CSL Aktie

Thank you for standing by, and welcome to CSL's Interim CEO 90-day Review and Financial Update. [Operator Instructions] I would now like to hand the conference over to Ms. Michelle Rees, Head of Investor Relations. Please go ahead.

Good morning, everyone. Thank you for joining CSL's Interim CEO 90-day Review and Financial Update. I am Michelle Rees, Head of Investor Relations. Before we begin today, I'd like to draw your attention to the important disclaimer on your screen. A copy of this, along with our ASX materials, have been published on the CSL and ASX websites. With me in Melbourne today is Gordon Naylor, CSL's Interim Chief Executive Officer; and Ken Lim, Chief Financial Officer. Please note, this briefing is being webcast.

I'll now hand over to Gordon.

Good morning, everyone, and thanks for joining us this morning. My name is Gordon Naylor, and I'm the Interim CEO and Managing Director of CSL. The purpose of today's call is to brief you on the steps that we are taking toward turning the company around and returning it to profitable growth. We're also providing a nearer-term financial update.

The last 10 weeks have been incredibly intensive, but I've been helped by my own deep experience at CSL, the full support of the Board of Directors and our remarkably resilient and capable people. Recognizing that the organization has been and continues to go through a great deal of change, my first priority was to steady the ship in part by visiting most of our major business sites around the world. I've talked to hundreds of people, led around a dozen town halls and engaged directly with many of our key business partners.

In addition to running the business, my role includes giving the Board the space to choose my successor and for me to actively lay the groundwork for that person's success. The review of the business was very helpful and has given a sound foundation for forward decision-making. In addition, that review was the basis for a comprehensive review of the balance sheet.

Our invested capital is around $32 billion, and it's clear that not all of this is working as hard as it should be. I will take you through the first item here, then Ken will take you through the financials. We'll then open the floor for questions.

We fully recognize that CSL's financial outcomes have fallen short of expectations. In order to turn this situation around, it was important for me to understand what has changed in the last decade or so. I was especially interested in what could be attributed to external factors versus our internal decision-making. Our analysis started with a shareholder view of CSL's financial performance over the last decade. Looking back at least 10 years was important given the long-term nature of this business.

We used the published financial reports and standard analytic tools, supplemented with macroeconomic perspectives of the business, along with analysis of key internal and external events over that period. The look back is complete and is now informing our immediate actions and strategies, including continuing many of the measures that the Board of Directors and the management team had previously initiated. I have no doubt our strategy remains the right one, which is to strengthen our core while investing selectively beyond plasma in logically adjacent spaces.

I must say that when I took on the role, I was worried that the valuable culture of the company may have been damaged in some way. Today, I'm very confident to say that the leadership of the company and the workforce are highly engaged, talented and committed to restoring the company to success. Staff fully understand the broader societal role that the company plays.

I'll talk more about plasma therapeutics, but it is pleasing to see CSL continue to explore growth opportunities within the rare disease space. Recognizing that there is a need for change and that financial outcomes need to be better, it is worth noting that the company is very profitable, has metronomic cash flows and significant financial capacity. I can also see that CSL continues to have evident competitive strengths in plasma collection and influenza vaccines. The core plasma therapeutics industry has continued to grow strongly, driven by underlying demand for the critical therapies and macroeconomic growth.

What is also interesting is that the industry structure is largely unchanged. The names are a little different, but we continue to have a small number of global vertically integrated players, each producing a modest number of fairly biogeneric products from human blood plasma. These players all have cash-sensitive ownership. There have been some alternative therapies for some Ig indications emerge, but new market opportunities have also opened up, such as secondary immune deficiency. This tells me that the unique macroeconomics of the sector are unchanged. The industry is fundamentally structurally stable and growing.

The absence of patent cliffs means that the market structure is highly durable. And as you can see from the data on this slide, considerable runway remains for future growth. The challenge is whether CSL has continued to compete as effectively as it once did and to respond to intra-industry dynamics. The premium of our gross margin structure over competitors suggests that the core is sound, but its decline over time also suggests that we're not as good as we were.

The good news is the changes that we're making are largely to deal with issues that are under our own control rather than external to the business or structural in the markets where we operate.

Turning to our 10-year look back. The red line shows the share price over the decade. That's a familiar story to long-term shareholders. The black line shows earnings per share. It's evident that over the long run, the company has continued to generate significant profit, and this continues to be the case today. It's not on the slide, but free cash performance has also been very strong. This has given the company the opportunity to return surplus cash to shareholders through dividends and buybacks, such as the one we just completed.

The light gray line shows the return on invested capital over that period. ROIC is a reasonable accounting measure of balance sheet productivity and has declined over that time. Putting the pieces together suggests that, firstly, the decline in ROIC has primarily been driven by a growing asset base, some of which has been less productive than anticipated. Ken will talk more about this shortly in the context of the balance sheet impairments. I also expect that we can be more efficient managing our working capital.

Secondly, the failure of several late-stage R&D projects, along with some market share losses in key markets has contributed to a loss of confidence in the growth prospect of the business. There's more to the diagnosis, but this captures the essence and is certainly enough to inform our forward-looking decision-making.

Let me make a couple of high-level comments on our corrective actions. Firstly, we're returning to being more outward-looking, better understanding our patient needs, the evolving science, competition and public health. Secondly, there is no fundamental shift in business strategy. This is primarily about excellence in execution. And thirdly, many of these initiatives were already in flight. In some cases, the heavy lifting has already been done, but the benefit will take time to realize. We are completing these initiatives with urgency.

It is useful, I think, to consider some of these approaches in financial terms. The company generates significant cash flow from operations. Apart from projects that are of a compliance or safety nature, every other use of that cash has to be justified on a risk-adjusted discounted cash flow basis to demonstrate that it is expected to generate returns appropriately above the company's cost of capital.

Surplus cash is then returned to shareholders through dividends and on-market buybacks while maintaining leverage within our published target range. This framework is unchanged from the past, but is very much core to our forward approach as well.

I'd also like to highlight our efficiency measures. It is clear that the company had overbuilt organizational capacity, and this is now being addressed. These changes will be evident in the P&L going forward. In addition, we are very focused on reducing the marginal cost structure of the business, especially in plasma collection and fractionation. This is a core driver of Behring's gross margin structure, and we do see opportunities here that will improve profitability and also competitiveness.

Allocating clear accountability to plasma collection leadership and elevating the operation to report directly to me will accelerate innovation in that part of CSL. An extensive transformation program was announced in August of last year, aimed at simplifying and streamlining the business. I'm pleased to say that very good progress has been made in this program.

To highlight a few points, the R&D organization has been considerably streamlined with a much tighter governance structure built around a strict financial framework in addition to science, medical and commercial insights. Success can never be guaranteed for individual projects, but we are very thoughtful about which horses we back with early signs of success such as VarmX. In addition, the simple reduction of fixed cost will benefit the P&L.

We are very confident about the Horizon 2 program, but are taking a measured approach to capital investment to support the new manufacturing process. Integration of the Behring and Vifor commercial operations is yielding synergies. Both are primarily rare disease franchises. One of the industry changes that the company was slow to respond to was the growing capability gains of our plasma industry competitors as their supply chains became more robust and their product portfolios progressed and in some cases, overtook us. This resulted in market share losses and lower growth.

For example, we are now the third largest Ig player by volume in the U.S., although we do retain global volume leadership. In response to these circumstances, we are making targeted investments in our commercial capabilities, and these are beginning to yield results. The operational separation of Seqirus is now largely complete. This retains flexibility for CSL in terms of a potential demerger when the timing is right and gives Seqirus the direct capability and accountability to continue to drive market share gains and look for growth opportunities. Because there are only modest synergies with the rest of CSL, the separation has not added any incremental costs.

We've increased the focus and accelerated the cadence of the executive leadership team and stopped or deferred a number of in-flight initiatives that were not core to the primary objectives today. I expect that the result of these steps will take some time to flow through the financial accounts, but we are seeing some encouraging early indicators.

As you know, our biggest product in our biggest market is U.S. Ig. Growing market share for the intravenous presentation, PRIVIGEN, has been challenging, and we've been losing share with the subcutaneous presentation, HIZENTRA, following new entrants in that space. This is end market data on the slide, so subject to in-channel inventory movements. The good news is that we're beginning to see the reversal of these trends.

Following some market volatility in the Chinese albumin market, we're also seeing some early traction as we grow a little faster than that market. Profit growth requires expansion within rare diseases beyond the traditional plasma therapies. So it's pleasing to see ANDEMBRY and HEMGENIX going well. Seqirus is the sectoral leader in influenza vaccines. The headwinds from vaccine policies and fatigue after COVID have been challenging, but have afforded an opportunity for Seqirus' innovative product portfolio to shine, driving the market share gains forward. It's a great example of a market rewarding innovation.

Having an orderly leadership transition plan is critical for CSL as we navigate through these changes. In addition to the work that I'm doing as Interim CEO to stabilize the organization and initiate a strong return to growth, part of my role is to give the Board the space to identify and appoint my successor. We suggested at the half year that this process would take about 12 months and is progressing as planned. For the avoidance of doubt, I've chosen not to be a candidate in the process, but I do anticipate that I will return to the Board as a Nonexecutive Director once I have completed a transition to the next CEO.

As a result, along with my fellow Board members, I'm actively involved in the CEO selection process. It also means I will be well placed to support the transition for the new CEO so that it is as smooth as possible. This is critical for business outcomes as well as shareholders and our people. The Board is also actively engaged in Chair succession and is very well aware of the need to maintain strategic momentum and stability as we move through these important leadership changes. It goes without saying how valuable the support of all members of our Board of Directors has been to the leadership team as we've all worked through the many challenges of the past few months.

It is with mixed feelings that I must share with you today Andy Schmeltz's decision to retire from the company at the end of the financial year for personal reasons. Andy is largely responsible for the retooling of the Behring commercial operation in response to the changed competitive environment as well as the integration of the Behring and Vifor commercial and medical affairs functions. We've all enjoyed working with Andy, and I do offer Andy and his family our very best wishes.

I am pleased to advise that Diego Sacristan has been appointed to succeed Andy in this critical role and to continue the important transformation of the operation. Diego comes with an impressive commercial pedigree from Pfizer, having served in numerous senior roles, including as global marketing lead. Since joining CSL in 2024, he has led the international and U.S. Behring commercial operations reporting to Andy. Andy and Diego deserve credit for the green shoots that we're seeing. Diego will now take the good work forward, and Andy will remain available to support Diego through the transition period. Diego has joined us today in Melbourne and is available to answer questions about the commercial operations of Behring and Vifor.

I'll now hand over to Ken to take you through the updated outlook and the impairments.

Thanks, Gordon, and good morning, everyone. The actions we're taking to return CSL to profitable, sustainable growth are the right ones, but the translation to financial benefits will take time to realize. As Gordon mentioned, the transformation program is progressing well and is delivering savings a little ahead of expectations. Although nearing completion of the original plan, we see some further opportunity here, and we'll look to make some more comments on that when we report our full year results.

Fiscal '26 represents a year of 2 very different halves. While CSL Behring was down in the first half, we do expect to see growth in the Behring portfolio for the second half, measured against both the prior corresponding and trailing periods. While encouraging, second half growth will be below the expectations we had in February. At the first half results, we called out ambitious growth expectations for Ig, China albumin and our launch products. Regrettably, those ambitions have not been fully realized.

Let me walk you through the key drivers of the revised guidance we're providing today. In the U.S. Ig market, as you've heard, underlying demand is in line with our expectations of mid- to high single-digit growth, and we are pleased to be seeing market share gains. Since February, however, it has become apparent that we had excess Ig inventory in the channel, causing a disconnect between end customer demand and the sales that CSL reports. While this excess channel inventory has now unwound to normal levels, it has driven a headwind of approximately $300 million in U.S. Ig sales compared to our previous expectations.

In China, we are taking share and market volume for albumin has stabilized. However, the market continues to decline by value. As a result, FY '26 albumin revenue will be around $200 million lower than previous expectations. And finally, there is a further $150 million reduction in revenue from some smaller impacts that have occurred in the time period since our February results announcement. The conflict in the Middle East has resulted in a pause of sales into Iran. We are seeing slower-than-expected growth in HEMGENIX, partly due to a temporary supply challenge, and we continue to see heightened generic competition in the iron market.

Turning to our updated outlook for fiscal year '26. We now expect revenue in constant currency to be around $15.2 billion, down 2% on fiscal year '25. NPATA, excluding restructuring and impairment costs at constant currency will be around $3.1 billion, down 4% on fiscal '25. In addition to a revised constant currency outlook, we're also updating our estimate of foreign currency impacts. Recent geopolitical events are causing heightened FX volatility. Assuming current foreign exchange rates prevail for the remainder of the financial year, our reported revenues would be approximately $400 million higher than the constant currency result and reported NPATA would be approximately $20 million lower than the constant currency result.

Gordon spoke earlier about some less productive assets on our balance sheet. We expect to recognize noncash impairments of around $5 billion in addition to the impairments already taken at the first half. The key drivers of these impairments relate to CSL Vifor intangible assets and selected property, plant and equipment. The Vifor impairments reflect reduced expectations for the business, including the impact of generic competition on the iron portfolio.

We're also reviewing our fixed assets, in particular, the carrying value of facilities that may not be fully utilized. We're working through the details of these impairments, which are likely to be recognized over fiscal year '26 and '27. An update will be provided at the full year results announcement in August.

I'll now hand back to Gordon.

Thanks, Ken. Before we open up for questions, let me just summarize briefly. Our retrospective review was important for us. It gave us clear signposts confirming that the transformation work that our Board of Directors and management team had commenced was important. It also suggested that a thorough balance sheet review was needed. We haven't completed that review work, as Ken mentioned, but the impairments that were discussed are recognition that circumstances have changed materially since major investment decisions were made.

Our green shoots are encouraging, but there is considerable work ahead before our current financial performance can be considered satisfactory and see a sole returns to sustainable profitable growth. I'm confident that this can be achieved. The industry structure is sound. Our people are committed and energized and the operating assets are robust. The application of macroeconomic insight and financial discipline are key, and we will be very focused in our approach. We will deploy CSL's capabilities to generate sufficient profit and cash flow to allow immediate returns to shareholders, along with funds for targeted investments to drive future profit growth. We are making progress and will maintain momentum.

Thank you, Gordon. We'll now move to Q&A. [Operator Instructions] I will now hand over to the operator.

[Operator Instructions] Your first question today comes from David Bailey with Morgan Stanley.

Apologies for that. Just would like to understand a little bit some of the implied second half growth rates coming through. So can you maybe talk a little bit about what you think IG and albumin growth would be on a full year and implied second half basis? And then as we work through the income statement in constant currency, can I just confirm that you're expecting growth for CSL Behring at the gross profit level? There was a comment earlier that you're expecting growth for Behring, just making sure that, that is a gross margin -- a gross profit number, sorry, for the second half.

Sure. Thanks, David. It's Ken. So in relation to your first question on IG, following the updated guidance, we expect IG to be broadly flat from fiscal '26 compared to fiscal '25. So we do see growth in the second half in IG compared to previous corresponding period and the trailing period, so probably in the low single-digit range. Albumin was obviously down quite considerably in the first half, about 27% for the full year, probably down in the mid-teens. So what that would suggest for the second half is a little down versus prior corresponding period and up on the trailing period, just recognizing the softness of the first half results.

For Behring overall, we are seeing the revenue flat to potentially a little down on fiscal '26 -- sorry, fiscal '26 to fiscal '25. We're seeing growth second half compared to the previous corresponding period and the trailing period. We are expecting to see a degradation in the Behring gross margin. So the revenue updates that we communicated today are products that have on balance, a relatively higher margin. And so our current outlook is that the Behring gross margin may fall by around 1% versus '25. And so that's going to affect the gross profit that we report in fiscal '26.

Okay. And just one quick follow-up, if I can. I know there was a lot in there. But just on the IG number, you mentioned there's some disruptions there around channel. Just can you maybe talk a little bit about the -- what you're seeing in the fourth quarter and exit rate expectations into fiscal '27, please?

Sure. I'm going to respond to let Diego talk about what we're seeing. I think I heard, David, you talked about fiscal '27, which we're not in a position to comment about '27 at the moment. But over to Diego.

David, this is Diego. So thanks for the question. When we look at the trend of IG, we continue to see underlying demand that is on the mid- to high single digits. So that's very healthy. And we continue to see half-over-half growth. So we see an acceleration. And as it was kind of part of the remarks, some of that demand acceleration has been muted by the normalization of the channel.

Your next question comes from Dan Hurren with MST Marquee.

Apologies actually on a plane at the moment, so I can't join the call. Look, obvious question, given the CEO chair, an old CEO, an interim CEO, a new CEO about to be appointed, will the Board be in a position to offer investors some continuity in terms of the standing behind these key numbers and impairments so that we can avoid the whiplash of another reset?

So it's Gordon here. So I think there's no doubt that the Board is standing behind the changes. And so we've -- it's -- we've had a lot of engagement with the Board between the executive team and the Board, and they're fully supportive of the changes. The -- which we're making to the business and the reporting and the reviews and so on. The -- and then looking forward, the CEO transition is in flight, going according to plan and is well supported by the Board and obviously by me.

Okay. Look, just a housekeeping question. Could we just talk about -- just for the models, the amortization on the -- and add back the other nontrading items at the bottom of the P&L for FY '26?

Sure. I'll discuss the impairments in more detail. So Gordon referenced his review of the business. And as you'd expect, that also included a review of our balance sheet. As we look at the businesses today, I think you've heard an update on the Behring business. We're seeing second half growth versus the relevant previous periods. And I think Gordon also indicated that the Seqirus business is probably doing a little better than our previous expectations.

In Vifor, we are facing some challenges across both the iron and nephrology parts of that portfolio. So iron, we've spoken previously about the rising impact of generic competition. Iron as a franchise in the first half, if you recall, fell by about 15%. As we look forward, we expect to see an increase in that rate of decline.

On the nephrology side, that has historically been a source of growth in recent periods. One of the major contributors to that was a product called Velphoro, which benefits from a 2-year TDAPA reimbursement framework in the U.S., which ends at the end of this calendar '26. So Velphoro is a product that has already reached its peak contribution in the first half. And so into the second half of this fiscal year and going forward, we expect to see declines in that product, and that contributes to an overall decline in the broader nephrology portfolio. So these are things that we need to assess. We need to look at those forward-looking expectations versus the carrying value of Vifor. Those assets and carrying values were set back in '22 when the business was first acquired. And as a result, we expected to book some impairments.

Right. I guess the question is you've got to NPATA, what's the add-back? I'm trying to get to underlying here.

