Mayne Pharma Group Limited (MYX) Earnings Call Transcript

Good morning, everyone. I'm Bruce Robinson, the Chair of Mayne Pharma. It's my pleasure to welcome you to Mayne Pharma's 2025 Annual General Meeting being held here in Melbourne, Australia. As shareholders may recall, Mayne Pharma was granted an extension of time to hold its 2025 AGM by the Australian Securities and Investment Commission as a result of the scheme of arrangement with Cosette Pharmaceuticals. Unfortunately, the scheme did not complete in November as anticipated, which I will discuss in further detail. This necessitates the convening of Mayne Pharma's AGM for 2025 today. As we have a quorum, I will now declare the meeting open. Once again, this year, we are offering a hybrid meeting, allowing shareholders to participate in person or via our live webcast. I will now briefly advise you of the procedural aspects for today's meeting. Shareholders and proxy holders present in the room can ask questions and submit their votes. If you are watching on the webcast and are a shareholder, you can ask questions through the meeting platform and also submit your votes. To submit a written question, select the Q&A icon on the screen. Select the topic your question relates to from the drop-down box type in the question and press send. We encourage you to lodge any written questions now. For those participating online, voting for all resolutions is open and will remain open during the AGM. You can change your vote up until the time I declare the voting is closed, at which time your most recent selection will be registered. If you experience any technical difficulties, there is an AGM help line number included in the online meeting guide. I would now like to introduce our Board members, senior executives and the company's auditor. Joining me in the room today are fellow Australian resident nonexecutive directors; and Anne Lockwood and David Petrie. Online, we have fellow U.S. resident nonexecutive directors, Dr. Katy MacFarlane, Ann Custin and Pat Blake, along with our Chief Executive Officer and Managing Director, Shawn Patrick O'Brien. Unfortunately, the storms in the U.S. have prevented Shawn from attending in person. Also here with me today is our CFO, Aaron Gray; our Company Secretary, Laura Loftus will moderate shareholder questions with our investment relations adviser, Tom Duthy, who is also sitting with Laura. The company's auditor, Benjamin Lee of BDO, is here in the room, and we extend our thanks to the company's lawyers from MinterEllison, who are hosting the Mayne Pharma AGM here at our offices. Thank you. Before I move to the procedure for today's AGM, on behalf of the Board and the broader Mayne Pharma community, I would like to acknowledge the contribution of Frank Condella, who retired as Chair of Mayne Pharma effective 14 January 2026. We thank Frank for his commitment to Mayne Pharma and for the leadership and dedication shown over the last 4.5 years as chair in a transformational period. In addition, today, will be the last AGM for Anne Lockwood and Pat Blake, who will both retire from the Board after the company's first half financial results in mid late February to focus on other business opportunities. once more on behalf of the Board, I thank them both for their dedication and service to Mayne Pharma. The Board's priorities remain unchanged, to deliver consistent execution, to strengthen earnings quality and cash outcomes to maintain disciplined capital allocation and to progress strategic initiatives that support sustainable shareholder value. The procedure for today's meeting is as follows: First, I will present my chair report and then our CFO, Aaron Gray will, given the fact that Shawn cannot be here in person, provide a brief snapshot of the FY '25 performance and a summary of our unaudited first half results and our outlook for FY '26. We will then go into the formal part of the meeting during which time we will take questions and vote on the resolutions outlined in the Notice of Meeting, which was dispatched to shareholders on the 22nd of December 2025. A recording of this meeting will also be available on our website following the conclusion of today's meeting. In FY '25, Mayne Pharma delivered a strong step-up in underlying performance, building on the turnaround achieved in FY '24 and demonstrating improved operating leverage and cost discipline. The company reported 5% revenue growth to $408.1 million, expanded gross margin to 60.6% and more than doubled underlying EBITDA to $47 million, alongside a material improvement in operating cash flow from continuing operations to $45.4 million. These results reflect tighter cost control, a more profitable product mix and the benefits of disciplined execution across the portfolio. In short, this was a much improved performance overall for Mayne Pharma, which Aaron will discuss further in a moment. Women's Health continued to gain momentum through targeted sales, marketing and education initiatives with segment revenue up 25% and NEXTSTELLIS delivering strong demand cycle growth and higher net sales year-on-year. We were pleased to receive Pharmaceutical Benefits Scheme listing here in Australia and reimbursement for NEXTSTELLIS in September 2025. Dermatology progressed through proactive portfolio management and channel optimization, including the acquisition of EPSOLAY and TWYNEO and the launch of a new branded Retin A product supporting improved segment margin despite revenue pressure from generic competition. The company also completed a major upgrade of its Salisbury manufacturing facility