For example, as the specialty products that Paul talked about, we’re growing faster than the rest of the Company. And so that tends to carry with it a high tax rate. So you get a little bit of mix there. But overall I think it pretty comfortable to somewhere to that and either in 20% is quite a reasonable number to use as your base though.

David Stanton - CLSA

Thank you.

Mark Dehring

Thanks Dave. We have some questions from Craig Collie at Macquarie.

Craig Collie - Macquarie Group

Thanks guys. Can you hear me okay?

Paul Perreault

We can.

Craig Collie - Macquarie Group

Great. I guess just to dive a little bit deep on the competitive environment Paul you’ve said that you see market growth IG very strong recent data as good as I guess as can be expected on the longer term. Just to I guess look at the competitive dynamics, you’ve had couple of competitors I guess who had supply capacity issues in the past. And there has been a charter out there that those results and some those competitors are not competing pretty aggressively, especially in the U.S. Can you I guess talk to that assumption and I guess elaborate on whether or not those accurate or not?

Paul Perreault

Well sure Craig, I’m not sure how much time we have but we can give it a go. I would say that, as I’ve said during the presentation and as I continue to say, this is a competitive market. I also don’t mind. Competition drives people it forces you innovate, to differentiate, to really try to come up with something that’s unique for patients in terms of the product proposition, in terms of convince, in terms of availability. And some of the competition out there have -- are well placed to compete really strongly, others are struggling to compete with those types of advantages.

So, you look at a scale player, like ourselves, and you look at what we’re investing in R&D and you look at what we’re doing in the business in terms of our ability to expand to meet demand in terms of our investments and capital. You look at our expansion of our plasma-collection, because without the raw material you’re not going to be able to grow. And you look at when we started all that. It was well before everybody started talking about these issues. And I think it just goes to the strength and the understanding that we have in the industry. So, I look at our game plan and I’d say, look, here is where I see the competition obviously I look at that landscape.

But I tried to execute extremely well within the organization on the things that we need to focus on. And as I said with the strategy slide, people might say, because many of you have been following us for while. Boy, it looks kind of the same. You’ve changed the picture, but it looks kind of the same, and it is the same but there’s nuances there is nuances behind all of those areas that we’re working on in terms of innovation, product differentiation, patient convince and impact in terms of R&D portfolio.

So, look, it is competitive and it will become more competitive because you’ve got government pressures in terms of payers, you’ve got new people entering the space, like the Biogens and the Novos that are really expanding into the recombinant haemophilia space. But you also have to be able to really understand what’s driving the economics behind the business. And when we look at our underlying financials, I feel very strongly that we’re well placed to compete in a competitive marketplace. I think our results this year show that. I think people should have confidence in the game plan and the underlying aspects of what we’re doing. So that would be my comment.

Craig Collie - Macquarie Group

Great. And then just to dig a little bit deeper on plasma-derived factor VIII, so plenty of positive point across your results, one potential weakness so I guess was that number going back with the little. You highlighted a few one-off. Does that mean that your expectations going forward I guess better than what you’ve printed this year?

Paul Perreault

Well, again it depends. The tender market is lumpy and that’s also a competitive market because the competition has plasma-derived factor VIII as well. So depending on what you see in the various tender markets, I would say that until we really, or fully, entrench with our new recombinant therapies, it will be a battle in the trenches on plasma-derived factor VIII. But again our ability to manufacture with our multiple sites around the globe have product available because the other part of these standard is not just pricing it’s actually when you can deliver the product against the tender. Because there is many nuances in terms of what the tenders require in terms of delivery and the amount that needs to be delivered within a certainly timeframe. I think we’ll continue to do okay. There might a few percentage points down over the next year or so or a few percentage points up, depending on timing or something of opportunities. But what’s really going to drive us forward is our recombinant portfolio in the hemophilia space.

Craig Collie - Macquarie Group

Okay, thanks Paul. And just one quick question for Gordon. I think Gordon in the past you’ve given us some guidance on R&D, any guidance for next year?