I'm sorry, could you repeat that question on the impact on NPATA?

So I'm just trying to get a physical number, what is the amort add-back that you're using in your NPATA, guidance that's given today.

Yes. So the guidance that we gave on NPATA was excluding any restructuring and impairment costs. So that will be incremental to that.

Your next question comes from Davin Thillainathan with Goldman Sachs.

Gordon, perhaps a question for you. Your 90-day review, could you perhaps talk to some of the changes that you've actually put through? We can't really see much that's changed on the slide deck. So perhaps some updates from your perspective. And then if you can then tie that into how those changes are helping your IT market share, please?

So I guess the broad comment would be that I've made a number of changes, but they have been much more around focusing the business than wholesale direction changing, and that reflects the fact that the substantive work has already been in flight. And so the restructuring of the R&D group, reduction of infrastructure in that area and just general focusing of the business has all been in flight for some time and it is going quite well.

More narrowly, I'll hand over to Diego perhaps to make some more granular comments about the commercial piece. But just broadly, I think the -- what we've seen over the -- I guess, over that period of the review is that competitors have strengthened their supply chain, so they've been able to be more reliable. In addition to that, they have developed products which have challenged our, I guess, our lead position as an innovator in the space, which has made the competitive pressures that the organization had faced in key markets more difficult. And the organization, I think, has been slow to respond to that.

And so now what we're seeing is this sort of pretty major retooling. We have to -- obviously, we'll increase our investment in that space, but we've also added capability to better understand those markets and to, I guess, more aggressively support the sale of our products, especially in the U.S. I'm not sure whether you want to add anything further to that, Diego.

So thank you, Gordon. I would just kind of -- we talked about the increase in our customer-facing our sales organization in the U.S. we talk about our focus on direct-to-patient communications that we have enhanced beyond the brand into diagnosis that is a clear lever of growth. And also, I will call out the recent enhancements that we've done around analytics that is giving us a very deep understanding on how to focus our efforts in front of our customers. And actually, we have a pretty long pipeline of improvements that are planned for 2027. We see this continuous flow of improvement that we need to continue driving the demand across the different regions.

Maybe just a follow-up, Gordon, as well given your experience with the company. Your comments about competitors getting better with the supply chain, do you sort of feel CSL's cost per liter on the IG front, do you feel like you're still the lowest cost provider here?

Yes is the short answer. And I think it's reflected in the gross margin structure for Behring, which continues to be pretty robust. Obviously, not as good as we'd like. And so I do see opportunities to consolidate and strengthen that advantage. But yes, the short version would be that I think we're starting from a pretty good location.

Your next question comes from David Low with UBS.

If we could just start with pricing environment. I was just trying to understand from your commentary about inventory in the channel and competitors, how much of a price degradation have we seen in key products in, I guess, U.S. and China?

Sure. This is Diego. Thank you for the question. So when we look at the U.S., the adjustment that we're making is related with our increased oversight of the channel beyond the specialty distributors has nothing to do with price. When -- as you know, we have different price points for different channels in the U.S. But when you look at our ASP, our average selling price has been stable in a very tight range, and we see that moving forward.

When we look at China, following the disruption that happened last year in the market, we did see price decline. We've referred to it at around 10% price decline. We do see a continuous price erosion in China but a much lower rate. So we see a stabilization of the price. And at the same time, we see a slight growth of the volume. So we do see signs in China of market coming back to a more stable trend. Obviously, we remain vigilant and ready to react to market conditions.

Okay. And my follow-up, just on the gross margin. So you talked about 100 basis points, Ken, of headwind. Can we walk through the 3 factors that have been outlined, so IG, albumin and other and which of those impacted gross margins? And of course, what we're really trying to understand is the exit gross margin for this year, what are the implications going into next year? I know you don't want to talk about '27, but just understanding the trends there. Is there likely to be a recovery or likely further decline would be helpful, please.

Sure. So I'll ask -- answer the second question first. Our objectives, our strategy continues to be to expand the Behring gross margin. That's obviously not what we're expecting in fiscal '26 because of the headwinds that we have described, the fact that as a result, we're seeing a flat outcome on the Behring revenue line with some degradation in some of the relatively more high-margin products. But going forward, margin expansion is still very much part of our outlook.

In relation to the components that we've discussed today, give you a little bit more detail. So the $300 million IG headwind is in the U.S., and it's principally HIZENTRA. So that has a margin, which is obviously higher than PRIVIGEN and obviously higher than what you see in other parts of the world. So that's a significant contributor to that margin impact.

Secondly, for China albumin, given the pricing that we see in China, it's on the higher end, certainly the highest margin that we have for albumin. So that has an impact as well. And then that final group contains within it, if you recall, HEMGENIX and iron, and they're both high-margin products as well. So back to my earlier point, the drivers that we're seeing with this updated guidance are all relatively high-margin products.

Okay. Just on HIZENTRA. So just trying to understand with the inventory adjustments in the channel, is that one-off in nature? Or effectively, that headwind continues into next year?

Thank you. It is onetime in nature. As I mentioned before, we have developed a much deeper understanding, and we have taken the needed actions to reach the average inventory that supports our underlying demand that continues to grow at mid- to high single digits. Again, this is behind us. I think it was an important step, and now we're very focused on the excellent execution moving forward.

Your next question comes from Lyanne Harrison with Bank of America.

Can I just go back to IG again? You mentioned that the market for IG was balanced in terms of supply and demand. What gives you confidence that, that's the case? We look at one of your peers, they reported their first quarter last week. They've got 15% growth in IG. You're talking about second growth -- second half growth in IG being low single digits. I hear what you're saying about inventory, but our channel checks still suggest that there's a bit of inventory in the market. What sort of -- how many months of normalized purchasing patterns have you seen recently? Can you call out what you saw in third quarter fiscal '26 in terms of IG growth?

Sure. So when we look at the underlying demand, inventory, I think, is pretty consistent across the board. We see numbers normalize over time. So I don't have any concerns when it comes to that underlying growth. When it comes to inventory, look, I cannot comment for our competitors. What I can kind of share with you is that we've completely changed the way that we look at the inventory, particularly in the U.S. We have a much more holistic picture. And we are not considering something that we have not in the past, which is the impact of the 340B contracted pharmacies. This is a dynamic that is not new to the U.S., but it's been growing in the case of IG.

We look across the different layers, and we've been adjusted our inventory for about 4 weeks. And we're now tracking very closely to an average of 6 weeks of inventory at the different levels of channel moving forward. So again, a very deep understanding. We have now a much granular planning, and we are at the level that we think is healthy, and we plan to keep it at this level moving forward.

I might just build on that. Lyanne, you asked some questions to try and understand the growth rates. And so just to remind you that fiscal '25 had quite an unusual skew in IG between first half, second half. And so as I said earlier, while fiscal '26 compared to all of fiscal '25, we expect IG to be broadly flat for the second half of fiscal '26, that explains why we expect to show growth versus both the PCP and the trailing period.

Okay. And can I follow up with just a question on China albumin. Obviously, you're doing a lot of work there. You've got 100 new hospitals that you're selling into. Can you talk a little bit about the distribution arrangements that you have in place? And in terms of that growth in market share for the last 3 months of 0.5%, it feels like it's a lot of effort to get that little bit of share growth. What are your thoughts into fourth quarter? And then what's the expectation for the market? I know you're not talking about or giving guidance to '27, but what's your expectation for the market for the next, I guess, 12 months?

Sure. So -- so let me talk about the arrangements that we have. The way that we're approaching China is a well-proven commercial strategy in China has been done multiple times. We look at the channel and geographical expansion. The geographical expansion in the hospital channel, we're doing it with our own resources and in the retail, which is a much kind of broader set of customers, we're doing it with the partnership of Baheal. With Baheal, we have a set of contracted volumes that we are working with them, and we have a very close partnership.

I understand the share gain seems small. It's been a relatively short period, and these things take time. But again, I think this is a well-proven strategy in China, and we are confident that we'll continue to yield results, and we're looking at an increased pace.

Look, the underlying dynamics that we see in China, as I mentioned before, is return to grow on volume and continuous pressure on price at a much lower rate that we've seen until now. So pretty stable growth from a volume perspective moving forward.

Your next question comes from Saul Hadassin with Barrenjoey.

Just a couple of questions. First one, there was some commentary at the half year about operating costs, particularly general and admin and I think R&D. Any update you can give maybe, Ken, on whether you're still thinking those costs will be similar to what you guided to, in other words, flat G&A. And I think you gave some commentary on R&D as well at the half year.

Sure. So outside of the specific updates that we're giving today, there's no change in the guidance for those other elements that you mentioned. So to reiterate what we said at the first half that for both G&A and R&D, we expect the full year to be roughly 2x the first half. The cost-out programs remains on track. No change in our full year expectations for that.

And can you also previously advised that as we move into FY '27, there's going to be a shift to NPAT from NPATA. Is that still the thought as we move into the next fiscal year?

Yes. So the move to NPAT versus NPATA, that's right, from '27 onwards. There will also be some changes. Gordon mentioned operational separation of Seqirus. So there will also be some changes in our segment notes. So we'll be able to disclose the earnings of the -- Behring and Vifor segment on the one hand and the Seqirus segment on the other hand, down to EBIT.

Your next question comes from David Stanton with Jefferies.

I wonder if I could talk to -- continue to beat the dead horse of IG in the U.S. and talk to why there's been increased inventory in the hospital channel. What are your hospital channel partners collecting more plasma for or more IG for, please?

So just to clarify, the increased inventory in the U.S. is not specific to the hospital channel. It's in our distribution partners that have 2 layers. The first one is the specialty distributors that we've been monitoring for a long time. And the second one is the specialty pharmacies that is kind of one level removed from us. So in the last few months, what we've done is a very deep analysis of at the account level of these channels. And we have observed that over time, inventory has been creeping, particularly in the second layer of the specialty pharmacy and driven by this 340B dynamics.

So now that we have the insights now that we understand in a much deeper level, we think this is the right move to cost correct this and to move forward in our new channel strategy with a healthy level of inventory. So this is not something that is kind of ups and downs. It's gradually creeping in. And given our insights today, we're in a better place to manage it now and leaving it behind and moving forward on an ongoing basis.

Okay. So just a follow-up then. I understand why 340B is requiring more volume. Perhaps you could give me some color around that.

Sure. Thank you. This is one of my favorite topics, 340B. So it's not -- so what is happening is that 340B contracted pharmacies. So these basically are 340B hospitals that contract with specialty pharmacies to deliver 340B volume, okay? The way that this works is that this is not fully transparent to us. This is not reported to us the volume that is going through that. And so we have developed the capability through combining multiple sources to now identify the volume that is going through that channel, and that has uncovered this growing volume over time in this channel.

Again, this is not new to the U.S. has happened in other categories in the past. And what we've seen is lately in the IG category more volume flying through the contracted pharmacy of 340B. So more visibility, greater insights and helps us to manage the inventory appropriately given this dynamic.

Okay. And perhaps I could ask my second question, specifically around the Baheal contract. And I was just wondering if that's -- because I hear different things in the market, whether that's a take-or-pay contract or whether it isn't. And if it is, have we seen them take what they said they were going to take, please?

So yes, we have committed volumes with Baheal and the contract is being executed as planned. And we also have a very close partnership with them making sure that we have the right level of oversight of the execution of that contract.

Your next question comes from Laura Sutcliffe with Citi.

Could we visit the topic of infrastructure overbuild? Could you outline what some of the assumptions were that led to that and how those historical assumptions are linked to today's demand profile for the products it might involve?

Sure. So Gordon's earlier comments about infrastructure build apply to several aspects of the business. And some of these decisions and investments actually go back several years. So they include, for example, investments in Lengnau facility in Switzerland, which commenced in 2014. A little bit after that, we made significant infrastructure investments in R&D facilities around the world, most notably in Germany, in Marburg. We have also expanded capacity across other parts of the business as well, including cell culture and overall manufacturing capacity.

So it reflects manufacturing capacity as well as infrastructure that supports other parts of the business, particularly R&D. As we look at the utilization of that infrastructure today, some of it is underutilized, and we need to work through the implications of that for carrying value.

Okay. And then maybe a second question at a higher level. I know you don't have a crystal ball, but are you confident that the review that you've undertaken has gone into all of the corners of the business thoroughly? Or is there anything else that you feel like we should continue to watch out for?

Yes. Thanks, Laura. We expect it has. That was the idea behind giving, I guess, a headline figure, which is still an estimate, but is intended to address, for example, whether these things are recognized in the current financial year or the next one.

Your next question comes from Steve Wheen with Jarden.

Just wanted to go back to the previous commentary that you made at the interim around cost out. It was a figure of $500 million to $550 million. Has that changed or perhaps more helpful would be that you did issue that guidance with some caveat over what amount the P&L might get to retain versus reinvesting. Can you give us any more color around that because that obviously is fairly meaningful with regards to trying to produce a P&L for this business?

Sure. So just to reiterate some of the comments that I made earlier and then give you some further guidance. So what I said earlier is that when you look forward, particularly as far as fiscal '28, and we think about the $500 million to $550 million of cost savings and what we do with it, we are being very rigorous across our capital allocation priorities.

There was a slide from Gordon where he outlined 3 major priorities. So reinvesting in growth, maintaining balance sheet gearing within a specified band with the expectation that after attributing the right amount of capital to those 2, we'll still generate excess cash, and that will be returned to shareholders.

Now particularly when you're going out to as far as '28, what those reinvestment decisions might be is a forward-looking statement that will depend upon what we see at the time. And this largely relates to the R&D portfolio. So we've made a lot of changes in the R&D function. We've taken a lot of fixed costs out. You'll see that in the R&D expense line, which for fiscal '26 will be less than fiscal '25.

And so for fiscal '26, the majority of those cost savings are being effectively released into the P&L. But we do need to reinvest in growth. And so my expectation is that the R&D line will increase over time as we add more substrate into the clinic, and that will, therefore, use up a portion, but certainly not all of the cost savings that we're intending to take out of the business.

So I would say near-term expectations that the majority of those cost savings will be released to the P&L in the -- more in the medium term. It will depend upon what we do, particularly in R&D, and that includes what we might do in business development. We've been very vocal about the fact that part of our strategy for strengthening the R&D pipeline is through partnerships.

So transactions such as what we did with VarmX, where once we do those deals, we also bring on incremental R&D expense. And so there's obviously a level of uncertainty with our ability to strike those deals, which is why you're not getting a completely precise ratio for me right now about how much of the $550 million will be reinvested versus release to the P&L.

Okay. And second question is a bit of an accounting question. Just curious about the $5 billion impairment that is in addition, I think, to the $1.5 billion from first half, just to confirm that. But secondly, from an impairment perspective, I don't really understand why it's a multistage impairment across 2 years. Like isn't an impairment just as you see it at this point in time?

Could you just clarify that a little bit further? And it would be -- I know you've said that guidance -- all other measures of guidance have been retained, but just would be nice to hear that you still expect to do high single-digit growth in '27 and '28?

Sure. So yes, your first question, the $5 billion is incremental to the $1.5 billion pretax pre-NCI number that we announced at the first half. In relation to the timing of those impairments, so we need to do further analysis. We need to have much more in-depth conversations with our auditors. And in some cases, the drivers of those impairments may not be fully clear or understood at the time we close our accounts in June of 2026.

So for example, the incoming generic competition for iron in the U.S. won't have happened at that point in time. And so assessing what that impact is, is obviously a judgment call where we're looking to get some more data points. And to give you an example, in Europe, the initial price impact was less than what we initially thought. But we have seen generic competition in Venofer in the U.S. where the price competition was fairly aggressive.

And we still to see what the price competition will be for Injectafer, which is the much larger product in the U.S. So from an impairment perspective, you need to have those key assumptions locked down so that you can get the requisite audit sign-offs. And we're just flagging the likelihood that not all of those developments or assumptions may be completely transparent at the time we close the books.

In relation to fiscal '27, on this call, we're focusing on the update for fiscal '26. At this time of the year, as always, we are running through a detailed ground-up budget process that will inform our fiscal '27 expectations. And as we do in the ordinary course, we'd look to provide the market with an update on that at the full year results in August.

Your next question comes from Sacha Krien with Evans & Partners.

A couple more on IG. Ken, your comments suggest that it's sort of a CSL-specific inventory issue and that's now cleared, which -- does that mean we should be thinking about growing in line with end market demand going forward? So if you could comment on that.

And then just related question, I don't think I fully understand why clearing your own inventory backlog is the only issue. We've had pretty consistent feedback that there is excess inventory in the broader U.S. market, including in SCIG. So I'm just wondering if you think that also needs to clear before we can get back to sort of more like end market demand growth?

So again, when we look at our inventory situation has been now cleared, and we see the market and we see our demand growing on the mid- to high single digits, and is also triangulated with market data. As Gordon shared, we have early signs of market stabilization for HIZENTRA and increase for PRIVIGEN. So yes, the idea is to grow with the market in the U.S. IG.

Okay. And then second question, just on HIZENTRA market share. So it's still 55% according to the presentation. I'm just wondering if you think that is sustainable over the medium to long term, given that's now far more competitive space?

So in the current market situation with HIZENTRA, we're not only focusing on market share, but we are also focusing on expanding the market. As we mentioned before, we've done significant efforts around direct-to-patient that is looking into the brand choice and -- but also into diagnosis, particularly in PID. So we do have a set of commercial improvements planned for the second half of the calendar year that should help us to retain this market share.

Obviously, when you are the market leader with a 55% and a lot of competitive -- competitors in the market, that's a situation that takes a lot of effort to sustain, and we are encouraged by the progress we've made and the data showing us an encouraged trend. But again, we don't -- we're not resting on our laurels. We know that there's a lot of work ahead, and we have a steady pipeline of commercial improvements to help us sustaining it.

Your next question comes from Andrew Paine with CLSA.

Just coming back to China albumin, just be good to get a little bit more info here around what you're seeing in terms of pressures over and above what you're expecting at the first half results. Obviously, the hospital channel is somewhat understood, but are you seeing any pressures in the retail market, particularly around pricing?

Yes. So our -- kind of our forecast for the year for China was an increase in volume that we are seeing, but not at the levels that we were anticipating and a plateauing of price erosion. What we see is we do see the volume increase, again, at a lower rate. We do see our market share improvement driven by our commercial efforts, again, at a lower rate than we were hoping for. And we see a price that is continue to erode at a much lower rate than we saw originally.

So our focus now is to continue driving the market share and continue to be responsible in terms of how we price. And we see an opportunity to grow both in the hospital and in the retail channels with our partnership with Baheal. So we remain very vigilant. So China is a market that has been disrupted, and it's a market that changed quickly. We've seen it in the past in this category and in others, but we're ready to react as appropriate.