following a multiyear investment program, improving service levels and reliability while the International segment grew on new launches, exports and expanded partnerships. We officially inaugurated the upgraded facility in December 2025. Mayne Pharma International was the recipient of 3 South Australian Premier's business and export awards, including South Australian Business of the Year. We were also a finalist in the 63rd Annual Export Awards. The national recognition reflects the dedication of our teams and the strength of South Australia's advanced manufacturing and life sciences sector. The second half of FY '25 was punctuated by a material all-cash takeover proposal for Mayne Pharma at a significant premium to the prevailing share price. On 20 February 2025, the company entered into a scheme implementation deed, subsequently known as the SID with Cosette Pharmaceuticals. For the acquisition of all Mayne Pharma shares at $7.40 per cash share with the Board unanimously recommending the scheme subject to an independent expert concluding that it was in the best interest of shareholders. The company progressed the scheme through the required shareholder and court processes. However, Cosette subsequently sought to withdraw from the transaction, leading to proceedings before the Supreme Court of New South Wales which in October 2025, [ found ] in Mayne Pharma's favor, determining all of Cosette's termination notices were invalid and that the SID remained on foot. On the 21st of December 2025, the treasurer objected to the proposed scheme, meaning the foreign investment review board condition precedent was not satisfied and the scheme was unlikely to proceed. Following this, the Board took firm action, including issuing a notice of intention to terminate and then terminated the SID on the 11th of December 2025, and on the basis of Cosette's material breaches, including in relation to its obligations to obtain FIRB approval. The company also confirms that Cosette was ordered to pay its cost following Justice Black's decision, and it intends to enforce this cost order. I note that on the 15th of January 2026 Cosette filed an appeal in the Supreme Court of New South Wales Court of Appeal to seek to appeal the decision of Justice Black. Mayne Pharma intends to vigorously defend this appeal. Mayne Pharma will always act in and to protect the interest of shareholders. Mayne Pharma has consistently reserved all of its rights in connection with Cosette noncompliance with its obligations under the SID including in relation to its conduct involving FIRB. It is worth noting that the FIRB process requires the bidder in our case, Cosette to engage with FIRB in relation to the transaction, and therefore, Mayne Pharma had little involvement in and little information about the process and engagement between Cosette and FIRB. Mayne Pharma is not in a position to provide an update in relation to these matters at this time given the legal sensitivities and that it would be inappropriate for us to comment on speculation or to discuss legal strategy in a public forum. Mayne Pharma is considering its options in relation to Mayne Pharma's rights and will provide shareholders with an update as soon as there is information to share or there are any material developments. Therefore, I will not be able to address questions from shareholders on this point today. The Board is understandably disappointed that the scheme did not proceed, particularly given the compelling value it represented for shareholders. Mayne Pharma went to great lengths to enforce its rights and obliged Cosette to appeal, as shareholders would be aware. This included very significant wins at both the New South Wales Supreme Court and also the Australian Takeovers Panel. However, the decision of the Treasurer and Cosette's conduct in relation to the FIRB approval was unfortunately not in the control of Mayne Pharma. I'm aware that none of you would be happy with our current share price. We are now firmly focused on executing our strategy, strengthening performance and cash generation and continuing to build long-term value for all Mayne Pharma shareholders. Now that Mayne Pharma is no longer subject to the constraints and distraction associated with the scheme, I want to emphasize that the Board's objective is straightforward to ensure that Mayne Pharma is led effectively, governed well and positioned to deliver sustainable performance for shareholders. The Board and management are focused on running the business, supporting our employees and customers and executing our strategy, while ensuring that Mayne Pharma retains the full benefit of its contractual and legal rights. The strategy of pivoting away from generics in the U.S. and towards branded products has largely been completed with our business in the U.S. focused on 2 areas, Women's Health and dermatology. My view, as a clinician is that we have extremely valuable products, including NEXTSTELLIS with its safety profile and excellent menopause products in the bags of our U.S. sales reps at a time when the treatment of menopause is finally receiving the focus that women deserve. Our U.S. dermatology products, including RHOFADE and other products for acne and psoriasis are valued by clinicians and patients. We are cash flow positive from operations and must grow to ensure financial stability and demonstrate the value of our company. We have experienced staff who care about the future of the company. I would now like to invite Aaron Gray to give the business update presentation accompanying today's meeting. Thank you, Aaron.