Gordon Naylor

Look, I think, it will continue to go online with the business. I think we’re running at about 9.1% revenue in the year just gone. The last two or three years, it’s been about the same, maybe a tad less in the past. So I’d expect it just to continue go with the business. Obviously it’s influenced by the progress on these different clinical programs, and so it might move around a little bit and obviously that those figures have insight the guidance that we’ve given.

Mark Dehring

Thanks Craig. We’ll now take some questions from Steve Wheen from JP Morgan.

Steve Wheen - JPMorgan

Just a question following also then on R&D, the guidance that you’ve previously gave was for to grow by about 13% in the constant currency basis. And I take your point the long-term nature and the lumpiness and then typically to predict the timing around R&D. But the fact that you came in less than that guidance for R&D this year, does that mean there is a little bit of catch up that will take place next year in terms of what you’re expecting?

Paul Perreault

Look in terms of the R&D I think that you will see some movements around. Because we’re increasing our R&D spend this year again I am not sure you’ll be able to fair it out what is it, whether it was just a transfer over whether it’s additional movement of our trials into the later stage development process. So, I think our guidance says that that will increase R&D this year. The timing of some of those payments and such are interesting but we’ve also been able to get some efficiencies in R&D this year as well through some changes we’ve made in our clinical operations group. So for instance we’ve had some sites in the past that we opened to try get additional patients that actually had never recruited a patient. And in the past we would keep running them and now we actually are shutting them down, which because of cost money to keep them open. You still have to monitor. You still have go you still have go. So we have taken a look at our operations. So when we talk about efficiencies and productivity, we look across the whole business. So, I wouldn’t say it’s impacting at all our investment in R&D we’re just trying to also make sure that we’re efficient in everything we’re doing.

Steve Wheen - JPMorgan

Great and then just one another thing about the guidance, just trying to tease out what the base is. But included in FY13 there was obviously a license payment with Janssen. With that not there, would that suggest the underlying growth is stronger or is there expectations of further milestone payments for Janssen within the FY15?

Gordon Naylor

Yes look, I think be careful not to overanalyze this one, Steve. I think there is no doubt that that was in the first half of the FY14. But there is a few other things as well, which move in. And I think we have got an ongoing program. We’ve got obviously the arrangement with Janssen, but we’ve got other things we’re doing as well. So I’ll be bit cautious about drawing that one out as being a one off. I think you’ll say similar things in the future.

Steve Wheen - JPMorgan

Is that a comment specifically about ’15 or was that further out in the?

Gordon Naylor

It’s a general comment. But it’s a broader longer length comment. So the FY15 I mean you should just refer to the guidance that we’ve given.

Steve Wheen - JPMorgan

Yes sure. Okay and just another sort of follow-on question on the recombinant factor VIII. Have you quoted the half loss that you’re now looking at because it suggest that given you are now looking at twice week dosing that half-life is actually improved a bit?

Paul Perreault

We have published a few papers and presented a few conferences. So off top of my head Steve I can’t tell you what we’ve quoted publically. So I’d have to go back and come back to you.

Mark Dehring

Thanks, Steve. The next question comes from Alex Smith of Citi.

Alex Smith - Citi

Just a question on the margins. If I strip out the 64 million, still looking EBITDA margins in CSL Behring down a little bit. Given the really strong sales growth that that group has achieved and that a lot of growth is coming from really high margin products in specialty in Hizentra and so forth. Can you help me understand why margins haven’t expanded quite considerably in the period? Is R&D spend a headwind there, COGS, is there additional expenses or is there pricing pressure. Can you sort of, would the anticipated margin expansion would have been a lot stronger?

Gordon Naylor

I think you've answered your own question Alex. There is a whole of lot things going on, maybe other like pricing pressures and so on. But the other thing I would point you to is currency. So Behring in particular is the most probably exposed part of the group with respect to the movement between the Swiss franc and the U.S. dollar and that will directly impact margin. And so there was, that directly squares itself, be careful that.

Alex Smith - Citi

So things like the COGS, it’s obviously cost more to collect those when you're opening new centers and pricing pressure in the marketplace, features that will continue into ‘15?

Gordon Naylor

That’s probably true, I don’t think we’re expecting that the marketplace is going to get a whole lot less competitive or that our customers are going to get much more price sensitive. So I think that’s probably fair.