Okay. Just on that contract with Baheal, that's volume and price that's been agreed, hasn't it?

So there is a range for both. So yes, we are expecting a stable output of that contract, and we are in very close collaborations with Baheal, making sure that we're not -- that we're very attuned to the market dynamics.

Okay. And you're like in line with the expectations for that? Or are you implying here that it's slower start than expected?

It's aligned with expectation. Again, it's relatively soon in the partnership. So we need to keep seeing how things evolve. But we don't have a concern at this point in time, just kind of keep working and keep driving the demand that is needed. But again, it's early in the partnership yet to have a definitive assessment.

Okay. And just -- I'm not sure if you mentioned this before, but the revised HEMGENIX growth. Can you just provide some views around what you had previously and where you are now?

Sure, I'll take that one. So HEMGENIX is still growing. We expect to see good growth for the full year growth in the second half versus both PCP and trailing. So that's ongoing momentum that we called out earlier in the presentation.

Okay. And one last one, if possible. Just can you split out the Middle East conflict impact? It's part of the $150 million, but good to know what that is specifically.

Sorry, can you say that again?

Sorry, you're calling out the Middle East conflict as part of the $150 million revenue. What's that specifically?

So this is shipments into Iran. So we've had to pause those shipments. So there's a loss of revenue as a result. Outside of Iran, we're still shipping.

Okay. So are you able to give a dollar figure for that as part of the $150 million?

Across the 3 parts of that last driver that we called out. So we said there was $150 million across the Middle East and HEMGENIX and Iron, roughly 1/3 that you can attribute to each of those.

Your next question comes from Elizabeth Davies with Bank of America. We'll just move on to the next question. This is from David Low with UBS.

Gordon, maybe one for you. I mean one of the things that's changed in the market most recently is this Egyptian plasma arrangement with European approval of products based on it. My understanding is the price or the cost differential there is pretty substantial. Just wondering what you think of that strategy? And is that something that CSL will consider in the medium term?

Yes, we can't really comment, Dave, on other players. I think from our perspective, we're very focused upon making sure that we collect high-quality, safe plasma at the lowest possible cost. It's sort of -- it's usually the beginning of my conversations with Steve Marlow. And then we exchange things.

The next question comes from Stuart Welch with Alphinity.

Just a few quick questions for each of you. So Ken, is it fair to say -- previously, you guys have had medium-term guidance out there in the market for high single-digit NPATA growth. Is it fair to say that, that is off the table at this point? And then, Gordon, one for you. You talked about Horizon 2 and measured investment into Horizon 2. If you could talk to that. And Diego, sorry, just one for you, so nobody has left out. You talked about growing in line with market in the U.S. So is that right you're happy to grow at system growth in the U.S. and not grow market share? Is that -- have I interpreted that correctly?

I'll take the first one. So we'll provide an update on '27 when we get to August.

Yes. On the measured investment piece, that -- we just we're just having to be thoughtful. We're just being thoughtful that we make our investment decisions, particularly in hard capital as we reach various regulatory and technical milestones.

On the U.S. market growth, so as I mentioned, we want to -- I mean, our plan and we see the dynamics to grow around the market growth. That could be hopefully a little bit higher, but that's kind of the goal. The reality is that this is a market that tends to equilibrium, and we are a big player in this market. So yes, we are planning to grow around the market rate. And again, there is a range on the mid- to high single digits that we will need to show as we move forward, and we are focusing on execution now.

There are no further questions at this time. I'll now hand back to Ms. Michelle Rees for closing remarks.

Thank you. With no more questions in the queue, I'll draw the briefing to a close. Thank you for your interest in CSL.

Good morning, everyone. Thank you for joining CSL's results presentation for the first half of the 2026 financial year. I'm Mark Dehring, CSL's Head of Investor Relations. Please note, this briefing is being webcast.

We have a lot to get through today. But as usual, I'd like to draw your attention to the important disclaimer on your screen. A copy of this, along with our other ASX materials, have been published on the CSL and the ASX websites. You will also have seen announcement we made to the ASX yesterday relating to the appointment of Gordon Naylor as Interim Chief Executive Officer and Managing Director. We'll hear from Gordon shortly.

But before we do, I'd like to introduce our other speakers today. With me here in Melbourne is Ken Lim. Ken has been our CFO since October last year. Prior to that, he was our Chief Strategy Officer and has previously led our Seqirus business unit. Also here is Chief Commercial Officer, Andy Schmeltz. Andy joined CSL in 2023 as Executive Vice President, CSL Behring. And last year, his role was expanded to include CSL Vifor. And finally, we have Dave Ross, General Manager and Senior Vice President of CSL Seqirus since 2024. And prior to that, he was the Head of Commercial Operations in North America since 2017.

I'll now hand you over to Gordon for some comments before we get into the detail of the results.

Thanks, Mark, and good morning, everyone. My name is Gordon Naylor. And following the announcement yesterday, I'm CSL's Interim CEO. My main job is to run the business, giving the Board the space to find and appoint a suitable successor. I'll briefly cover my background, but in that respect, I will work to be an experienced set of hands for about a year. Interim does not mean that I'll be taking a back seat. With the support of the Board, I fully intend to drive the company forward. In the short run, we have an ambitious half year ahead of us, and we need to complete the strategic transformation that is now well underway and already delivering value. At the same time, we must deeply examine CSL's journey, especially over the last decade to fully understand the opportunities for improving strategic growth and profitability. As an investor, I'm not prepared to accept that we can't do better, and I see opportunities to do so.

Just to briefly recap on my time with CSL. I have a deep connection to the company over my 33 years as an employee before I was invited to join the CSL Board in December. Along with Brian McNamee and many others, I took CSL from an unloved part of the Australian government to global leadership in plasma therapeutics and then influenza vaccines. We had and continue to have a deep understanding of those industries and the economics that drive them. I was a key player in the globalization of the company and was heavily involved in the major acquisitions that Brian drove to establish CSL Plasma, Behring and Seqirus. I then took CSL Plasma to global leadership and at different times, ran various functions, including the global supply chain and IT. I was Chief Financial Officer through a period of remarkable growth. My last assignment was to build Seqirus into global influenza vaccine leadership. Dave and Ken were key parts of my team.

I'll make a couple of early high-level comments before handing over to Ken. I think that the strategic framework is sound. The challenge is whether we can do better within that framework. I'm very happy with Seqirus. It has used its global product leadership to drive market share gains in an extraordinarily difficult U.S. market, a classic CSL play. The noncash impairments around the Vifor products are allowing us to move forward. The cash flow from the iron franchise and the growth opportunities in nephrology make this an attractive space.

Your focus and my focus will be on bearing. It's a highly attractive growth sector, and we have the right assets. This is where the greatest opportunity lies. CSL remains a strong and consistent cash generator. I'm looking forward to engaging in more depth with our shareholders over the coming weeks and months.

With that, I will hand over to Ken and the rest of the team.

Thanks, Gordon, and good morning, everyone. Before I get into the results for the first half, I'd like to remind you of our strategic framework. The results we're presenting today represent a step in a broader transformation of CSL with the objective of delivering enhanced growth, profitability and shareholder returns. Andy will then provide an update on Behring and Vifor, and Dave will take you through the Seqirus result. I'll then discuss our financials in more detail as well as our guidance for the rest of the 2026 financial year.

Many of you will be familiar with this slide from our Capital Markets Day in November. CSL's growth is underpinned by our leadership in large growing markets with high unmet medical need. We're embedding a relentless focus on cost leadership to deliver profit growth that's faster than revenue growth and generate strong cash flows that enable us to reinvest in the business. I'm confident that this strategy will underpin strong sustainable shareholder value creation over the long run.

Six months ago, we introduced a transformation program to simplify our organization and drive stronger growth. I'm pleased to say we're progressing well and are already seeing significant value creation. I'll speak to some of the key initiatives. Those in white are now complete and those shaded gray are underway.

In terms of portfolio growth opportunities, we're excited about our collaboration with VarmX on a potential new coagulation treatment. And just this week, we entered into an early-stage research collaboration with Memo Therapeutics, focusing on their recombinant polyclonal Ig technology. On the efficiency side, we've rationalized R&D sites and streamlined our corporate functions, resulting in savings that we'll see flow into the P&L this year.

We've integrated Behring and Vifor's commercial and medical functions, eliminating duplicated spend that has facilitated reinvestment in our U.S. and China commercial capabilities. In plasma collection and manufacturing, we've reallocated collections to more efficient centers and are making strong progress on multiple yield enhancement projects.

While we're pleased with our progress so far, there's still a lot of opportunity ahead of us. And as I said earlier, I'm confident we'll see these initiatives translate into strong, sustainable shareholder value creation over the long run.

Turning now to our financial results. While we made strong progress on the transformation program, we're clearly not satisfied with our first half results and we'll be speaking to the initiatives we've implemented to drive stronger growth going forward.

Our first half performance was also adversely impacted by government policy changes and one-off costs associated with our transformation program and asset impairments. I'll get into more detail shortly.

We have a strong balance sheet and cash flows and today are announcing an expansion of our share buyback from $500 million to $750 million.

Looking at our high-level financials on a constant currency basis, group revenue fell by 4% and NPATA declined by 7%. Reported net profit after tax was down 81% after factoring in the one-off costs that I mentioned earlier. Cash flow from operations was $1.3 billion. Looking ahead to the full year, we're maintaining guidance and have an ambitious plan for growth in the second half, driven by Ig, albumin and our newly launched products.

I'll return later in the presentation to discuss our full year results guidance in more detail. With that, I'll hand over to Andy Schmeltz to discuss the performance of the Behring and Vifor businesses.

Thanks, Ken. You see the Behring half year results here. Needless to say, this has been a challenging time for the business. Let me give you some context. Ig sales of PRIVIGEN and HIZENTRA declined relative to a strong comparable period in the first half of fiscal year '25. This performance includes the adverse impacts of IRA Medicare Part D reforms, which crimped Ig sales in the U.S. and the expiration of some contracts internationally, which I've spoken about previously. However, when compared to the trailing 6 months through June 2025, where the comparison is like-for-like relative to Medicare Part D, revenue from Ig increased by 3%.

For albumin, the disruption from policy changes and cost controls in China, which we highlighted at our Annual General Meeting in October, are reflected in the numbers. That said, we've mobilized rapidly to mitigate the impact of these challenges. In fact, we've seen a positive response in the most recent 3 months from the expansion of our hospital field force in China and from our exclusive retail channel partnership announced in early November 2025. I'll talk more about this in a moment.

The performance of Ig and albumin was partially offset by strong growth in other areas, including hemophilia, where we continue to see steady uptake of HEMGENIX. Sales of HEMGENIX grew 16%, backed by positive 5-year data published in the New England Journal of Medicine in December of 2025, which reinforced durable efficacy and safety for HEMGENIX in adults with hemophilia B. And we were very pleased with the strong launch of our new treatment for hereditary angioedema, ANDEMBRY, after it received approval in the U.S. and many international markets during fiscal year '25. ANDEMBRY can eliminate HAE attacks for the majority of patients with once monthly dosing via prefilled auto-injector. Today, less than a year into the launch, more than 1,000 HAE patients globally are now on therapy. With this momentum, ANDEMBRY is poised to become a leading medicine for HAE prophylaxis. Finally, perioperative bleeding, in particular, KCENTRA, continued to be impacted by competitive market dynamics.

I'd now like to dive a little deeper into our Ig franchise and also albumin dynamics in China. Our view is the fundamentals of the Ig market remains strong with significant unmet patient need. We continue to see the market growing consistently in the mid- to high single-digit range over the medium term. This is underpinned by robust growth across core indications like primary and secondary immunodeficiency and CIDP. And importantly, Ig market demand and supply are balanced.

In the coming second half, I believe we will see stronger double-digit CSL Ig portfolio growth now that, one, we have digested the onetime adverse impacts previously mentioned; and two, we anticipate benefiting from commercial investments triggered over the past several months. Specifically, the expansion of our U.S. Ig and hospital sales forces, restarting our U.S. HIZENTRA direct-to-patient marketing campaign and broadening our contracting efforts across targeted accounts in the U.S. and with customers and governments internationally. Early signals are promising from these investments. Our U.S. PRIVIGEN business grew faster than the IVIg market over the last quarter, and our international business, excluding the U.K., is growing in high single digits. All that said, I appreciate this is a show-me story with forward results necessary.

Moving to albumin sales in China. Upon seeing the market decline early in the fiscal year as government policy enforcement ramped up, we rapidly deployed mitigation efforts, which should lead to a stronger performance in the second half. These included expanding our geographic footprint across more provinces, cities and hospitals in China. We are ramping up our commercial presence across 8 must-win provinces and pursuing more than 100 new hospital listings. We also entered into an exclusive partnership with local Chinese distributor, Baheal Medical, focused on the private pay retail segment.

And finally, our medical team is generating fit-to-purpose real-world evidence to demonstrate albumin's important role across diseases while our commercial team is driving on-label demand. I'm confident these measures will see albumin sales in China stabilize, recover and grow in the second half.

Turning now to Vifor. CSL Vifor delivered a strong performance driven by nephrology. Overall, revenue was up double digits at constant currency. However, the iron business fell, having been impacted by generic competition. Nephrology was the standout as sales in the dialysis segment jumped. This was driven by continued strong demand for Velphoro as the full benefit of its inclusion in the TDAPA scheme was realized. Mircera also performed well and continues to be the market leader in the U.S.

Our rare nephrology launch products also reflected robust demand and sales growth, driven by continued uptake of Tavneos in all markets where it's launched, and FILSPARI, which successfully launched in several European markets.

This next slide outlines why we believe nephrology will continue to be a strong contributor to overall performance. Velphoro is benefiting from TDAPA designation that will continue through the end of the calendar year. And our rare nephrology launch products, Tavneos and FILSPARI are well differentiated and performing well in Europe.

As alluded to in the previous slide, iron growth was impacted by the launches of generics and associated price deterioration. Also, we expect to see the impact of the loss of exclusivity of Injectafer in the U.S. in the 2027 financial year. Despite this, there continues to be high unmet medical need for iron, and we believe growth opportunities will come from geographic expansion as well as via market development to grow IV iron penetration into areas such as women's health, cardio and chronic kidney disease.

I'll now hand off to Dave Ross to discuss the results for CSL Seqirus.

Thanks, Andy. As expected, coming into this year, our influenza pandemic business returned to more normalized levels following a nonrecurring H5 outbreak revenue in FY '25. With that, our focus was placed squarely on driving our differentiation strategy in seasonal influenza, where I'm proud to say that we're the only company with year-on-year revenue growth continuing our long-standing track record of growing market share. The breadth of real-world evidence continues to demonstrate the increased effectiveness of our cell-based vaccine flu cell vacs and the benefits of our adjuvant vaccine Fluad. This compelling clinical data, coupled with strong commercial execution, has allowed us to grow share in key U.S. customer segments and to continue the execution of our geo expansion strategy, all of which is designed to drive growth while diversifying our customer base.

Additionally, the opening of our cell-based Tele marine facility allows us to make a full conversion to differentiated vaccines while expanding our pandemic capabilities and offering. Our performance was achieved against the backdrop of a global seasonal influenza market that we project will decline by mid- to high single digits on a value basis. While immunization rates in ex U.S. markets have essentially recovered to pre-pandemic levels, U.S. immunization rates will see a low to mid-single-digit decline this season. While lower demand in the U.S. has put downward pressure on global prices, the most significant impact has occurred in nondifferentiated standard egg-based vaccines to which we are no longer exposed with the forthcoming sunset of our AFLORIA brand. I remain confident that the U.S. immunization rates will recover over the medium term. especially given the significant public health burden we're currently experiencing.

As a reminder, last year marked a 15-year high in influenza disease and is currently trending to be an equally bad or even worse flu season this year. There are at least 20 million cases this season in the U.S. with disease activity still running high. Sadly, pediatric deaths are again on the rise with the overwhelming majority of those deaths occurring in children who were either under or unvaccinated. With the rising burden of disease and recent U.S. policy changes, we're seeing a groundswell of stakeholder momentum building to combat vaccine hesitancy. The most notable being the American Academy of Pediatrics reaffirmation that all children 6 months and above in the U.S. should be immunized.

As I've stated before, the science and the data will ultimately prevail. The public health consequences of influenza are just too big to ignore. So while the current market dynamics are challenging, our differentiation strategy positions us well to continue our trend of outperforming the market. And as U.S. immunization rates recover, it will act as an accelerant for our strategy and growth ambition.

And with that, I'll hand it back to Ken to discuss the financial results in more detail.

Thank you, Dave. I'll start by walking you through the P&L, focusing on our reported numbers and changes in constant currency. Total revenue for the group was $8.3 billion, down 4% and gross profit was $4.6 billion, down 3% and group operating result was $3.8 billion, down 4%. In research and development, we made strong progress on our restructuring initiatives and in fact, are a little ahead of schedule. R&D expense in the first half was $600 million, down 8% for the second half, we expect R&D to be a similar amount as the first half, again, benefiting from our restructuring work. Importantly, we're investing where we see attractive opportunities such as our VMAX candidate, which is scheduled to commence Phase III in the second half. General and admin costs were also down, in this case, by 2%.

We expect G&A costs in the second half to be similar to the first. Net interest expense was down 11% as our balance sheet continues to delever given strong cash flow. NPATA before restructuring and impairments was $1.9 billion, down 7%. I'll go into more detail on the restructuring and impairment costs shortly. Post these one-offs and amortization, net profit after tax was down 81%. Our underlying effective tax rate was 21%. We expect this to be in the range of 18% to 20% for the full year. We continue to deliver strong cash flows of $1.3 billion in the half. We declared an interim dividend of USD 1.30 which is unchanged from the prior comparable period. And finally, a reminder that from fiscal '27, we'll be moving to NPAT rather than NPATA as our core earnings metric.

Turning to the next slide, we presented the operating results for each of our business units. Andy and Dave have already spoken to the sales drivers. For CSL Behring, revenue was down 7% and gross profit down 7%, and the operating result was down 9%. Behring's gross margin improved slightly by 10 basis points, this reflects the positive impact of efficiencies in plasma collection and manufacturing and the growth in HEMGENIX and in Denbury. It also reflects headwinds from Medicare Part D and the sales declines in Albumin and KCENTRA. Medicare Part D alone represents a roughly 100 basis point margin headwind. Seqirus' revenue was down 2% and which is pleasing given the challenging market backdrop Dave spoke about earlier.