Thanks, Bruce, and good morning, everyone. As Bruce mentioned, Shawn is in apology for physical attendance today. So I will take you through the business update, starting with the fiscal year '25 results highlights, then an update on our unaudited 1H fiscal '26 financial results, operating highlights and key drivers and finishing with our fiscal year '26 focus and outlook. Before I begin, I'd just like to draw your attention to the disclaimer regarding forward-looking statements and the use of non-IFRS measures. Please read today's commentary in conjunction with our financial statements and ASX disclosures. I will first briefly touch on our fiscal year '25 results, which are now well in the rearview mirror, given the date of today's meeting. In fiscal year '25, we delivered revenue of $408.1 million up 5%, with gross margins expanding to 60.6% as mix and execution improved. Importantly, disciplined operating expenditure and targeted investment translated into underlying EBITDA of $47 million up 105% versus the prior year. We also lifted total direct segment contribution to $109.7 million and converted that into a much stronger cash outcome with operating cash flow from continuing operations of $45.4 million. Turning to Slide 9. Operationally, we delivered strong momentum in our core franchises. NEXTSTELLIS demand cycles grew 30%, and our licensed Women's Health portfolio also grew 17% with positive tailwinds, particularly for our menopause products. During the year, we lost some coverage on NEXTSTELLIS when one large U.S. insurer ended coverage for branded contraceptives. We overcame this with an upgraded -- with an updated Women's Health sales team, replacing 40-plus sales reps to prepare for refreshed marketing materials and marketing plans. And while Q3 fiscal '25 was a challenge, we've since returned to growth and are putting up new prescription records consistently in Women's Health, this past week. For dermatology, we saw impacts from at-risk generic competition on our authorized generic ORACEA, but we're able to maintain significant market share while renegotiating our agreement with the manufacturer of that product to continue delivering positive contribution. We delivered significant contribution from RHOFADE in spite of coverage loss in the second half, impacting the high initial contribution from this product. Although the second half performance was lower than the first half, we did deliver a very positive return on this investment. Additionally, dermatology highlights were our continued channel shift to improve margin, more than 70% of Mayne Pharma prescriptions now sit outside the traditional channel with Adelaide Apothecary representing around 5% of total prescriptions and growing strongly year-on-year. Also the acquisition of TWYNEO and EPSOLAY, which we launched in Q1 fiscal year '26. We continue to build our disintermediation solution, Adelaide Apothecary and the direct pay prescription growth at this time, still unpromoted, which grew 57% versus fiscal year '24. Internationally, we completed the modernization upgrade to strengthen end-to-end manufacturing capability and efficiency, expanded our KADIAN partnership, including a new 200-milligram format and broader Canadian indications and improved DIFOT performance to 96.5% versus 91% at 1H fiscal '25. We've discontinued certain low-margin Salisbury supply agreements to focus capital and capacity on higher-margin products. Finally, we invested in defending our intellectual property including Paragraph IV challenges to protect the long-term value of our portfolio. The step change in performance during fiscal '25 is very clear in direct contribution, up $21.2 million year-on-year. That improvement was primarily driven by Women's Health, which increased 76%, reflecting both portfolio momentum and better commercial execution. The overall group moved from $88.5 million to $109.7 million total direct contribution, giving us a stronger base to fund growth initiatives while improving operating leverage. Turning to Slide 11. At the group level, fiscal '25 revenue growth was led by Women's Health volume growth across the portfolio. Underlying EBITDA increased to $47 million, representing a $24.1 million improvement on fiscal year '24, reflecting both margin expansion and disciplined cost management. The key takeaway is that we improved earnings quality and strengthened cash generation while continuing to invest selectively into the portfolio. Turning now to the current year. I'll provide an update on first half fiscal year '26 unaudited results and then unpack the main drivers, particularly the effect of transaction and litigation costs, earn-outs and the segment level performance. 