Alex Smith - Citi

And maybe just a second question on Kogenate sales reported by Bayer were down 20% in the second quarter and they commented that they were using capacity for their long acting product. How does that impact your ability to source Helixate supply into FY15? Do you have adequate inventory to continue to grow their product et cetera, just trying to understand that impacts CSL?

Paul Perreault

I think certainly we are working closely with Bayer, they’ve been a great partner and there is something that has to be shared when we’re trying to develop new products and manufacturing process being impacted by the development of these new agents. So I think that also is a point to some, you saw that Helixate was down about 1% this year versus. A lot of that is due to the fact that it’s difficult if the product is not flowing fully, but we’re not short on product. But I don’t expect that it will impact the team significantly. We’re working with Bayer quite closely on these inventory levels.

Mark Dehring

Thanks Alex. We’ll take one more question online and then we will come back to room here in Melbourne. So we have Saul Hadassin from Credit Suisse.

Saul Hadassin - Credit Suisse

Paul, just if I could explore U.S. IVIg growth in a little bit more detail. So excluding Hizentra, do you think you made the growth in line with market? Do you see any material share shift in those particular product categories of Privigen and Carimune?

Paul Perreault

I think we’re more in line with the market when you look at the IV growth of Privigen and Carimune in the U.S. market place. Hizentra is a driver, clearly it’s differentiated, its phenomenal product. But we were still able to show some very good growth in the second half in Privigen and some of that is part of our strategy with some of the customers there in the U.S. which has been helpful.

The U.S. market is very, very competitive in IG. It’s the largest market in the world. There is tens of millions of grams going into that market place and competitors that are looking to expand really look at where the growth is being driven from and is being driven from the largest market. So the competition is quite fierce in the U.S. but again that’s okay, we’ll manage with it and continue to grow is my view.

It’s an interesting environment in the U.S. with IG, but again with differentiated products and with a premium product like Privigen, we’ve been able to do okay.

Saul Hadassin - Credit Suisse

And is it your assessment that the PPJ data is an accurate reflection of volume growth in the U.S.?

Paul Perreault

Look it’s one data point and it’s a lagging data point. So I think it’s okay to look at if you are trying to get some trending going, but I wouldn’t rely 100% on that for your models.

Saul Hadassin - Credit Suisse

Just moving on to fibrinogen quickly. So you mentioned that 4% to 6% growth, so I was just wondering if there has been any progress on trying to get product in terms of inter-clinical programs in the U.S.?

Paul Perreault

Yes.

Saul Hadassin - Credit Suisse

So what does that consist of?

Paul Perreault

So we’ve been in discussions with the agency around the clinical trial design for fibrinogen in U.S. and I think that those discussions are progressing well. Our trial that we are running across Europe and Japan has recruited. So we are anxiously putting all the data together there as well so that’s been a big success. When we open the trial for cardiac bleeding in Japan, we recruited quite rapidly there is a number of physicians in Japan that were quite excited about having opportunity for fibrinogen and they really moved quickly to recruit patients in the aortic bleeding trial that we have running. So that was very helpful because they really were able to significantly improve our timelines on that trial.

Saul Hadassin - Credit Suisse

And final question just on albumin; I haven’t had a change to try and pull out the China sales, but are you have to comment on what growth was ex-China for albumin in fiscal quarter and the starch effect again is that something that we should see sort of temper in terms of growth into ’15?

Paul Perreault

So we’re up 16% in albumin, and China is about 40% of our albumin sales today and we were up 29%. So I haven’t backed out the number. But I am sure you can.

Gordon Naylor

I am sure Saul’s got a spread sheet.

Saul Hadassin - Credit Suisse

Probably.

Paul Perreault

So from that perspective I think it was still strong demand. I think the starches still do have that hangover effect. And so we’ve been able to see some growth as I said in Europe and we actually had some very good growth again in Latin America. Our Latin American affiliates are really starting to come online. Argentina, Brazil and Mexico they are very strong this year. So we are very pleased with the growth we’ve seen there.

Mark Dehring

Look we have no further questions. So with that I will draw the meeting to a close and thank you very much for your interest in the Company. Good-bye

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