However, Seqirus' margins did come under pressure due to pricing in the U.S. geographic mix shift towards lower-priced markets and the noncontinuation of avian flu sales recognized in fiscal '25. Sales and marketing costs for Seqirus were up reflecting launches into new markets such as Germany and France. For Vifor, revenue was up 12%, driven by the strong performance in nephrology and its operating result was up 22% as we continue to leverage the P&L through efficiency gains.

On the next slide is an update on the financial aspects of our transformation program. As a reminder, we're targeting annual cost savings of up to $550 million by fiscal '28 with one-off restructuring costs of $700 million to $770 million. Our plan in fiscal '26 is to deliver $100 million of cost savings. And I'm pleased to say at the half year, we've achieved 60% of that target. In relation to one-off restructuring costs, we're about 2/3 complete. There are 2 areas that account for the bulk of these costs, employee expenses and we rightsized the organization and facility closures and asset write-offs.

Turning to the balance sheet on the next slide. Separate to the restructuring costs that I just discussed, in fiscal year '16 we'll be booking total after-tax impairment of approximately $1.1 billion with $1.05 billion taken in the first half. The impairments principally relates to 3 main areas: first, a write-down relating to our agreement to license self-amplifying mRNA technology. Since entering this agreement in 2022, we've seen a decline in COVID disease burden as well as a significantly more onerous regulatory regime in the U.S., particularly regarding mRNA vaccines. We're also impairing the carrying value of Venofer, our iron sucrose treatment for anemia. The impairment follows the licensure of 3 generic competitors in the U.S. in the latter half of 2025, resulting in reduced future sales expectations. Reduced forecast for Venofer have minimal impacts to the group with Venofer contributing approximately $117 million in sales last fiscal year. Finally, our decision to accelerate investment in Horizon 2 manufacturing capacity has led to the redundancy of some plant property and equipment.

In the second half of this fiscal year, we anticipate an impairment of approximately $70 million post tax relating to Vifor. As we previously noted, before sales have grown significantly following its inclusion in the U.S. TDAPA framework. However, TDAPA inclusion is expected to roll off from December 2026. These impairments are almost entirely noncash. And as I mentioned earlier, have minimal impact on the forward-looking prospects for the group. Our balance sheet remains in a strong position with leverage of 2x at December 2025 after repurchasing approximately USD 400 million of shares in the first half. This has given us the opportunity to expand our existing share buyback program for this year from $500 million to $750 million.

Moving to my final slide. We're maintaining guidance for the full year. We've set out here the drivers of our strong second half ambition and a bridge from our first half results. Starting with our first half group revenue that we announced today, if we simply double this and take off an amount that allows for the expected seasonality in Seqirus, we get a simple annualized revenue figure for the full year. On the right of the waterfall, we've shown the growth expected in the second half. In IG, we expect double-digit second half growth for both PRIVIGEN and HIZENTRA due to our expanded field force in the U.S. direct-to-patient advertising and broaden contracting. For Albumin in China, as you heard earlier, we've already seen positive signs from our expanded commercial footprint across more hospitals and cities supported by our retail partnership with Baheal Medical.

And finally, we expect continued strong momentum in our recently launched products, HEMGENIX and ANDENBRY. We also acknowledge that there will be competitive pressures in other areas of our portfolio such as Ion, KCENTRA and Head and have taken these into account for our full year expectations.

Before handing back to Mark for Q&A, I'd like to make a few closing comments. We have significant untapped potential in this business. While our transformation program is progressing well, there is still much work and many more opportunities ahead of us to enhance growth and shareholder returns. I'm looking forward to working with Gordon to realize that full potential.

With that, I'll now hand over to Mark to coordinate the Q&A.

We'll now move to Q&A. [Operator Instructions] Our first question comes from Andrew Goodsall at MST Marquee.

Just to the ownership of the result and obviously with Gordon as the incoming CEO. There's a propensity in the marketplace to see a new CEO is sort of generally coming in resetting numbers. So just coming -- just asking directly on that ownership. Obviously, Ken's going through it in a bit of detail, but just wanted to hear from Gordon on that. .

Yes, I'm familiar with the model. The -- so yes, a lot bit term no ambiguity. I completely own the situation of the company is in at the moment, and that's a bit of my job is to look for the opportunities that Ken referenced earlier and do something about it.

Okay. And then the second question, just perhaps Andy, just on confidence around second half IG growth. And obviously, we're flown a few contracts, including the -- well, a step-up in your participation in the Aussie import comp contract. Just any more color and detail you're sort of willing to share with us that gives you that confidence in recovery.

Thanks for the question, Andrew. Clearly, we knew that the first half was going to be a challenging period for our IG portfolio. And we faced many headwinds here in the first half and adverse impacts that are going to be predominantly behind us in the second half. The kind of U.S. Medicare Part D reform, that's a few points of growth that were impacted the impact of the lost contracts internationally, which we've worked a lot through, that's another few points of growth. And then there was some choppiness in trade purchases as well.

So with those behind us and the investments that we've made, as I kind of articulated, in our U.S. field force in our direct-to-patient campaign in our broadened contracting platform. Those all have started in recent months to have some momentum. We see, in the U.S., PRIVIGEN is growing faster than the IVIG market. We see HIZENTRA holding share. We see our growth ex U.K. internationally in the high single digits and that will all benefit us in the second half. We think that probably a better barometer is trailing period growth, which was 3% versus the trailing period. And we think that's probably a more appropriate kind of barometer for full year.

Thanks, Andrew. Next question comes from Saul Hadassin at Barrenjoey.

Just first question, sort of cognizant of the pressures for IG now been in the half, but maybe 1 for Andy. KCENTRA, IDELVION, HAEGARDA, effectively all delivering growth well below expectations, at least what the market was looking for. you talk to some of the measures that you're introducing outside of IG specifically that might see some recovery in those particular products?

Sure. Saul. Thanks for the question. Certainly, KCENTRA is predominantly a U.S. story where there was an introduction of a competitor a couple of years ago at a significantly lower price point than KCENTRA. And so we've been competing well. We've actually decelerated the impact -- it's now from a volume perspective in the single digits, but there's a price impact. We've been broadening our contracting approach. We now have a U.S. hospital field force that's promoting not only PRIVIGEN but KCENTRA as well, which is very helpful. And we're being successful with contracts. And actually, our volume growth in contracted accounts is growing in mid-single digits.

But that doesn't take away that the return to growth for KCENTRA is going to take time, and it's going to be predicated upon broadened indications in DOAC reversal and in cardiac surgery, which are coming in the next few years. Just to comment, IDELVION is actually holding its own in hemophilia B quite nicely in the face of 3 new subcutaneous competitors. HAEGARDA also is holding its own lots of innovation in the hereditary angioedema space. And so that was as expected for us, especially with An Denbury performing so well. I think I covered the major products that you mentioned.

And you can ask a quick follow-up, just to the outlook then for the second half gross margin per bearing Clearly, first half, not a bad outcome in terms of some degree of margin expansion. Is second upon to deliver even more margin uplift on the basis of benefits coming through from Ricard.

Saul, it's Ken. I take that question. So as you saw margin in the first half were marginally up, and that reflects a number of positive drivers. So what we're doing in plasma collections, plasma manufacturing and then the growth that we've seen in some of these high-margin products that Andy spoke to, basically, HEMGENIX and in Denbury have been positive to margin. And then there's some -- also some headwinds. So we've seen a decline in albumin. We're seeing a decline in KCENTRA and then also the Part D impact -- we will cycle through those, but they're embedded in the results for this full fiscal year.

So the medium-term outlook for margin is definitely continuing to trend upwards. But for fiscal '26, it will be broadly stable, marginally up, consistent with the first half.

Good. Thanks, Saul. Next question comes from Steve Wheen at Jarden.

It's a bit of a continuation of the gross margin in bearing I mean there's clearly a lot of moving parts here and a lot of headwinds based on some of your high-margin products doing worse than less than expected. I'm just trying to understand what is driving the ability to offset that. So you've called out 100 basis points from Medicare Part D, but what other sort of -- I'm ultimately just trying to quantify the upside to the margin in that half that you're getting through efficiencies and some of the other initiatives you've put in place?

Sure. So I'll expand a little bit. So -- we have a number of operational levers that impact margins. So what we're doing internal to the company, and they're all going quite well. So CPL is trending down -- we've previously spoken about the benefits that we're delivering through Horizon 1 yield improvement that continues to deliver -- we're taking fixed costs out across the network, including in operations, which impacts the gross margin -- some of that because of our supply chain lead times take a mile to manifest in the P&L. So as an example, if you recall, Rice and I know me, were only fully rolled out at the end of fiscal '25, and we don't get a full year impact of those benefits until fiscal '27. So I'd tell you on those internal operational levers, we feel pleased with progress.

And then, of course, there's the product mix. And so that goes back to the topics that we've already discussed. -- and a mixture of drivers here, some tailwinds and some headwinds, which I think Andy has already covered.

Yes. And can I just follow up on that? Clearly, price is a major driver to margin. Could you just talk to some of the pricing dynamics that you've seen in IG in the U.S. specifically and then maybe an albumin as you start to look into some of these into this retail channel?

Yes, I'll take that, Steve. Look, price for IG, particularly in the U.S., prices are relatively stable. We're able to take modest price increases. And then, of course, there's a lot of contracts in the U.S., particularly for IVIG. That being said, in this period, the Medicare Part D impact is purely on price. So you see this negative impact on price, and that's where we capture the Medicare Part D. But that will be behind us as we move into calendar year '26 and going forward.

For albumin, clearly, in China, which is the highest price realization for albumin globally, it will continue to be so even with the cost controls. But we are being thoughtful and modestly taking some price down in order to grow volume because it's a volume play for albumin as we expand geographically, but modest taking price. And around the rest of the world, prices are relatively stable for albumin, but significantly lower than China and the U.S. And so our strategy for albumin is to continue to expand in China, and I think we'll see a nice turnaround in the second half.

Thanks, Steve. Next question comes from Laura Sutcliff at Citi.

Could you please explain a bit more what the phrase broadened contracting approach mean?

I think that's to me, Laura. -- happy to. Look, broadened contracting is our attempt to kind of encapsulate both in the U.S. and internationally, a recognition, particularly with IG that there's opportunities for us to grow volume by being more robust in our contracting approach. In the U.S., there are segments in the hospital segment, in the specialty pharmacy segments and in clinics and we had been a little narrower in our approach historically of where we contract and where we don't. So now we're being much more purposeful. And internationally, of course, 60% of the IG volume goes through tenders. And we've been very thoughtful in improving our capabilities, database analytics, modeling, game theory, so that we can be successful in the tenders that we think are appropriate and that we choose to win. And so that's kind of what the phrase broadened contracting speaks to.

Just a follow-up on that, does that mean you're willing to be a bit more flexible on price? Is that what that is really getting at?

Yes. I think we absolutely are being thoughtful and purposeful -- at the end of the day, there's limited supply for -- and so we want to allocate our limited supply in areas where we think it's appropriate and at the price points that make sense for us, but we also don't want to be predictable. And so that's part of this as well.

Thanks, Laura. Next question comes from Dave Stanton at Jefferies.

Just a modeling question for me. And do you expect revenue growth in albumin in F 26 on F 25, please?

Again, I think that 1 goes to me, Dave. So albumin, the second half is going to be much stronger than the first half, not only because the real impact was in the first 3 months of the year in China. And the investments that we quickly made that I articulated are already starting to pay dividends. And so we're going to see a nice turnaround in the second half. Can we make up for the entire shortfall in the first half of the second half. I think we're going to get close, but I think modest year-over-year decline in albumin in '26 with a return to growth in 27 is probably more appropriate guidance.

Very clear. And my follow-up and 1 for Ken. You have mentioned in F '27 and F '28 that you're looking for high single-digit guidance at NPAT previously. Does that still hold?

Sure. So we obviously need to get through the second half, and we've been speaking a lot about that on this call in relation to the longer-term outlook for '27 and '28 seeing nothing that would lead us to change that outlook. That's always the case at the moment, we're working through the budgets for fiscal '27 and as is normally the case, we'll give more detail on that when we get to the full year result in August.

Next question comes from Lyanne Harrison at Bank of America.

Can I come back to IG. There were some comments in the prepared remarks where you talked about the IT market demand and supply are well balanced. -- that's very different from previous comments where you talk about unmet demand and also in response to Laura's question saying that there's limited supply of IG. So I just wanted to understand, are you seeing different demand supply dynamic in different geographies. Can you talk about the United States versus rest of the world core countries? And then can you also speak to the expanded sales force in the United States, targeting certain accounts? Is that where you're seeing competition. And as a result, you're having to invest more in sales and marketing there.

Thanks for the question, Leanne. So let me try to clarify my comments about the IG market dynamics. First of all, the unmet need for IG is significant and the diseases that IG is used to treat primary and secondary immunodeficiency, CIDP, we see the diagnosis and the utilization of IgE growing high single digits, low double digits. My comments -- and we think that's going to continue for the foreseeable future. That being said, my comments about supply and demand balance were that just about all companies now, the major companies are vertically integrated and are very thoughtful in the amount of plasma that's needed to collect to deliver on looking a couple of years out, the demand projections for IgE. And so we're in an environment that there's sufficient supply generally to meet the projected demands for IgE. And so that's how I refer to a well-balanced market, but growing I mean, absolutely growing and attractive. And in our position as a market leader, we continue to expect to be a market leader. It's growing in the U.S. The demand is growing internationally. We do see the per capita usage of IG is more robust in the U.S., in Australia, -- and in other geographies, right, there's just not as much IgE. So we think the global growth is going to continue.

To your questions about the expanded field forces, I mean, look, we've been very thoughtful but believe that there is an opportunity for bearing to grow faster than the market in IgE over the midterm by ratcheting up our commercial capabilities and infrastructure. And so we created a new hospital focused field force that's promoting PRIVIGEN and KCENTRA at the beginning of this fiscal year. And we also increased the scale of our IgE immunology field force that promotes HIZENTRA and also PRIVIGEN and we think it's just to help us continue not to stay competitive, but to be successful in growing faster than the market over the midterm.

And just a follow-up. If we could come back to KCENTRA. So obviously, if we think back to the December '24 half, that's when you had a contract last year. But since then, we've had 3 halves of, I guess, declining KCENTRA revenue. So I hope that, that would cycle out this half. But you talked about I guess, competition in that space. Can you talk about that a little bit more and what your expectations are for the second half of '26?

Sure. So the KCENTRA dynamic is that the competitor that entered and KCENTRA was the only 4-factor PCC in the U.S. And now there's another competitor. They came in with a price point, I think the average selling price is about 30% below KCENTRA. We've been very thoughtful about where to contract so that this doesn't become -- so that it makes sense for us. But it is fair to say that, I mean, an analog show that it takes several years to reach an equilibrium when there's a market entrant with a price differential like that. And so that's what we're working through.

We're pleased to see that we're winning contracts and that with our broadened portfolio, it also gives us a leg up here to be successful winning contracts. And in those areas where we have contracted volume, we're growing. The 4-factor PCC market is growing in volume, but the revenue of the market has come down, not surprisingly, given this dynamic. And I think we're stabilizing. But I do think a return to growth is going to still be a few years out as we broaden indications.

Next question from David Bailey at Morgan Stanley.

Can you've given some numbers there for the operating expenses R&D and G&A pretty much being the same in the second half, just with the initiatives coming through on the IG side, how should we be thinking about that sales and marketing line for the second half?

So as a percentage of sales for bearing reasonably consistent with the first half, similar with Seqirus percentage of sales not as helpful first half, second half, just given the seasonality, but hopefully, that gives you a sufficient guide.

Yes. No, that's helpful. And then maybe just in terms of the period bleeding segment, obviously, case entry is under a bit of pressure there, but there is some things going on to potentially look at label expansion, similarly with fibrinogen and acquired for benign deficiency. Just maybe talk to us a little bit about where the life cycle management programs are at and then when we could potentially start to think about those -- the benefits from those label expansions coming in into the top line, the gross profit line.

Sure, David, I'll take that one. Look, this space, we think is attractive, and we have a right to win. With KCENTRA, we've got the cardiac surgery life cycle that's underway, and we're working with the FDA on a path forward for DOAC reversal indication for KCENTRA. Those will both take a few years. So we're looking at 2028 fiscal year and beyond. We did get feedback from the FDA on our Riostep expanded label where they had some questions about clinical evidence, and we're working with the FDA to work through to get through that. So we do hope to be able to have an update and to broaden the indication for Riostep fibrinogen. And then, of course, our ArmX partnership which we think will be really great that, that should come online if all goes well in the end of the decade here, 2029, 2030. So it's going to take a little bit of time, but this is a space where CSL certainly is poised not only to compete but to compete successfully and win over time.

Next question comes from Andrew Paine at CLSA.

Just wondering if you have any thoughts around visibility through half 2. just in terms of reaching your NPATA guidance, really just thinking about the October update where the focus is on albumin and flu and less market expectations, Seqirus outperformed and albumin underperformed. Just trying to understand the moving pieces here and keen to know how much clarity you have on underlying trends through to half '26.

So incorporated within our guidance for the full year. Obviously, the dynamics we've seen pan out in the first half. So within that, security collar doing a little bit better than what we thought a few months ago. I think, a solid result for the 12% up, probably unlikely to hold that percentage growth over the full year. And then Andy has spoken to the bearing drivers. So that's all built into the numbers. Happy to elaborate if there's any other further detail you're looking for?

Yes. Just I guess, in terms of visibility that you have for these numbers through the half and I guess, leading into the half, it seems like there was quite a material shift in the last 2 months there versus what we thought was going to happen in October. I guess what happened there? And I guess, what's the confidence in the second half that you're not going to see some moves like you saw in those last 2 months?

Sure. So we've touched on some of that to elaborate. Obviously, with the Seqirus business, there is some inherent uncertainty in U.S. vaccination rates. And we've been pleased to see some stronger late season vaccinations that have obviously then being incorporated into the Seqirus result. With respect to Behring, the progress through the half varied quite considerably. So if you recall, it was at the Annual General Meeting that we spoke about some of the headwinds that we're seeing in China. And I think the team pivoted very quickly to put countermeasures in place and as you've heard from Andy, those countermeasures are having some really tangible positive impact. So I would say the results that we're seeing over the latter part of the half, to us, give us a good indicator of the trend that we expect to see as we move through the second half.

Next question comes from Sacha Krien at Evans & Partners.

Similar vein of questions. to Andrew. I'm just wondering, it looks like the composition of your 2016 guidance has changed. I'm just wondering how much of that is attributable to better performance on costs. Can it sounded like those numbers that you were sort of talking to in the second half well below at least what the market was expecting. Is it just the $100 million saving from the cost-out program in FY '26?