1H fiscal year '26 unaudited revenue was $212.1 million, broadly flat year-on-year versus the prior corresponding period. The most notable operational positive for the half was the continued improvement in gross margin, up to 66% from 61.4%, reflecting mix execution and ongoing margin initiatives. Unaudited underlying EBITDA was $28.6 million, down 8% versus the prior year, which primarily reflects the planned step-up in Women's Health commercial investment and the timing of certain costs, while we still delivered direct segment contribution of $69.5 million, up 7%. We ended the half with $67.4 million in cash and marketable securities after funding a number of material items that I'll detail on the next slide. This slide is about transparency on the key bridge items affecting both EBITDA and cash. The headline point is that scheme related legal costs, including litigation, had a significant impact on reported earnings and cash flow in the half. There are also noncash items, most notably earn-out reassessments that affect reported EBITDA, but don't represent a current period cash outflow in the same way. On cash, it's important to separate what the business generated from ongoing operations versus transaction and litigation costs and financing items. For continuing operations, excluding transactions and litigation costs, we generated positive $17.9 million, but this was more than offset by the $21.7 million of transaction and litigation costs and earn-out payments, including the royalties and the TWYNEO and EPSOLAY acquisition-related payments. As Bruce noted, Cosette was ordered to pay Mayne Pharma litigation costs following Justice Black's decision and Mayne intends to enforce this cost order. The takeaway is that the underlying business continues to generate cash, but the half year cash movement was materially influenced by these discrete items. Slide 15 examines the unaudited segment financial highlights. In Women's Health, revenue was $96.5 million, up 2%, with NEXTSTELLIS demand cycles up 16% and continued strength in BIJUVA. Direct contribution was down modestly as we lean into incremental sales activity and promotional investment to capture the macro tailwinds and support the use of our refreshed marketing materials. In dermatology, revenue was $78.6 million, down 3%, but profitability improved markedly. Gross margin expanded to 65%, driving direct contribution up 36% to $29.8 million. An excellent example of operating leverage and mix benefit. International remained a smaller contributor in the half with improving gross margin, the higher direct OpEx as we invest behind key initiatives that we expect to unlock value over time. International delivered revenue of $36.9 million with gross margin improving to 30.5%. The direct contribution fell to $2.1 million as we increased investment and direct operating costs in this segment, mostly related to promotional activities associated with NEXTSTELLIS following the PBS approval. Overall, the segment story is consistent. Dermatology is showing strong margin momentum. Women's Health is investing for growth and international is positioned for the next phase of value realization. Turning to some segment operating highlights for the half. In Women's Health, we're seeing positive macro momentum and we've refreshed and relaunched marketing materials, supported by ongoing sales force optimization and promotional investment. Commencing 1 January, we have seen new positive coverage decisions for NEXTSTELLIS from several leading U.S. health care insurance companies, enhanced access and lowering cost -- sorry, enhancing access and lowering costs for our patients. Operationally, dermatology benefited from substantial margin improvement through mix and operating leverage, and we continued building our direct-to-patient pathway. Adelaide Apothecary revenues grew 63% on the prior comparable period. We successfully launched our 2 newly acquired dermatology products, TWYNEO and EPSOLAY. We are currently preparing for the next step of our disintermediation strategy with a planned launch in the second half of this fiscal year, which we are very excited about, as the U.S. health care market is strongly trending towards direct-to-patient sales opportunities. For international, key milestones included PBS approval for NEXTSTELLIS in Australia and the commencement of promotion post listing alongside continued progress at Salisbury and broader recognition of our export and business achievements. The consistent theme is that we're strengthening access, improving economics and investing behind platforms that can scale. Finally, turning to our outlook. We will continue to build Women's Health market share by investing in top talent, refreshed marketing and product access solutions, supported by strong intellectual property while delivering cost leverage through disciplined growth and ongoing optimization. In dermatology, we will take the next step in our disintermediation strategy by fully leveraging the ecosystem we have built to improve access and patient outcomes with a potential expansion into additional therapeutic areas. Internationally, we will focus on unlocking value from recent investments, including the NEXTSTELLIS PBS listing, targeted CapEx and supply agreements. Across legal and capital priorities, we will enforce our agreements and protect shareholder value while pursuing synergistic capital-efficient acquisitions that enhance scale. Thank you for your attention. I will now turn the meeting back over to Bruce.

Thank you, Aaron. We will now move to the formal part of the meeting. The AGM provides the opportunity for you to reelect your directors, to reflect on the company's performance over the past year and to raise any questions you have about our company. All shareholders should have received the notice of noting notice of meeting, and it is my intention to take the notice of meeting as being read. There are a number of procedural matters to which I must draw your attention. This is a shareholders' meeting and only shareholders, their attorneys, proxies or authorized company representatives are entitled to vote or ask questions at this meeting. Shareholders and proxy holders present in the room can ask questions by raising your hand. As a reminder, if you are watching on the webcast and are a shareholder, you can ask questions through the meeting platform. To submit a written question, select the Q&A icon on the screen, select the topic, your question relates to from the drop-down box, type in the question and press send. You can also ask a verbal question by following the instructions in the broadcast window. We encourage you to lodge any written questions now. We will address questions at the relevant time during the meeting. Questions may be moderated. And if we receive multiple questions on one topic that will be combined into a single question. Finally, due to time constraints, it is possible that we may not be able to answer all questions. If that occurs, then we will revert to you individually after the meeting about your unanswered question. Alternatively, investors may wish to follow up with Mayne Pharma Investor Relations, Tom Duthy. Voting today will be conducted by way of a poll on all items of business. Subject to the voting exclusions specified in the Notice of Meeting, the persons entitled to vote today are all shareholders, representatives and attorneys of shareholders and proxy holders who hold red admission cards. On the reverse of your red card is your voting paper, which details the motions that are being put to the meeting. Relevant instructions are also printed on the reverse of your admission card. For those participating online, voting for all resolutions is open now and will remain open during the AGM. If you are eligible to vote at this meeting, you will see a vote icon displayed on your screen. Click on this icon, which will bring up a list of resolutions and present you with voting options. To cast your vote, select one of the available options. You have the ability to change your vote up until the time that I declare the voting is closed. At which time your most recent selection will be registered. In order to ensure that all shareholder views are taking into account all items of business before the meeting where a vote is required will be determined by way of a poll. I appoint David Squires of Computer Investment -- Computershare Investor Services as the returning officer to manage the poll process. We will provide the proxy information received from shareholders up until the start of this meeting after we have taken questions on the relevant item of business at today's meeting. Open proxies in favor of the Chair will be voted in favor of Resolutions 1 through 4. I will now go through the items of business. The first item of business listed in the notice of meeting is to receive and consider the financial report of the company for the financial year ended 30 June 2025, and the reports of the directors and auditor. This item also gives shareholders the opportunity to ask questions about the company and its operations, including any questions you may have about the business update provided by Aaron. The company's current auditor, Mr. Benjamin Lee from BDO, is also available today to ask any shareholder questions on the audit, if required. I will first ask if anyone in the room has a question, then we will move to any questions that have been submitted online during the meeting. I now invite shareholders to ask any questions on the accounts or operations of the company. If you have a question, please raise your hand, and we will pass you a microphone. Please also state your name before you ask your question. So questions are open. Are there any questions?