So I'll talk generally about costs. So yes, the $100 million target that we have been working towards for fiscal 2016. We're happy with progress against that target. We are always looking for efficiencies across the group. And so if you look at, for example, our G&A line, I think at the full year result of 1.25 million, we guided to a G&A outcome of about $1 billion in the full year. I think we're going to come under that equally in R&D. I think at the time, we guided to full year outcome of about $1.35. I think we'll be less than that. So we're very, very focused on taking out inefficiencies and unproductive spend. But importantly, where we see opportunities to grow the business, we will do that. And so I mentioned in my opening comments on R&D, we're investing in some exciting candidates where we see the opportunity. So that's the balance that we're making. But yes, there are some nice cost benefits that are flowing into the full year.

Yes. And just on -- sorry, to look at FY '27 a little bit, but you sort of flagged to date falling away for Vifor and we've heard of some regulatory issues around taboos. I'm just wondering what Vifor looks like into '27 given those issues, what the headwinds are from the start.

Sure. So I'll touch on Vifor and then I think we'll get Andy to make some comments with respect to Tania. So before very much 2 different businesses. So with respect to iron, you would have seen that iron declined in the first half. because of the well-known drivers there with loss of exclusivity. So we will see continuing declines in iron. Andy spoke to some of the initiatives we're doing to cataract up. But overall, I think that will net out with a decline in iron. And then, of course, in fiscal '27, we have the impact of the loss of exclusivity for Injectafer.

With respect to the nephrology portfolio, the growth has been very strong in recent periods. A lot of that has been driven by Vifor. And as we've articulated today, you need to be aware that the Vifor TDAPA reimbursement period ends at the end of fiscal '26 -- sorry, at ends at the end of calendar '26 and the way reimbursement works for that channel in the U.S., we would expect to see a significant drop in Vifor revenues from that point in time. So that's going to temper the nephrology growth rates that we expect in Vifor.

And then maybe to just add the rare nephrology portfolio with the launches, Phil Spari, internationally is growing well. Tavnios as well. You mentioned Tavis. And we're aware of the European Medical Authority Article 20 assessment, and we're working with the regulatory authorities following that procedure. So we just have to follow the process and allow that to play out.

Next question comes from Devin Thillainathan.

I guess I just want to understand a little bit more in terms of your sales force changes that you've put through for your IG business. I guess the question really is about having seen the market share loss you've seen across the last 12 months and the change of CEO that you have announced. Just curious to understand perhaps if there were any missteps that were made across that time frame on the commercial execution stage. And then trying to, I guess, understand effectively if that assists you in growing your share again, if you understand the line of questions.

So let me take a stab at addressing some of your questions. Look, we are looking to grow our leadership in Ig not only growing with the market over the midterm, but growing faster than the market. And we see that there's opportunities everywhere. The way to be more successful in the U.S. is through the full range of commercial levers that we're pulling. And some of those include kind of share of voice on the ground -- and so we've expanded our field force in the hospitals. We've expanded our office base field force. And now we're actively promoting both PRIVIGEN and HIZENTRA. We are in the U.S., we have a little bit lower share in IG, IVIG with PRIVIGEN than we do internationally, and we think that there is an opportunity to expand our business. And so that's definitely part of our strategy going forward. That's something that has been well thought out over the last couple of years and will take time to play out, but really pleased to see PRIVIGEN for the first time in a while growing faster than the market, particularly in the important hospital segment in the U.S. recently.

So I think it's just 1 example of our mindset to not rest on our laurels, not expect anything to be given to us, but to resource our teams appropriately to enable us to address the unmet need and to capture more patients with the CSL Ig franchise.

Okay. And then just a follow-up then, maybe a question for Ken, with the Behring gross margin, just thinking about the moving parts there. In the first half, I guess, we had a pretty big headwind with Medicare as you called out 100 bps and the albumin pressure. But I think through the second half of 2016 and those 2 factors kind of fall away. Would you then expect you would have a better margin performance from an accretion perspective in the second half?

Yes. So just to go back to my earlier comments. Thanks for the question that over the full year, we guide to expect margins to be a little bit up -- and so it reflects a lot of different drivers, so I won't repeat everything else that I've said, but there's operational drivers, internal drivers that I think are going well and then we're working through the impact of the product mix shifts on the top line. Overall, medium-term outlook remains for an upward trend, but I think we'll see a slower margin expansion in fiscal '26.

Next question comes from Craig Wong-Pan at RBC.

Within IG, could you just explain the competitive dynamics you're seeing, given you have been underperforming peers like is the field force expansion in response to something your competitors have been doing?

Look, we're proud of our market-leading position in IG globally. And we're always looking for ways to accelerate growth. And we did a thoughtful review and identified opportunities to resource ourselves a little bit more strongly in the U.S. And I think it's not reflective of an acute shift or a competitive approach. It's just a recognition that we're always looking for ways to allocate our resources in the most impactful way to drive the business. And so certainly, that plays out. The U.S. dynamics, as they are in other markets are quite always evolving. The customers, the channels, the level of concentration versus fragmentation. And so this was a purposeful investment. And we're already seeing it pay off, and so that, that will drive further investment.

I mean another example is the direct-to-patient campaign for HIZENTRA where we know that HIZENTRA is the most convenient subcutaneous IG offering for patients and many who are on IVIG or diagnosed with these conditions that HIZENTRA is a better total solution for them. And by going directly to the patients, which is a trident approach in many other disease areas, but had not been done in the IG space before that this is an opportunity to further differentiate ourselves. And of course, for CSL, there's a benefit of having -- expanding our leadership in SIG in the U.S. So I think it's all just thoughtful and smart commercial execution.

Okay. And then just moving to iron that decline. Could you help us understand how much was lost volume or how much was kind of price that you had to -- like price reduction you had to incur to keep the volume?

I can take that one. So I would tell you, overall, the decline is probably about 80% volume, 20% price over the year as a rough guide.

Next question comes from Thomas Wakim at Bell Potter Securities.

Just on the bearing gross margin. So you're expecting, I guess, a bit of a small step-up in FY '26. But longer term, have there been any changes to the longer-term expectations around getting back to bearings kind of pre covered gross margin level?

No change in that longer-term expectation -- as you know, we're not going to put a time on it. But I think what's important is that we'll continue to deliver margin expansion over time. That's a really important metric for us, and we continue to deliver against it.

And then just a second question, please, on IG. Can you give us any update at all about the competitive dynamics within the CIDP indication obviously, some peers in this space have made some pretty significant sales gains with FcRn products. Have you noticed any impact at all of that on your IG products?

The dynamics in CIDP with the introduction of FcRns are aligned with what we represented at Capital Markets Day. We see the vast majority of the utilization being after IG in the second and third-line settings. And so IG continues to be the market-leading standard for first-line utilization. And in fact, we see that for a subset of patients, the benefit risk of FcRns kind of wanes and we see them returning to IgU. So look, it's good for patients to have more options given these are chronic diseases. But I'd say it's -- nothing has changed over the recent 6-month period here.

Next question comes from David Stanton at Jefferies.

Yes. So just a follow-up for me, gentlemen. With the cost savings you're planning to get over the medium term, can you give us some ideas about whether you'll reinvest that -- those cost savings you've outlined? And so what percentage of the total and where potentially might you reinvest?

Sure. So with the cost savings, what we've said before, which remains the case is that we will balance capital allocation between reinvesting in the business to drive growth. And so in the most recent period, I spoke about the reinvestments in commercial. But we need to be satisfied that those reinvestments are going to drive an attractive ROI. And if not, then obviously, those benefits will be released to the P&L with the objective of making sure that we can deliver adequate attractive returns to shareholders over the near, medium and longer term.

In relation to a fixed metric when you look forward, that's not a metric that I can give you because it depends upon the quality of those reinvestment opportunities that come up at the time. So there will be a mix. We are looking to reinvest in growth. But we are also looking to drive P&L leverage. As I mentioned before, gross margin growing faster than revenue and operating margins growing faster than the gross margins and cost-saving initiatives and releasing a significant part of that to the P&L is fundamental to that.

Look, there are no further questions in the queue, so I'll draw the briefing to a close. So thank you for your interest, and goodbye.

Good afternoon, everyone, and thank you for joining us on short notice. My name is Mark Dehring, Head of Investor Relations at CSL. The focus of today's call is CSL's leadership transition, and we appreciate your interest and engagement in this important juncture for the company.

To be clear, we are not addressing financial results during this session. There will be a separate call tomorrow dedicated to our financial performance, where you'll have the opportunity to ask questions regarding CSL's results and outlook. Today, our intention is to provide context and clarity around the leadership change and what it means for CSL.

I'll now hand you over to CSL's Chairman, Dr. Brian McNamee.

Good afternoon, everyone, and thank you for joining us on such short notice. Given the importance of the announcement, I wanted you to hear directly from me and have the opportunity to meet Gordon Naylor, who has just been appointed as Interim CEO and Managing Director and will begin in the role tomorrow.

Paul McKenzie will be retiring from the company. On behalf of the Board, I want to sincerely thank Paul for his dedication and service to CSL over the past 7 years, both as CEO and previously Chief Operating Officer. Paul has made a significant contribution to CSL, particularly in optimizing our operations, including significant progress on Horizon 1 and 2, leading global initiatives through challenging times and drove plasma collection volumes to above pre-pandemic levels. He drove the transformation of our R&D reorganization, reducing fixed costs and infrastructure. Under Paul's leadership, CSL launched the first gene therapy for hemophilia B, HEMGENIX, and the launch of our monoclonal antibody for hereditary angioedema and Dembri.

After careful consideration, the Board has determined with Paul that now is the right time for new leadership to continue to drive CSL's strategic transformation and performance. Gordon's proven track record and deep knowledge of CSL's business make him ideally placed to do this while we conduct a global search for our next CEO.

Many of you will know Gordon. He was previously CSL's CFO. During his 33-year tenure with CSL, he played a pivotal role in our rise to global leadership in plasma therapeutics and vaccines. Gordon helped design and build the Broadmeadows facility and then was the first Chief Engineer of that site. He was a key player in the globalization of the company and was heavily involved in all major acquisitions that drove the establishment of CSL Plasma, Behring and Seqirus. Gordon was President of Seqirus, quickly taking from a business that was losing $300 million a year to profitability and market leadership through its differentiated portfolio. He also took CSL to global leadership and at different times, ran the global supply chain and IT.

Anyone who has worked with Gordon will know he is a clear thinker, calm under pressure and leads teams to success. Gordon is fully empowered by the Board and has the mandate to implement any changes necessary to drive the company's performance. Gordon's priorities will be to bring greater focus, accelerate the ongoing strategic transformation and to enhance shareholder value.

At this point, I'd like to hand over to Gordon to introduce himself and share immediate priorities.

Thanks, Brian, and thank you to the Board for your confidence. I'd also add my thanks to Paul for his leadership and commitment over the past 7 years. As Brian said, I have a long association with CSL even before it was listed on the ASX. CSL is a great company with innovative platforms, world-class people as well as differentiated medicines and vaccines that are essential for patients and communities globally. There remains significant unmet medical needs within our therapeutic areas and the broader global community, and we expect the demand for our existing and new treatments and vaccines to grow in the coming years.

Interim does not mean I'll be taking a back seat. My experience at CSL means that I can hit the ground running and ensure we make significant progress in this period. I will be able to help accelerate our transformation while the Board conducts a search for the next CEO and MD. I'll be working closely with the Board and the strong leadership team that Paul has assembled to execute our transformation and drive our strategy forward. I'm looking forward to meeting with many of you over the coming weeks. I'm excited by the challenge ahead. Mark?

Thanks, Gordon. We'll now open the lines up for Q&A. First question we have is from David Low at UBS.

Gordon, just trying to understand, I mean, we've had a lot of updates from CSL through the AGM and then the Capital Markets Day. Are your priorities going to be -- do you expect them to be well aligned with what we've already heard? I mean, are there changes coming? Are there going to be changes to the top-level management do you expect? I mean I guess I'm trying to understand is this a step towards stability or whether we're perhaps going to go through another period of further changes for the business?

David, I can't really comment upon the prior announcements. But I guess the broad point is that the foundations are very sound here. And so my role give the Board the space to select the next CEO, continue with the transformation work that's been going really quite well and which is well directed. And then understand what the journey CSL has been on over the last decade or so has been all about and really explore the opportunities which come with the portfolio we have today and just -- and I think particularly to look to profitable growth from here. So that's broadly the approach. We'll see how we go on all the specifics when we get there.

Next question comes from Laura Sutcliffe at Citi.

Thinking about your search for a CEO. Do you expect to be looking for someone who will pursue a traditional look at CSL for the future? Or are you looking for someone who's going to cast a critical eye over the structure and function of the group? Perhaps you could describe what strengths or other criteria like location and so forth, you're prioritizing in your search?

Look, thanks, Laura, for the question. As you can imagine, the Board is thinking deeply about the attributes that we feel we need for the next 5 and 10 years. And that was really part of the discussion with Paul McKenzie that we felt we'd made excellent progress on the transformation. But in the dynamic markets in which we operate, we need new and broader skills to take us to improved performance commercially and also broaden our pipeline activities. So when we think about the sort of skills we need, we -- the benefit of having Gordon in this interim role is we can take our time to get the best candidate we can find because we have great confidence in Gordon. You couldn't find a better person to do the interim job given his deep understanding of the business and really his track record of performance.

So we're very clear that we're looking for someone who can take the great strengths of this organization. And I can assure you, this is still a very strong organization that generates very strong cash flows as a business. It has significant unmet medical needs in much of its portfolio. So we have -- we believe we have opportunities in the next 3 to 5 years, both from efficiencies through the Horizon 2 program and then portfolio to grow. The attributes, therefore, of the next CEO is someone who can execute after Gordon on this portfolio and assist us in growing consistent with the stable strength we have. So I don't see significant change. It will be a global search. It's clearly somebody who will have had global experience. And the job -- the CSL job is essentially a Northern Hemisphere job with a significant Australian attribute.

Thanks, Laura. Next question comes from Steve Wheen at Jarden.

Thanks, Mark. Just a question for you, Brian. Just at the AGM, it was indicated that the Board gave Paul their full support. And I just wondered what's happened, if anything, between October and now for that to no longer be the case?

Steve, again, if we go back to the AGM, I was crystal clear in my speech, we had a sense of urgency, and we had 5 critical things that we had to work on. If we go back to my speech, some of them were what I'd call operational transformation, but 2 of the others were about commercial performance, execution and portfolio. And when the Board sat down recently and looked at our business and thinking about where we need to go in the future, we, in discussion with Paul, recognized he didn't have the skills that we wanted for the future. And therefore, it really we discussed this question of him, therefore, retiring. And so to some degree, I'd say there were clear signs at the AGM that we had a sense of urgency of getting on with things. And we've made excellent progress, I think, on the transformation, which you'll hear of tomorrow.

But we're impatient as shareholders cannot be happy with the performance because the Board certainly is not happy with the performance as well. So it's our job to return to growth, return to the sort of strength that we believe we have and are recognized by the market and will be reflected in the share price. These things, enhancing shareholder value is central to our thinking of this transition.

Next question comes from Craig Wong-Pan at RBC.

Just wanted to understand like the timing. I mean, just the day before your result, there's a leadership change. I mean, was there any disagreements between Paul and the Board about, I don't know, strategy or just that sort of made his position untenable?

No, I mean -- sorry, excuse me. The rationale for doing it the day before is so that we can announce it. So it doesn't confuse the results presentation tomorrow, that Gordon and Ken and the team will lead that discussion on the performance and the outlook for the rest of the year, et cetera, and that you won't be surprised when Gordon is there, and it's not Paul McKenzie. So the whole idea was to make sure we made this announcement and provide an opportunity for the results -- to focus on the results.

Next question comes from Andrew Goodsall at MST Marquee.

It's sort of first 100-day type question just to Gordon, whether you sort of expect to be in a position to sort of lay out a plan of action, certainly for those sort of near-term execution type plan.

So I've got another 100 days if you're asking this question?

Yes.

Yes, so it's obviously early days. I think I refer back to my earlier comments, I think we're starting from a pretty good place. It's exploring the opportunities and finding out how to drive greater profitability in the company. I think, Andrew, that we're pretty engaged with the investment community and with the analysts and so on. And so you'll continue to get updates. We'll certainly be talking about a lot over the next few weeks. So it will be an ongoing dialogue, I think.

Next question from David Bailey at Morgan Stanley.

You've mentioned some of the opportunities over the medium to longer term under penetration of key markets, operational initiatives. My question is, have you seen anything over the last couple of months that would suggest a significant difference in the growth outlook from here? I know there was some medium-term guidance or '27, '28 EPS guidance of sort of high single-digit growth. Is there anything to suggest that, that growth rate will be materially different? Or is this more of a change to think longer term about the direction of CSL more broadly?

Look, David, I think I'm unaware of those things you're describing. What I can say is do we believe that some of our core products in their portfolios, whether it be immunoglobulin, whether it be hereditary edema, et cetera, those products and they have an opportunity to continue to grow because their unmet medical needs. We see no change in the outlook for those products. I'd say Seqirus has been difficult to predict the market. It's very dynamic. And as you've seen, it is true that it's been quite a complicated year for us on Seqirus. But I'd say the reality is that there's also a lot of influenza disease out there. So our fundamentals haven't changed. And I think the outlook for our core products haven't changed.

Next question comes from Sacha Krien at Evans & Partners.

Look, we've seen the CFO and the CEO depart in, I think, a matter of 4 months. I'm just wondering if there's any other senior executive departures we should be aware of? Or do you feel like you have the right people in place to take the business forward underneath Gordon?

Look, Paul, as we've noted earlier, has done really sterling work. And part of that has been to build a team that I think is strong. So not -- I think the answer would be nothing anticipated.

And look, I'd add to comment that I think that Joy's retirement enabled us to promote someone we had a very high regard for internally to be the CFO. So to some degree, retirements give opportunities in companies as well to promote people, to try new people. Sometimes you go outside and sometimes you do internal appointments. I think I wouldn't overread into this reality. I think that, as Gordon said, Paul has created a strong team. And we're just determined with a sense of urgency to get on with things, to move things faster, to do things better in the marketplace. Yes. So it is a sense of urgency that we share with our shareholders.

Next question from Dave Stanton or David Stanton at Jefferies.

Question for you, Gordon. Look, given you've previously run CSL Plasma and you had a look at it for a little while now, what are the major issues in the collection business that you see now?

Thanks, David. I think it's probably a bit early for me to be doing diagnosis. But I'd just say that we will be looking very closely at all parts of the operation and answering questions like that one. And just more broadly at how we take -- find a pathway forward that fully explores the opportunities that the company has.

Next question comes from Davin Thillainathan at Goldman Sachs.

I guess just a question for you, Gordon, having been successfully turning around the Seqirus business and your time there. When you look at the situation that you are inheriting on an interim basis for the broader business, are there sort of any parallels that you would look at having done the turnaround at Seqirus that you could perhaps lay the groundwork for Behring for, I guess, the ultimate CEO to take over from?

Thanks for the question, Davin. I think maybe a little bit about approach. So the Seqirus turnaround started with building a strong leadership team, and we've got a good start on that. It also started with quite an honest assessment of the situation and clear communication to the organization of the challenges and the opportunities. So at this point, I'd say that will be the same playbook, at least as a starting point.

Next question comes from Saul Hadassin at Barrenjoey.

Just a clarification, I guess, Brian, you mentioned the strength of the team below Gordon. I'm just wondering, does the search for CEO -- does it exclude internal candidates? Are there any internal candidates that you're looking at? Or is this purely an external search?

We definitely look internally as well as externally. And so that's how we see it. But -- and with Gordon, we have the great opportunity, as I said, to take our time, get our brief right and find the best person possible. That -- but there's no doubt that will include looking inside the company as well as externally.

Next question, Steve Wheen from Jarden.

Just a follow-up for you, Gordon. I'm just wondering if there was any scenario where you might accept a full-time role as CEO? And if you've got any views on the demerger of Seqirus given that was your baby.

So you can do endless scenarios. I think the process that Brian outlined is the right one. The company needs to thoughtfully consider all of the different alternatives that they have. Your second question demerger. So look, Seqirus is actually a hell of a good asset. This -- it's got a unique position within influenza as a result of the differentiated portfolio. It's grown market share since inception against much larger competitors and into a volatile at the moment, challenging market, particularly in the U.S. So this organization is doing really well.

Now the opportunity is to maximize the value for CSL shareholders. There's a timing question around that and whether it will be better in the hands of others. But certainly, at the moment, it's quite clear that we should press forward with creating a clear sort of separate operational identity for Seqirus within CSL. That's a sort of no regrets move to maximize the value within CSL's hands and then to maximize the optionality should it make more sense in the hands of others.

Thanks, Steve. We have a question from Sam [indiscernible]. Sam, forgive me if I pronounced your name incorrectly. Sam is from Residents AM. No. We've lost Sam. Next question comes from Sacha Krien at Evans & Partners.

I just thought I'd try with a follow-up. Brian, when you were mentioning some of the positive things that Paul has achieved, you mentioned R&D, restructuring, Horizon 1 and 2, but there wasn't any mention of collections or R. And I'm sure you're aware there was some discussion last week about whether or not CSL might need to go back to speak to Haemonetics. I'm just wondering if you can make any comment on that discussion that was out there last week.

Look, I just didn't want to go through all the good things that Paul did in the press release. But I think that we've done well on plasma. I think Rika is a good -- has been good for us. Gordon -- I mean, we have a great leader in the plasma business that knows Gordon really well. I mean I think there's no doubt Gordon will look carefully at the plasma business, but it is performing well today.

Okay. Thanks, Sacha. We have 2 more questions in the queue. We'll take those, and then we'll close the call. Next question, a further question from Craig Wong-Pan at RBC.

Brian, you mentioned Gordon has the full support of the Board to make changes. I know that Gordon will need a bit of time to review and assess the business. But were there specific areas of change the Board has in mind?

Look, I think the Board are of the view that the transformation program that Paul Mack put in place is the correct one. There's no change in strategy at all. Where we need to focus and get greater execution on is in the product portfolio and in the commercial activities of the company. And so they are the areas that the Board want to complement really the good work -- the great work that's been done to date to put us in a strong position for the next wave of growth. That's what we're intending to do.

Thanks, Greg. And our final question comes from Laura Sutcliffe at Citi.

It's for Brian. The business is obviously undergoing some quite substantial leadership change at the moment. Just wondering if that affects how long you might want to stay in your seat as Chair of the Board.

Look, I'm committed to the company. I was voted, if I recall a bit over a year ago for my -- this term as on the Board. Look, I'm very committed to the company as all the directors, Gordon has our full support. And so I'm certainly very keen to be here to assist in steering the company forward and presumably be involved in the selection of the next CEO as all Board members will be. This won't be just a Brian decision. This will be a Board decision, and we have already a committee that's looking at it. So yes, I mean, this is -- we're all heavily committed and invested in the success of this company, and we're really keen for it to get its performance and the recognition in the share market of that.

Thank you, Laura. We have had one further question pop up, which we'll take that, and then we'll close the meeting. Vic [indiscernible] at Perennial Partners.

So I was just wondering about -- I guess, it goes to strategy. I mean we've talked a bit about execution today, but really, the company seems to be a little bit strategically at risk. So in these discussions, the Board sort of -- and that's a responsibility of the Board. So I'm just wondering where you're going with strategy and whether there's any strategic change as we go forward.

Look, I think as I said, both at the AGM and now, I mean, I think our strategy is clear. We have to extract more value from our existing business portfolio because we have lots of opportunity in the markets in which we operate. We have to continue to invest in life cycle management and product differentiation that I think is a significant priority for the company. We've done well, I think, with the launch of new product recently. So that will be a topic for tomorrow.

There's no change in strategy, but what we need to do is we need to harness the opportunity of what we have, get the efficiencies in the company that we're looking for, get the cost out that we're driven to and build a portfolio of products that are consistent with us operating as a rare disease company as well as, of course, supporting Seqirus, whether it remains in our current portfolio or whether we, at some stage, find a way to -- that our shareholders would benefit from it being separated to them because I am a believer in simplification. I think one of the issues that Paul Mack has had to deal with is the business got too complex and simplification to me, is a key thing we're looking at.

So I don't agree at all. I mean our strategy is clear. I think everyone in the senior leadership understands the strategy. We're about urgency and execution today.

And thank you, Vic, and thank you, ladies and gentlemen. That was our last question. Thank you for joining us. We will, of course, be speaking to many of you again tomorrow regarding CSL's financial performance and outlook. And I'll now draw the meeting to a close.

Hello. I'm Fiona Mead, CSL's Company Secretary. Thank you for joining us for the first session of CSL's 2025 Capital Markets event. Our presentation tonight will start with some remarks from CSL's CEO and Managing Director, Dr. Paul McKenzie, and you will then hear from the General Manager of CSL Securities, Mr. Dave Ross.

Before we get started, I draw your attention to the legal disclaimer, which [indiscernible]. It's now my great pleasure to introduce our CEO, Dr. Paul McKenzie.

Thank you, Fiona. Good evening, everyone, and good morning to those online. It's great to see everyone here in the beautiful city of Chicago. I ran into Paul on the elevator. I was surprised how great the weather is here. But I know many of you traveled a long distance and to be with us here today, and we certainly appreciate that, and we want to acknowledge that because we know that journey is particularly a long one. We look forward to the opportunity to bring you closer to the CSL journey and our leadership team that I have here with me during the meeting as we explain our plans for the future.

I thought I would just take a minute to talk about where we're sitting, the hotel that we're at. It dates back to the 1920s. And actually, the hotel was built at the same time as a children's hospital. The Children's Hospital is called [ Shriner's ] Children's Hospital which has turned into a large network of children's hospitals throughout the U.S. in particular, that serves terminally ill children and supports their families. I always find a little bit of history is interesting to reflect upon a healthcare history for the Shriners in the area.

We will open our event this week with a real focus on CSL Seqirus. And in a minute, I will have a pleasure to welcome Dave Ross to the stage to give you an overview of that business. We understand there's going to be questions about the outlook for this part of the business. given the current market dynamics and our recent announcements, and we look forward into delving into those very specific questions that you have. We also know you're keenly interested in the core business of plasma and its future. and we intend to spend the majority of tomorrow discussing the core business and really getting into what that looks like now and in the future.

So it's my pleasure to welcome Dave to the stage for a look inside CSL Seqirus. Dave will be joined on the stage after his presentation by Ken Lim, our newly appointed Chief Financial Officer, and myself for Q&A. Dave?

All right. Thanks, Paul, for that introduction, and good evening, everybody. CSL Seqirus has been on an incredible journey of growth and market leadership since its inception 10 years ago. And I know that there are some current headwinds that we need to work through, but we need to put those things into proper context. Our business, our strategy and our prospects for growth are very promising.

So with that in mind, let me start by sharing with you the 3 things I'd like you to take away from our discussion this evening. The first is that influenza is a uniquely complex pathogen amongst the vaccine preventable diseases. And in that complexity brings opportunities for strategic differentiation. The second thing is that while there are near-term headwinds, we're confident that we will see a market recovery in the U.S. in the medium term. And the last and most important thing is how Seqirus is uniquely positioned to create value and outperform the market.

Now before I jump into the meat of the discussion, let me give a brief introduction to Seqirus and what sets us apart from the competition. Our incredible journey of growth and leadership is owed to our differentiation strategy. that's built on the balance of having the right vaccine technologies, a unique set of strategic capabilities and by creating the right customer experience for our health care providers that we serve. I am extremely proud of the Seqirus team and how we've created enduring competitive advantage in a very unique part of the vaccine marketplace. This is essentially a just-in-time business for a complex and changing biological product that operates in extreme seasonality.

Now what that strategy has gotten us to date is the following: what you're looking at here is our revenue share in red versus our 2 primary competitors from 2017 when we first executed our differentiation strategy. It shows consistent share growth year-over-year, which was generated through increased volume and by driving value through improved product and customer mix. It's everything that you'd expect from a well-designed and executed differentiation strategy.

Now to fully appreciate the value of our business, you need to understand that the -- what the underlying public health need is that it serves. And as the public health and economic stats on this slide make very clear influenza is not the common cold. It's far from it. This is especially true for the most vulnerable of our populations for whom the consequences could be devastating. It's the high cost of this disease that fundamentally underpins the long-term value and viability of the influenza vaccine market. And it's also the reason there are well-structured immunization programs in all major markets.

So let's take a look first at the demand in the biggest markets outside of the U.S. In all of these markets, immunization rates peaked during the COVID pandemic when flu vaccines were used as a critical tool to protect the health system capacity that was needed to care for COVID patients. Since then, the rates in all of these markets have returned to and stabilized at pre-pandemic levels of between 40% and 70%. The real challenge that we're facing is within the U.S. market where vaccine hesitancy has led to a significant decline in immunization rates.

So like in the other markets, we saw immunization rates peak in the U.S., the first year of that COVID pandemic. However, unlike the other markets, the U.S. is experiencing significant vaccine fatigue that's led to a decline in immunization rate levels far below what was routine prior to the pandemic. Now this immunization rate decline equates to about 60 million fewer people being immunized each year. This is, quite honestly, a staggering number from a public health perspective, one that will not go without real consequences in cost from a public health perspective.

In fact, when you overlay the hospitalization trends, -- what you see is a clear correlation between the reduced immunization rates and the higher disease burden. This past flu season represented the worst influenza season in the past 15 years. So what we know is that disease is rising while immunization rates are declining. What we don't know yet is when that rising burden of disease will trigger the change in behavior that's needed to see immunization rates recover. In the end, we feel very strongly that science and data will prevail and the public health consequences will ultimately be too big to ignore.

Now in times like this, history can often give us a useful perspective. So on my next slide, I'm going to take you back to a period of about 2005 and 10 when there was a significant vaccine hesitancy across the vaccine marketplace, including influenza. Now during this period, influenza rates were hit with 3 challenges. There were behavioral challenges where there was significant miss information that led to an anti-vax movement, which in turn led to low confidence in vaccines. There were structural challenges that limited access for patients to immunization. And there were industrial challenges that resulted in unreliable supply.

But what happened was that the stakeholders across the vaccine market leaned in to solve for these challenges. They were all driven by the common view and understanding that the public health consequences of the approach at that time was resulting in cost and disease burden that was simply too high. So following their collective effort, we saw a nearly doubling of doses administered in the U.S. in the decades that followed. And at that same time, we saw the market value of influenza vaccine grow by nearly fivefold due to the launch of higher valued differentiated vaccines.

In the headwinds we're currently facing, we don't see the structural or industrial challenges that we faced at that time. What we're experiencing are the behavioral challenges caused by this is and disinformation regarding vaccine safety and effectiveness. And like with the last period of vaccine hesitancy, we believe that the science and the data will drive a similar response from stakeholders to take action.

Now in fact, we're beginning to see stakeholders mobilize. We're seeing patient advocacy groups that are implementing more and broader educational and awareness programs. We're seeing medical societies and newly formed advisory groups are taking steps to preserve and promote evidence-based decision-making. And insurers have confirmed their coverage of vaccines based upon their inherent health economic benefits.

And to support these efforts, Seqirus will continue to gather compelling evidence on the benefits of our vaccine, which will do 2 things. It will help health care providers make informed clinical decisions for their patients and should help improve public confidence in vaccines. Now while immunization rate recovery is important to the growth of our business and the overall market, it's only one part of our growth story.

So let me explain what I mean by that. Influenza is a very complex virus. And in that complexity are opportunities to create strategic differentiation in ways that health care providers will value. Flu is one of the most highly variable pathogens for which we immunize. There are multiple circulating strains that are continuously evolving, drifting and shifting so that the attack rates and the virulence could vary from season to season. And the at-risk populations can also vary from year to year. It's a highly seasonal viral activity with 2 prominent disease seasons one in the northern and one in the Southern Hemisphere.

The viral complexity creates a need for a very specialized capability. especially to participate in the higher value enhanced vaccine space we occupy. Now add to this the operational challenges of having to reformulate the vaccine every year to match the circulating strains. It's essentially like launching a new product every year. And this requires a very different kind of manufacturing excellence and agility.

There are also unique supply chain challenges as the vaccines are released on a rolling basis during the immunization season, all without the traditional safety stocks that you'd see with other vaccines. And then there's the fact that our customers, the health care providers execute about 95% of all of their immunizations for flu over a short 12-week period.

Now when you combine all of this complexity, it's essentially a just-in-time business for a very complex biological product that operates, as I said, on an extreme seasonality. At Seqirus, we welcome each of these challenges as opportunities to differentiate Seqirus in ways that create value for the health care providers we serve. In fact, we take a very holistic approach to our differentiation strategy. It's about 3 things. It's about having the right vaccine technology, the right business capabilities and about creating the right customer experience.

I would say that our differentiation strategy is equal parts of each of these 3 things. But I want to take a moment to comment on our customer experience focus because it gives you a little bit of a glimpse into our culture, which I believe underpins a lot of our success. As a flu-focused business, we ground our company's purpose in meeting our customers' needs, the health care providers. We essentially reverse engineer from their vaccine and operational needs to determine where our focus and resources should be directed.

Now let me bring some of these capabilities to life with a few examples of what sets secure us apart from the competition. Let's start with what makes our technology and our portfolio so valuable from a clinical perspective. Now when you look at flu, there are many circulating strains each year is depicted on this graphic. The WHO then selects the strains that they believe will be the most prominent for the upcoming season.

When it comes to a standard egg-based vaccines, the problem is that egg adaptation happens in the manufacturing process. This occurs because you're growing a mammalian virus, one that can infect the human in an Avian egg. And this adaptation will lead to some drift from the selected strain that can cause a standard egg-based vaccine to be less effective. Now to solve this problem in our senior population, we add MF59 adjuvant to our vaccine to make Fluad. This adjuvant is designed to provide a boost to their weakened immune system of that senior population and to provide a greater breadth of protection.

Then for those under 65, we have our cell-based vaccines. That's Flucelvax, which avoids that egg adaptation I just mentioned by creating an exact match to that selected strain and there's a growing compendium of real-world evidence that's showing that Flucelvax is providing better protection than standard egg-based vaccine, especially when there's significant egg adaptation.

And then when we look to the future, we're working on our aTIVc vaccine. That's our adjuvanted trivalent cell-based vaccine. That combines an optimized dose of our adjuvant with an optimized dose of our cell-based antigen to create what we believe has the potential to become the new standard of care for the populations for which it's licensed.

Now let me take a moment to give you an update on where we are with the aTIVc. The Phase III immunogenicity study has been completed and based upon those results, we have already filed for licensure in the U.K. and in the EU with expected approvals at the end of FY '26. And with recent FDA input, we're now in the process of developing the study protocols and plans for the launch in the U.S. and other markets.

Now when you pull together all of this, what you could say is that we are the only flu vaccine manufacturer who could offer a differentiated vaccine for all recommended populations, pediatrics, adults and the senior pop regulation.

Now let me shift gears to another strategic capability that we developed to help shape the markets in which we operate. One of the things that I am most proud of is how we have led the way to elevate the value of real-world evidence in shaping vaccine policy and NITAG recommendations around the world. And by doing so, improving public health while creating new commercial opportunities for Seqirus.

In the past, RCT's randomized clinical trials, were the only basis on which NITAG recommendations were made. This meant that an RCT done 10 or 15 years ago, on a vaccine formulation that is no longer in use for strains that are likely no longer circulating was the definitive statement on a vaccine's effectiveness. Now while RCTs are important, it stands to reason that if we design and implement rigorous real-world evidence studies that are faster and cheaper to execute and could be run over multiple seasons to track the effectiveness against varying strains that we'd be able to provide health care providers with more comprehensive information to inform their clinical decision-making. And that's exactly what we have and we'll continue to do as part of our differentiation strategy.

Now applying this approach to Fluad, we've helped drive preferential recommendations in 19 countries for enhanced vaccines like Fluad. That's raising the standard of care for the target populations. We've also taken the same real-world evidence strategy for flu cell back to demonstrate its benefits versus standard egg-based vaccines in both the pediatric and the adult population. The bottom line is that we're using our flu expertise, we're challenging the status quo on the recommendations are made, and we're thinking differently about what our health care providers need to make better and more informed clinical decisions.

We're shaping the markets in ways that improve public health while creating growth opportunities for our products. We've taken the same market-shaping approach to how we run our pandemic flu business. We've chosen to leverage our flu expertise to help governments improve their pandemic preparedness with a unique business model that has 3 distinct revenue streams. The first is our advanced purchase agreement, what we call APAs, that creates annual recurring revenue streams from reservation fees paid that we received in exchange for a portion of our pandemic vaccine capacity.

The second is if a pandemic is declared, we would then sell those governments the volumes agreed to in those APAs, the first wave of which would generate $3.5 billion in revenue.

The third part of the business model is that we've partnered with those same governments around the world to prepare prepandemic vaccine stockpiles for viruses of concern that are circulating within animals. While this revenue stream is more sporadic, when it does happen, we're ready to respond. For example, during last year's H5 outbreak, Seqirus captured nearly 90% of all of the outbreak demand around the world.