Hello, I am [ Brett Wells ]. Just like to thank the Board for its work over the last year during a difficult time. My question relates to royalties. I've done a forensic review of the last 5 years annual reports and the thing that I noticed is the significant royalty burden. It seems that Shawn is doing quite well operationally, but the harder he pedals the higher the contingent obligations of royalties become. So I just want to understand whether or not the Board is considering renegotiating some of that royalty burden. And for example, if I look at the present value of future obligations for TMXD -- TXMD, it's actually much larger than the current market capitalization of that company. So maybe there are other ways to address the royalties.

Thank you, Brett, for the question. Of course, we can't comment on speculation about negotiations with any of our partners. I would note, however, that royalties are commonly used in licensing agreements and remain a subject of ongoing discussion with the Board. Are there any other questions in the room? Laura and Tom, have we received any questions via the online platform?

We have. I'd like to read those out to you now, Bruce, if I may. The first question, if the Fed -- it's quite a long question. So I'll just read it verbatim. If the federal treasurer was under the assumption, that the South Australian facilities would be closed for a more competitive location will management support his basis for rejecting the takeover and consider a more viable operation or ask said treasurer for government financial assistance for keeping this operation in South Australia. Thank you.

Mayne, of course, has no visibility on the views of the treasurer other than those that were provided in his press release which provided no details around the "more competitive location." Mayne doesn't consider that it needs to consider a more viable operation as the question implies. Mayne is very proud of its Australian operations and the recent recognition of the business by the South Australian Premier is a testament to that.

Second question relating to shareholder value in dividends. Mayne Pharma has been able to diminish shareholder value and has ceased paying dividends. Mayne Pharma has underperformed and the Board has continued to receive fees for underperforming. Why is this the case?

Well, the Board has been and always will be focused on trying to deliver for shareholders and on its duty to shareholders. There is no proposal for us to do anything in relation to director remuneration other than what has been done following the AGM in November 2024, which resulted in directors receiving a 10% cut in their base director fees. The dividend policy is determined based on a wide variety of factors. And again, and as always, determined by what is in the best interest of the company.

Thank you, Bruce. The third question, how could you get the merger conditions so wrong?

Well, the terms that Mayne agree to in the scheme implementation deed with Cosette are quite standard conditions and were appropriate for this kind of transaction and are commonly used in the marketplace. The transaction didn't proceed due to the FIRB condition not being met. As I said in my report, the FIRB approval process is buyer-led without access by us as the target to FIRB or the treasurer. The only information that FIRB has -- is able to get from the buyer rather than -- from Cosette rather than from us. So we're specifically excluded from interacting with FIRB.

We have a couple of other questions pertaining to much of the same question. [ Dr. Wells ] asked both NEXTSTELLIS royalties and TherapeuticsMD, which I believe Brian answered and provided context for, so thank you. The next question is, when will the Board start working in the interest of owners?

The Board has been and always will work in the interest of owners. All of our work over the last 12 months and going forward is going to be to try to deliver improvements in the operation of the business and to generate cash for the business.

Next question relates to Women's Health and the comment Aaron Gray had made at the first half -- at the most recent 5 months update, mention was made of a reduced contribution in Women's Health due to required managed care credits in first half FY '25. Can you expand on this?

Perhaps Aaron could expand on that.

Yes. So in fiscal year '25, any time you do a GTN, a gross to net calculation, which is basically how much to set aside related to the sale of the products for a given period to pay all of the rebates and all of the other payments that have to be made. You have to do an estimation of not just how much product is going to go through, how much product remains in the channel and how the product is going to be prescribed. Is it going to be covered or uncovered? Will it go through one of the large wholesalers or through a smaller pharmacy, will it go through our own pharmacy? So there's a great deal of estimation that goes on. And obviously, it's a zero-sum game because you have 100% of the products that move out. So even a small variance in how you've assumed the product will move out, can throw off a fairly large credit. That's what happened in the first half of fiscal year '25. We had bet that we -- or we had calculated that we would pay more managed care rebates over the period and we actually ended up not paying nearly that amount of managed care rebates. So that became a credit. That became a release that happened during the first half and it related to the first half, but it also -- some portion related to the prior year. So that became a large lift to the H1 '25 revenues, which repeated to a much smaller extent in H1 fiscal year '26. So it was basically the true-up of a reserve in H1 '25 that created a more difficult comparable with respect to the net revenues that didn't quite repeat in the first half of fiscal year '26.

Thanks, Aaron. Any other questions?

I will, there are a few to get through, Mr. Chair. The next one pertains to the financial statements for FY '25. And it's a question directed to both Aaron, yourself and Ben from BDO. Again, we can't verify these numbers given they've just been asked online. However, the question states, our latest accounts note we've got $1.04 billion in accumulated losses but still claim to have net assets of $370 million, yet the current market cap is only $230 million. However, the contributed capital is only $1.2 billion because we have $185 million in reserves. So the question is, what is the history of these reserves and did the latest audit process examine whether they should be eliminated from the accounts. I'll let you answer that, then I will go to the next question.