One of the strategic capabilities that enables our pandemic business is our operational excellence within manufacturing, which is the last topic I'd like to share with you before I shift gears to where we see growth in the future. As I've mentioned earlier, the challenges of annual strain changes, coupled with the unique supply chain needed and the condensed manufacturing cycle time creates meaningful opportunities for differentiation.

Our investments to date have strengthened our global footprint, enhanced our capabilities and created the agility needed to serve our Northern and Southern Hemisphere customers while creating the warm base needed to execute our pandemic strategy. When you combine that industrial capability with our customer-focused culture, you create the reliability our customers need to achieve their immunization goals, while also creating the agility needed to take advantage of opportunities when they present themselves, like we did with the H5 outbreak.

This leaves one piece of information I'd like to share with you, and that's where we see our future growth coming from. Now we see different growth drivers across the short and medium term. So let me start in the U.S. where I'd like to highlight 2 near-term opportunities. The first is in the pediatric segment of the market where there is currently utilization of about 30 million to 32 million doses. That represents about $0.5 billion worth of market value. With the benefits I've shared earlier about Flucelvax, we have the only differentiated vaccine that covers the full age range for the pediatric population, which creates an opportunity to take a leading market share position over the coming years.

We have a very similar opportunity within the health system space. That's the hospital system space where we can now offer the only fully differentiated portfolio that covers all age ranges that are cared for in this setting. Then outside of the U.S., geographic expansion remains our key strategy. With recently implemented preferential recommendations for the senior population, we have significant growth opportunities in Germany, France, the Nordics, among others. And as we continue to have success shaping markets and driving preferential recommendations in senior markets, we will continue to expand our international targets.

To support all of these opportunities, we have had a targeted expansion of our sales force to extend our reach and frequency with the top immunizers. What you also need to account for is that most of the market value you see on this slide will grow as we convert it from the standard egg-based vaccine that it is currently to the higher-value differentiated product. In many cases, there's a potential to double the current value of these targets.

Now in the medium term, we will continue to penetrate the markets we serve but we also see the U.S. market recovery as an accelerant to our strategy, bringing new volume to existing customers and creating the opportunity for price appreciation across the broader market. Also, starting in the medium term and continuing into the longer-term horizon, we see the launch of aTIVc as establishing a new standard of care for the patients for which it's designed. The value of aTIVc creates will be created from 3 different things. It will allow us to grow market share while we displace competitive share. It will allow for a premium price based upon its expected health economic benefits, and it will strengthen our portfolio offer for those customers who want different options for different patients.

Now I know I've shared a lot of information with you, but hopefully, it was all in the service of demonstrating those 3 things that I started with. And that is that the uniquely complex influenza market creates opportunities for strategic and lasting differentiation, that the strategy, capabilities and performance of Seqirus sets us apart from the competition and that while the current U.S. market conditions are challenging, there's reason to believe in its recovery and that, that recovery will act as a growth accelerant for our strategy.

So with that, thank you for your attention, and I'd like to invite Paul and Ken to the stage for the Q&A portion of this agenda.

Good morning ladies and gentlemen. We still have some people registering, but we always start our Board meetings on time at CSL. So today will be no exception.

Welcome to CSL's 2025 Annual General Meeting. Before we commence with the formal proceedings of the meeting, we'd like to play you a short video. The video feathers [ Melissa ], who has a hereditary angioedema or HAE patient of ours. Thankfully, [ Melissa ] and many of our other HAE patients can manage their treatment with CSL products.

You can read more about our purpose and how the people and science of CSL save lives and make the lives of our patients better in our annual report, which is on our website or there's some copies outside afterwards.

Thank you, [ Melissa ], for sharing your story with us today.

[Presentation]

My name is Fiona Mead. I'm the Company Secretary here at CSL Limited. It's a pleasure to welcome you all to our 2025 Annual General Meeting, and I do believe we have a full house.

I will run through the procedural aspects of the meeting shortly. This meeting is being held in a hybrid format. Thank you to all of you who've joined us today in person, and we welcome everybody who is joining us online as well.

For those here in the room, in the unlikely event of an emergency, please follow all the instructions from the RACV staff and be attentive to announcements over the PA system. If we do need to evacuate, please calmly use the stairs, which are located next to the lifts. Assembly points are located on either corner of Burke Street or Williams Street. If first aid is needed, please immediately see an RACV staff member for assistance.

Today, we'll run through each item of business stated in the notice of meeting, after which we will invite questions in the room and online. Shareholders and proxy holders present in the room can ask questions during the meeting by lining up at one of the microphones located in the aisles when the Chair invites questions.

Please advise the computer representative of your name and show them your red or green voting card to indicate you are a shareholder or a proxy holder. If you are a shareholder or proxy holder participating online, you can submit a written question by clicking on the messaging tab on the Lumi platform. Type your question in the box towards the top of the page and press the send button.

A copy of your submitted questions, along with any written responses from our meeting team can be viewed by selecting my messages. Written questions can be submitted online at any time during the meeting. If you are online and wish to ask a question verbally, click on the request to speak button in the broadcast window. You'll be prompted to confirm your name and enter the topic of your question. Submit your request and follow the instructions to allow access to your microphone and join the queue.

Please note that while you can submit questions from now on, they will not be addressed until the relevant time in the meeting. If you have any troubles, please call the AGM helpline number, which is up on the screen now.

Online questions may be moderated for inappropriate language. And if we receive a few questions that are similar, we may combine those questions and answer them together. If your questions are too lengthy, we may need to summarize them in the interest of time. To ensure all shareholders in attendance here today have the opportunity to ask questions, we ask that each shareholder restricts themselves to no more than 2 questions or comments. If we have time at the end, we will ask shareholders with more questions to come forward.

The Chair will address some questions that we received prior to today and then take questions in the room, followed by written questions on the online platform and then verbal questions on the online platform. Persons entitled to vote today are all shareholders' representatives, shareholders and attorneys of shareholders and proxy holders who hold red admission cards. On the reverse of your red admission card is your voting paper, please vote by marking a box beside each resolution to indicate how you wish to vote.

Proxy holders have attached to their admission card a summary of proxy votes, which details the voting instructions, if any, for business items. You must vote in accordance with those instructions.

In respect of any open votes, a proxy holder may be entitled to cast, you need to mark a box beside the motion to indicate how you wish to cast your open votes. Please ensure that you print your name where indicated and sign the voting paper. When you have finished filling in your voting paper, please lodge it in a ballot box before leaving the meeting to make sure your vote is counted.

Computershare staff will be positioned at the exits to collect your voting paper when you leave. Voting on all items of business will close 10 minutes after the meeting ends. During which time, you'll have an opportunity to finalize your voting paper and lodge it in the ballot box. Please raise your hand if you need assistance and a Computershare staff member will help you.

For our online shareholders, once we declare voting is open on all items of business, and if you are eligible to vote at this meeting, a new voting tab will appear. Selecting this tab will bring up a list of resolutions and present you with voting options. To cast your vote, simply select one of the options. Your vote is automatically recorded. There is no need to press a submit or enter button.

You have the ability to change your vote by selecting a different option on the relevant resolution. You may change your vote at any stage until the time we declare voting closed. Ahead of our opening address from the Chair, I share with you our legal notice on the screen behind me. That covers the logistics of our meeting, and I will now hand over to our Chair, Dr. Brian McNamee.

Thank you, Fiona, and good morning, ladies and gentlemen. Thank you for joining us today. There is a quorum present, and I'm delighted to open the meeting.

I would now like to introduce your Board of Directors. To my right, first of all, Fiona thank you, our Company Secretary, who you have already heard from. Dr. Megan Clark, who will be retiring from our Board at the end of this meeting; Elaine Sorg; and next, Professor Andrew Cuthbertson and Ms. Carolyn Hewson at the far end. To my left, Dr. Paul McKenzie, our Chief Executive Officer and Managing Director. Dr. Brian Daniels, who is standing for election at this meeting, and you'll have an opportunity to hear from Brian later this morning.

Ms. Alison Watkins; Mr. Cameron Price, who is also standing for election and you will have a chance to hear from; Mr. Samantha Lewis and Ms. Marie McDonald, who is also retiring from the Board at the end of today's meeting.

We're fortunate to have such a strong group of Directors of our Board. Voting on all items of business today will be conducted by a poll, and I'm declaring the poll open now. The poll will close 10 minutes after I declare the business of the meeting to be closed.

Before we move to the formal business of the meeting, I'd like to speak about CSL, a business I've been involved with since 1990. It's a business that I like many of you feel great personal affection for and a business that I believe, despite current turbulence has the right strategy and the right people to deliver sustainable and profitable growth. I'll then hand over to CSL's CEO and Managing Director, Dr. Paul McKenzie, who will provide a review of the business and performance for the financial year 2025, progress against our strategy and outlook for financial year '26. We'll then move on to the procedural matters of today's meeting. And finally, as Fiona mentioned, we will take questions from those in the room and online.

As you know, CSL is a leader in plasma-derived therapies, influenza vaccines and iron therapies. We deliver these innovative life-saving medicines to patients in more than 100 years -- 100 countries. We exist to deliver enduring impact to those patients in areas of unmet medical need, helping to boost public health around the world and contributing meaningfully to the communities we serve.

In 2025 financial year, we delivered a USD 3 billion net after-tax profit and declared a final dividend of USD 2.92 a share. I'd like to extend my thanks to Paul and his leadership team and our 29,000 people around the world who help make this happen.

Now our share price has suffered significantly in recent months. It's been very disappointing for us and for you, our shareholders. Let me be clear: Do I believe that our strategy, our IG growth story and our ability to generate strong return remains intact? Yes, I do.

As a company, we've been in these situations before. We've seen periods of growth and face periods of challenge and we come back stronger. The actions we are taking now will position CSL for its next chapter of growth. The reality is that for some time now, CSL has been operating in a way that is too complex, and this has impacted our ability to react decisively to the geopolitical headwinds and to maintain our market leadership position.

It is clear to the Board and Paul the changes must be made rapidly and effectively. Paul and his management team, with the full support of the Board, have identified areas where the business must evolve. These are bold strategic steps to reshape and simplify the business, build our growth and pipeline, reduce costs and improve clinical and commercial execution.

We are charting a path forward, one that builds on our strengths, our history, our strong culture, but also focuses on the market challenges. Specifically, we are implementing an improved commercially driven operating model to bring decisive speed and focus to how we run the business and drive demand for what we sell.

We must invest in internal and external innovation to build our pipeline and are doing so by reducing our fixed cost base. We've also refocused our approach to research and development to make it more productive, more agile and better aligned with long-term innovation goals. We're simplifying our operating model to reduce complexity, transform performance and unlock efficiencies targeting over $500 million in annual pretax cost savings by 2028 financial year.

We're optimizing our global plasma network to meet rising demand, improve our productivity and boosting our agility of our manufacturing to match our yield improvement initiatives.

Finally, we have begun a multiyear capital management program. Starting with a share buyback this financial year, a clear signal of our strong cash flow and balance sheet. I have no doubt that these are the right decisions for CSL. But progress is not linear, success is not distributed evenly and change even positive and urgent change does take time. I understand your frustration. However, Paul and the team's work is not done.

With that, I'll hand over to Paul to present last year's financial outcomes and also talk about some of these matters. Thank you very much for coming.

Thank you, Brian. Good morning to everyone here and online. It is a pleasure to be here with you today to discuss the outlook for your company and our progress against our strategy. These meetings are an important reminder that this is your business and like all engaged shareholders, you have ambitions for it.

I share that ambition. As Brian mentioned, change takes time and progress is not linear. But let me be clear, the fundamentals of your business remains sound. And I am very confident we have the right strategy to deliver CSL's next phase of growth.

I am mindful that you have experienced strong growth and returns over many, many years and your management team remains focused on ensuring the company delivers against that ambition. As I said a moment ago, our core business performance demonstrates our resilience. For the 2025 financial year, revenue was up 5% at constant currency to $15.6 billion. NPATA was up 14% to $3.3 billion. Net profit after tax was up 17% to $3 billion.

CSL Behring continue to power our growth with revenue increasing by 6% at constant currency. Sales of PRIVIGEN, HIZENTRA and albumin all rose with sales of hemophilia growing a robust 13%. For CSL Seqirus, revenue increased 2%, as significantly lower immunization rates in the U.S. were offset by avian flu pandemic response opportunities. And at CSL Vifor, revenue was up 8% as iron sales grew in volume and our nephrology portfolio gained momentum with multiple launches around the world.

As we look to our performance for financial year 2026, I'm pleased to say the majority of the business is tracking to plan. Behring continues to drive the growth of the company with strong fundamentals in our core IG business and the recent successful launch of in ANDEMBRY. Vifor continues to compete well in an evolving iron market, and nephrology is growing to plan.

We are also expanding our clinical and commercial portfolios through strategic business development opportunities, such as our recently announced partnership with VarmX. In the partnership with VarmX, we will develop a first-in-class treatment for patients on Factor Xa inhibitors, who require urgent surgery or are experiencing severe bleeding.

This collaboration not only addresses a significant unmet medical need but strengthens our innovation pipeline and our ambition to deliver enduring patient impact. Our transformation initiatives are also progressing well, and I will discuss those in more detail shortly.

While the majority of the business is performing well, we are seeing 2 factors that impact our results in the first half of the fiscal year. In our Seqirus business, we have seen a greater decline in influenza vaccination rates in the U.S., greater than we expected. This is despite a positive recommendation from the U.S. administration on influenza administration and an unprecedented level of infection impacting public health around the world.

For the current Northern Hemisphere '25-'26 flu season, based on the insurance claims to date, we now expect the vaccination rates to decline by 12% for the overall population in the United States and down almost 14% for the 65 and over population versus last year's vaccination rates.

The 65-plus age segment is where our differentiated product FLUAD has and continues to grow share even with this market downturn. This challenge impacts our forecast, resulting in overall Seqirus revenue for financial year 2026, declining by mid-teens versus our previous outlook of high single digits. In addition, we have seen the recent impact of government cost containment controls in China reducing the demand for albumin.

We are adapting our approach to the supply there, which will limit this impact to the first half of the fiscal year. Given these factors affecting our performance in the first half of the year, we are revising our financial year 2026 revenue growth outlook to 2% to 3% from 4% to 5% previously forecasted. And we've updated our NPATA growth to 4% to 7% reduced from the 7% to 10% originally forecasted. All of these are at constant currency.

Looking ahead to financial years 2027 and 2028, we anticipate that CSL Behring will maintain sustainable and robust growth with strong group cash generation and balance sheet metrics. That said, due to the ongoing uncertainty in the vaccination rates in the United States, while there are some scenarios in which group NPATA may touch double digits, we believe a high single-digit growth is a more appropriate expectation until we see the U.S. influenza vaccination rates improve.

My focus as CEO and that of your management team is taking the right action to deliver growth. The changes we are putting in place will enhance the resiliency of the overall business. Brian is right, these are bold strategic steps to realize the full potential of the company. They are put in place following significant review and analysis.

We had become disproportionately complex, and we are taking steps to simplify and streamline our business. In R&D, we are reducing fixed cost and enhancing efficiency by the reduction of our footprint to 6 global sites and increasing the speed of both translational research into the clinic and clinical trial execution while continuing to pursue life cycle management opportunities to expand our commercial portfolio.

We are bringing the Behring and Vifor commercial and medical capabilities together to improve productivity and reduce duplication. We are also actively reviewing our corporate overheads. These are obviously difficult but necessary decisions to position CSL for the long term. These actions free up more than $500 million in savings by fiscal year 2028, and that savings will allow us to reinvest in our highest priority growth opportunities.

I want to assure you that in the markets we serve, there is strong growth demand for our life-saving medicines. We are moving with urgency to serve more patients, drive innovation across our clinical and commercial portfolios, enhance efficiency and deliver greater shareholder value. We are a global leader in large and growing markets with unmet patient needs, and we have a market-leading IG franchise with attractive and durable growth potential.

Our strong balance sheet and cash flow enables a disciplined capital allocation to deliver growth across the business. We will accelerate profitable growth by expanding our leadership in rare diseases. This will be underpinned by increasing investment in programs to improve diagnosis, awareness and treatment of these rare conditions.

A good example of improving treatments is in hemophilia B. HEMGENIX, which offers a life-changing potential cure for patients suffering with hemophilia B. Our operational excellence will continue to drive reliable supply and cost optimization. Our teams are laser-focused on the end-to-end fundamentals of plasma economics, further reducing collection and processing cost per liter of plasma.

We continue to innovate in our plasma centers now that we've rolled out the Rica plasmapheresis system, and our ongoing Horizon 1 and 2 yield initiatives are and will deliver more benefits. Delivering on our strategy requires exceptional talent. And I have prioritized building a leadership team ready to drive the transformation and to deliver results.

In the past year, we have welcomed Dr. Mary Oates as Chief Operating Officer, leading our push in operational efficiency. Andy Schmeltz was appointed Chief Commercial Officer overseeing the integration of CSL Behring and CSO Vifor, commercial and medical functions to reduce duplication and to unlock new revenue opportunities. And more recently, Ken Lim has been appointed Chief Financial Officer, following the retirement of Joy Linton. I want to thank Joy for her service to the company and recognize Ken's deep institutional knowledge and strong track record with CSL.

Each of these leaders, along with the rest of your management team is charged with turning strategy into action and results. This will require disciplined investment and focus. My role is to ensure everyone at CSL, whoever they are, whatever they do, in every location around the globe, is focused on growth.

In closing, I want to reconfirm our confidence in our core business. As Brian said, CSL has proven its resilience time and time again, and we are taking the disciplined and deliberate steps to strengthen our performance and streamline the company for growth. I share Brian's confidence in CSL's long-term outlook as well as his commitment to accelerating our progress.

A big part of what makes this company unique is our history and our people. More than 29,000 colleagues worldwide impacting the lives of millions of patients around the globe. I will never grow tired of hearing stories how people have helped change the lives of patients battling rare and serious disease, delivering ever better life-saving products to more patients and generating strong returns on our -- your investment is what motivates me.

Thank you, and I will now hand back to Brian.

Thank you, Paul. I want to reiterate the strength of CSL Behring, growth in the immunoglobulin and our new products. However, I would like to address one of the challenges Paul spoke of, specifically the U.S. vaccine market for influenza.

In August, we communicated a well-founded strategic intent to demerge Seqirus through a separate listing on the ASX. At the time of the announcement, the decline in influenza rates was thought to be moderating. The previous flu season had recorded the highest rate of morbidity and mortality in 15 years. And the U.S. government's vaccine advisory panel had endorsed a recommendation that everyone above the age of 6 months should have an annual influenza vaccine.