So under IFRS, all of our statements are under Australian IFRS. What is included in the accounts is what we're required statutorily to include in the accounts. So what is examined at each period is what is appropriate to include in the statement. And we are following Australian IFRS completely. So no, we would not exclude reserve balance from the accounts. As to the specific reserves, much of it likely relates to the gross to net because -- and a number of other items. So I don't have the details to hand, but I can -- Tom, if we can get the information, I can follow it up separately.

Absolutely. So the second part of that question pertains to the movement in intangibles between the period. So why did we write down the intangibles from $545 million to $528 million over the fiscal year? Has the arguably excessive intangible figure being closely examined in the current half year audit? I just answered that. We have not yet received our half year audit, but Aaron, please go ahead.

So one of the least enviable tasks that I get to perform with my BDO colleagues is testing the intangible assets. That's one of the areas, one of the two key areas of risk that is highlighted in our audit report. And we go through extensive testing of the intangible assets. We are -- we spend months in advance of a period working on the model, and we spend as much time as basically to the finish line trying to complete all of the intangibles testing. Basically, we look at a forecast of future cash flows, and that forecast has been pressure tested through a lot of different scenarios. We generate our forecast in a number of different ways. We have mathematical modeling that we use to generate our forecast. We use a number of -- we use regression analysis with a number of machine learning algorithms to try and help predict the future. We look at the market. We also then fold in qualitative input to try and make sure that we have as realistic a forecast as possible. That is then tested rigorously by BDO and challenged rigorously by BDO. And so in terms of the intangible asset carrying value, I can say that the carrying value is one of the 2 top focuses or any review that we have. And basically, I think, we've tested it almost every period over the past 2 years. So we go through a test and a retest on a regular basis. Those carrying values are indicative of the future cash-generating ability of those assets.

You have anything to add, Ben?

Nothing to add [indiscernible].

Bruce, just a couple of questions, which I'm going to pull in the interest of not repeating, answered more than once. And these relate to the changes that have been made to the Board. So there's some queries and questions around, Bruce your modus operandi for taking the chair's role. And how you think about that in the context of your tenure with Mayne Pharma in the next few years looking forward? And secondly, just around the timing of Frank's departure, a shareholder notes that appeared to be quite sudden. And likewise, for the retirements of both Patrick and Anne. I guess, the shareholders would just like to know sort of what are the sort of reasoning there and your personal circumstances of taking the chair rule and tenure moving forward?

Okay. So let me answer all of those questions as best I can. Frank decided to retire for personal reasons. I think it's fair to say that the past 12 months were extremely exhausting and Frank's contribution during that time was enormous. He and management and Ann Custin were -- carried the major load of trying to get this transaction across the line. As far as Pat Blake and Anne Lockwood are concerned, both of them have other opportunities, business opportunities that they have decided that they want to pursue. And as is usually the case, have decided to resign from the Board after the midyear results have been announced, which they obviously feel some responsibility for. My own situation, having been a Director of Mayne Pharma now for nearly 12 years. I've been through the ups and downs of this company. I feel as I know the company, I feel that we really need to consolidate at the moment, to concentrate on executing our strategy, and I think we've got the team to enable us to do that. As Aaron referred to in his report, the sales team has been refreshed. I think it's of high quality now. It's very well led, as are all the components of the business. And I think we are in a position now to drive shareholder value. I am very committed to this company. I've been with it now for quite a long time. I feel as I understand it, and I hope that I can help to support management with our other directors in doing so.

Thank you, Bruce. I'll keep moving through these questions. I believe we have addressed this question both adequately in the speech, but also through the waterfall reconciliation of both cash and financial costs. But this question does relate to the total transaction and litigation costs with Cosette and the outcomes of the appeal, which again, Bruce, I believe, you've covered in your chair address. Just a question relating, I guess, to the ongoing obligations to both our legal counsel and our corporate adviser as part of the transaction, if you would like to make any comments there, Bruce.

Well, our corporate adviser, Jefferies, was involved with the transaction and our involvement with them has now finished since the transaction has been terminated. We are still reviewing all of our options with regard to ongoing litigation. And as I say, as I think you've heard during my report, we do have a court order in our favor that obviously will depend upon the results of the appeal, which we hope to here, I think, about the middle of February. We will be heard then, but we won't hear the results of the appeal until perhaps May this year.