Today, I wish to reiterate that in the long term, the strategic direction of both CSL and Seqirus is unchanged. Separation continues to be the preferred approach to unlock simplification and focus and sustain long-term growth for each of these businesses. However, our priority is to maximize shareholder value.

Given the heightened volatility in the current U.S. influenza vaccine market, we have concluded that advancing with the previously proposed demerger timing will not fully capture Seqirus value potential. Therefore, we are no longer targeting completion of the demerger in financial year '26.

Timing will be revisited when we're confident that market conditions would support the maximization of shareholder value for you. Tackling these various initiatives requires the right people at the Board level with the right mix of skills and experience to guide our strategy and lead our operations in increasingly complex global environment.

This not only means that traditional skills like risk management, scientific expertise, commercial acumen, but newer skills in the digital and AI arena.

I'm pleased to share some updates about our Board since our last AGM. First, we welcome Dr. Brian Daniels to the Board of Directors from the 1st of December. Brian is based in the United States and brings over 30 years of experience in the pharmaceutical industry, spanning clinical development, medical affairs and the commercialization of medicines. He is a highly credential Director, and we're delighted to have him on the Board.

We also welcomed Mr. Cameron Price, who joined the Board from the 1st of October. Cameron is a highly respected executive with over 30 years' experience, most recently serving as General Counsel and Chief Risk Officer at Australia's Future Fund. He brings deep expertise in global investment, risk management and corporate governance. You'll have the opportunity to hear from both Brian and Cameron later in the meeting, and I'm sure you'll find their insights informative.

It's also my pleasure to announce the appointment of new Directors to our Board. Firstly, Mr. Costa Saroukis, effective from the 1st of December 2025. Costa had a global career in the biopharmaceutical industry and was most recently Global Chief Financial Officer and Board member of Takeda Global, a very large Japanese pharmaceutical company, where he was instrumental part of its transformation. We are fortunate Costa has returned home to Australia, and I'm looking forward to bringing his deep understanding of global pharma and plasma therapeutics to CSL's Board of Directors.

In addition, I'm pleased to announce that Mr. Gordon Naylor has -- will also join the Board effective 1st of December 2025. Gordon was recently announced as a Chair Elect for the demerged Seqirus business. Given the revised demerger time line, Gordon's experience and leadership in the global biopharmaceutical sector will be invaluable. His deep understanding of both CSL and Seqirus operations will greatly benefit the Board, as we continue to advance our long-term strategy.

And finally, I'd like a moment to acknowledge 2 long-serving members of our Board, who will be retiring at the conclusion of today's AGM: Ms. Marie McDonald and Dr. Megan Clark. Marie joined CSL's Board in August 2013 and has brought a wealth of experience across law and medical research. Her deep expertise in financial markets, risk and compliance and corporate governance has been invaluable. Thank you.

Marie has served on both the Audit and Risk Management Committee and the Human Resources and Remuneration Committee, and her thoughtful contributions have helped guide CSL through more than a decade of growth and transformation.

Dr. Megan Clark has been a Director since February 2016, a distinguished career spanning scientific research, health, investment banking, mining. Megan has brought a broad strategic lens and global perspective to the Board. She has served as the Chair of Human Resource and Remuneration Committee and contributed to both Corporate Governance and Nomination Committee as well as the Innovation and Development Committee.

Her leadership and insights have helped shape CSL's innovation agenda and strengthen our Board governance. On behalf of the Board and the entire CSL Committee, I want to sincerely thank you, Marie and Megan for the outstanding service, dedication and lasting impact you've made on the company. We wish them well, the very best next chapters in their lives.

I want to take a moment to talk about our approach to remuneration because it's closely tied to who we are and how we operate, as a unique ASX-listed company. Although our roots are proudly Australian, CSL competes in a global biotechnology market, and many of our senior leaders are based in the United States. That's the reality of our industry. And it means we need to attract and retain world-class talent who can foster innovation, navigate complex science, manufacturing and deliver long-term growth for our shareholders.

Your Board firmly believes that our remuneration framework supports this goal. It's designed to be competitive globally and to bring in the kind of leadership that will take CSL into the next phase of growth. That said, we've engaged with shareholders and acknowledge their concerns. We take their feedback seriously and are reviewing the framework in this light.

This year, it is clear from the votes received that many of our shareholders have voted against the remuneration report. This will trigger a spill resolution, which we'll put to the meeting. We understand the importance of finding the right balance between offering executive remuneration packages that are attractive to top talent and safeguarding the long-term interest of the company and shareholder value. We remain committed to engaging with you on this, and our approach serves both our people and your investment.

Before I conclude, I want to touch on an exciting development of our manufacturing capacity and capability. In the coming months, we'll be officially opening our new influenza vaccine manufacturing facility at Tullamarine. This is a state-of-the-art facility that has taken several years to build in more than $800 million. It will be the Southern Hemisphere's premier cell culture influenza vaccine manufacturing and research center.

Moving Australian vaccine production to Tullamarine also closes a significant chapter in CSL's history, the closure of our facility at Parkville. That site is close to my heart, my days as Chief Executive a while ago and dates back to the founding of the company in 1916. It's a great example of how our company continues to evolve, being true to its roots and always embracing innovation, competition and moving towards our next chapter.

With these new initiatives and capabilities of our people behind us, I'm confident CSL is well positioned to seize our opportunities ahead. Our strategy is clear, and we remain committed to delivering for our patients and for you, our shareholders. Thank you again for your support.

We'll now move on to the formal part of the meeting. The items of business for consideration today are described in the Notice of Meeting, which I'll take as read. In terms of running the AGM efficiently, we'll read through all the items of business set out in our Notice of Meeting, following which we'll address all shareholder questions at one time.

I'm confident that I'm holding available undirected proxies in my capacity as Chair of the meeting and will vote all available proxies in favor of resolutions in Items 2, 3 and 4 and against in resolution of Item 5. The Board recommends that shareholders vote in favor of the resolution Items 2, 3 and 4 and against the resolution in Item 5, with interested Directors abstaining from making a recommendation in respect of any resolution they have an interest in.

To conduct the poll, I appoint Mr. Michael Hutchison of Computershare Services Directors a running officer; and Ms. Genevra Cavallo and Ms. Katrina Marina of Deloitte to act as scrutineers.

Voting is now open on all resolutions. We now come to Item 1 of the Notice of Meeting, which is to receive and consider the financial statements and report of Directors and auditors for the year ended 30th of June 2025. This item does not require shareholder approval. However, shareholders will be given an opportunity to ask questions and make comments on the report and about the management of the company later.

Ms. Cavallo and Mr. [ Griffis ] of the company's orders Deloitte, are also present today and available to answer questions in relation to the conduct of the audit, the preparation and content of the orders report the accounting policies adopted by the company in relation to preparation of accounts and the orders independence in relation to the conduct of the audit.

The second item business is the election of Directors. We have 2 directors seeking election today. Dr. Daniels joined our Board in December 2024 and Mr. Price joined in October 25. In accordance with our constitution, they are now seeking shareholder election. The qualification and expertise of both candidates outlined in the notice of meeting. Having reviewed the performance the Board considers both candies to be independent directors and supports their election. Item 2a relates to the election of Dr. Daniels.

I will now ask Dr. Daniels to address the meeting. Thank you.

Thank you, Brian, and good morning, shareholders. Today, I stand for election as a Non-Executive Director of CSL. I spent my entire professional career on patient care and improving patient outcomes bringing important medicines to patients is the greatest reward to me as a physician is focused on the patient was the reason I became a physician and then trained as a rheumatologist and immunologist in the United States.

I then spent 30 years discovering, developing and bringing to market new medicines that help patients with significant unmet medical needs. I want to continue to contribute this purpose with CSL, a company I have long admired. CSL occupies a unique role in the care of some of our most vulnerable patients, both here in Australia and throughout the world.

CSL has a proud Australian heritage and a track record of delivering for both patients and shareholders. And I share the Board's optimism for the future as the company looks to build on this legacy. I look forward to driving further R&D productivity at CSL from both internally and externally sourced programs.

Good governance in this stewardship are essential to this ambition. The skills I developed over my professional lifetime will complement those of our existing Board members, specifically my work in researching and developing medicines across a wide variety of diseases. And then for a decade, I chaired the R&D Investment Committee for Bristol-Myers Squibb and had oversight on an annual spend in excess of USD 1 billion per year.

I have experience in the regulatory strategy, medical affairs, market access and early commercial efforts, all of which are needed for the successful delivery of our medicines to patients. As a biotech leader, I understand the value of high-performing cross-functional teams and the success of our development programs.

In the last decade, as a partner in a venture capital firm, I've helped lead investments in over a dozen early stage biotech companies. In our shared ecosystem, these companies are a critical engine for new innovation for patients. I believe these skills in the global perspective will be valuable in helping steer CSL through this next phase of our growth and I'm acutely aware of the responsibility involved in serving such a respected and value-led organization, and it will be a privilege to serve on this Board of Directors.

Thank you.

Thank you, Brian. The Board, with Dr. Daniels abstaining, recommends that shareholders vote in favor of the election of Dr. Daniels. I refer to the slide behind me, which shows details of the proxy position for this resolution.

Congratulations.

I'll now move to Item 2b and ask Mr. Price to address the meeting.

Thank you, Brian, and good morning, shareholders. Despite that strange expression on my face up there, it's a real privilege and honor to be considered for election to the CSL Board.

I've observed and admired CSL's development and growth into a global leader over the last 20 to 30 years, delivering both important medical outcomes for patients and strong returns for shareholders. To me, CSL is a special organization to be involved with as it is clearly purpose-driven with a values-based culture, is Australian headquartered while being a truly global leader in the sectors it operates in, has a strong focus on long-term growth and shareholder value creation.

In that context and as the company progresses with its current growth and strategic plans, as Paul outlined, I believe that my skills and experience will enable me to complement the Board's governance and oversight role going forward.

Until recently, I was the General Counsel and Chief Risk Officer at Australia's Sovereign Wealth Fund, the Future Fund, for more than 11 years, working closely with the Chair, the Board and their CEO. Future Fund invests more than $300 billion globally across all major asset classes. Through that role, including as acting CEO for about 6 months in 2020 during the COVID crisis and the market crisis around that, I was privileged to regain extensive experience and knowledge of international investment issues, including geopolitical, economic, monetary, market, regulatory and policy issues.

Also, gained experience in risk management, theory and practice; and government and global peer relations. It also gave me a very strong perspective on a listed company and its Board from an institutional investor's point of view. Prior to that, I had a 25-year career at law firm, Allens, where I advised a range of public listed and private companies on domestic and cross-border mergers and acquisitions, equity capital markets and corporate governance matters, including on the ASX listing rules and equity incentive plans.

I'm very mindful of the duties and responsibilities of the role and would work closely with my colleagues to continue a strong focus on the best interest of CSL and its shareholders. Thank you for your consideration.

Thank you, Cameron. The Board, with Mr. Price abstaining, recommends that shareholders vote in favor of the election of Mr. Price. I refer to the screen behind me, which shows the details of the proxy position for this resolution. Congratulations.

As we're holding questions to the end of the meeting, I'll move to item 3. Item 3 on the Notice of Meeting is an advisory vote to adopt CSL's remuneration report for the financial year ending 30th of June 2025. As I mentioned in my opening address, CSL is likely to receive a second strike on its remuneration report today. To deliver our promise on our promise to patients and to protect public health, we rely on our people and need to ensure a strong global talent supply.

To this end, our executive remuneration framework enables us to attract, engage and retain suitably talented employees in the various markets in which we operate. This includes competing for talent with larger pharmaceutical companies. The Board is committed to an executive remuneration framework that links paid to the achievement of CSL's strategy and business objectives.

This creates a performance culture that, in turn, drives long-term shareholder value. Under the Corporations Act, the company is required to include in the Directors' report a detailed remuneration report setting out certain prescribed information relating to Director and Executive remuneration.

The company is also required to submit this by adoption by resolution of shareholders at the Annual General Meeting here. The vote on this resolution in this item is advisory and does not bind the Directors. However, we take the outcome of the vote into consideration when reviewing practices and policies of the company. The screen behind me details the proxy position for this resolution. Based on what you can see in the proxy slide before you, we have not met the requisite 75% of support for our report this year.

We are disappointed that this will result in CSL receiving a second consecutive strike, which means Item 5, which I'll come to, is a resolution to spill the Board will be put to the meeting. We'll provide further background on Item 5 shortly.

As I mentioned, talent is a critical factor in driving company performance and remuneration is a key component of this. The Board unanimously recommends that shareholders vote in favor in the adoption of the remuneration report.

We now come to Item 4, which seeks approval for the purposes of ASX listing rule 10.14 for the grade of 58,360 performance share units under the company's executive performance and alignment plan to Dr. McKenzie, our Chief Executive and Managing Director.

The Board believes in the interest -- shareholder interest to provide Dr. McKenzie with an equity-based incentive to ensure there is alignment between returns and shareholders. It also considers it's important to obtain shareholder consent to the grant, our performance share units.

The Board with Dr. McKenzie abstaining, recommends that shareholders vote in favor of the grander performance units to him. I refer to the screen behind me, which shows details of the proxy position for this resolution. As the proxy results indicate that CSL has received a second strike on Item 3, the remuneration report, we're now obliged to put Item 5 to the meeting, which is the resolution to spill the Board.

This is an ordinary resolution. If this resolution passed and becomes effective, a special meeting of shareholders known as a Spill Meeting must be held within 90 days. The following Non-Executive Directors will cease to hold office immediately before the end of the Spill Meeting unless they are reelected at the Spill Meeting, myself, Professor Andrew Cuthbertson, Dr. Brian Daniels, Carolyn Hewson, Samantha Lewis, Elaine Sorg and Alison Watkins.

Although Dr. Megan Clark and Ms. Marie McDonald held directorships when the Board passed the resolution for the Director's report for the financial year June 30, they were retired the closure of today's meeting and will not be required to stand for reelection at the Spill Meeting.

As Mr. Cameron Price was elected today's AGM, he will not be required to stand for reelection at the Spill Meeting and as he was not in office at the time of the report was passed. I refer to the slide behind me showing details of the proxy position for this ordinary resolution.

So we passed that hurdle. That completes all the items of business for today, and we'll now move to shareholder questions. And remember, please remember to cast your votes on each resolution.

Okay. I'll get a pen and paper for the questions.

So we give the shareholders in the room a little extra time to submit questions. We're first going to ask some questions that we received from shareholders prior to the meeting. We'll then take written questions from the room and then from questions online. And we also may have some questions. We have a lot of shareholders online today who may ask online questions.

So the first question we have is from Mr. [ Highland ]. His question is, given the acquisition of CSL Vifor and ongoing margin pressures from plasma collection, cost inflation and geopolitical risk, how does management quantify the risk to return on invested capital, ROIC, from these factors?

What specific margin recovery levers are in place? And how is the Board ensuring that capital is deployed only into growth opportunities that make a rigorous ROIC threshold?

Look, thank you for that question. There's a lot of matters embedded in that question, so I'll try and briefly summarize them.

I think that if we look at our underlying business, we really feel the plasma therapeutics, driven by immunoglobulin demand, continues to provide strength to the company. And our ability to compete that market is very strong and will continue to provide returns to shareholders.

The investment in Vifor, we've done -- we've pulled many levers to try and improve the performance from our perspective after the acquisition and that includes growth last year and now integrating the medical and commercial teams, particularly in Europe to further strengthen our capability.

There is no doubt that Vifor took us into areas of great interest to us in the iron area and in nephrology. And we're continuing to look for ways in which we can expand. We have important clinical trials in the area of renal disease that we'll read out late this decade.

I share your concern that we need to find ways that we continue to improve our return on invested capital that we allocate capital fairly and consistently to all the opportunities that we see that we can generate high-quality returns. And one of those things is our ability to buy our own shares back for shareholders that we manage our capital for both our internal investment, whether it be R&D, whether it be manufacturing expenditure, but also returning funds to shareholders through dividends and share buybacks.

So we are absolutely laser-focused and part of our ability to perform is having a great executive team and also continue to build our Board capability. And you've heard from 2 of our excellent new Directors today, and we're bringing on additional Directors -- new Directors shortly. So I think we're well primed for continuing growth, and we share your interest in growing returns and growing our ROIC.

Mr. [ Highland ] had a second question, which was in relation to the demerger. So your answer to this may change in light of today's announcement. Chair, can you please outline in clear detail the Board's view of how the separation would unlock shareholder value including the key value drivers for both the remaining CSL Group and a stand-alone Seqirus entity?

So I think I've probably dealt with the question of the drivers of the RemainCo, which is Behring and Vifor, excellent opportunities as we see in the plasma therapeutics, immunoglobulin portfolio, growth into our nephrology franchise. So we're doing that. The reality is they are very different businesses.

There is no doubt that the Behring plus Vifor business is about rare diseases, it's about high unmet medical need, it's about smaller clinical trials, it's about our ability to source those products and compete effectively and have a highly integrated team focused on that. Seqirus is a very different business. I mean, I love the Seqirus business.

I don't want people to think we're willing to push this away because we don't like the business. We love the business. They have done an amazing job building this business up, differentiating the portfolio in both pediatric and in the over 65 portfolio, generating excellent real-world data and clinical trial data, demonstrating the utility of vaccines, particularly our vaccines.

But there are challenges internationally. Paul spoke of it today. Vaccination rates are a surprise to us. It's true. Did we think, given the declines we've already seen in the last 2 years in the key U.S. market because this really is a U.S. business plus, plus Europe, plus the rest of the world, but it's a really powerful U.S. business.

Did we anticipate that given the severity of the disease last year, the strength of the recommendation of the vaccine and our ability to manufacture these products efficiently and well, did we expect that vaccination rates would drop again another, I don't know, what is 14%, 15%. Remarkable. But it's our reality.

So we can't see the bottom of the U.S. vaccination realities today. It must be coming soon. The disease prevalence is real and strong. Our challenge also is we've made -- people understand why did we have to update our profit for the first half? Because we've made this vaccine, we anticipate we're going to sell it. We haven't. You don't lose what you thought was just merely your manufacturing cost, it's a 100% loss of revenue that flows through to your profit essentially.

So it's a significant swing factor in how we see our business this year in the first half and how we look the next couple of years, it's quite complicated to forecast. We're trying to be very clear about that. So it's a long answer because I wanted to give it. We think the Seqirus team have done an amazing job.

We think they've got a great team. We think they have a great potential. It's just a very different business dealing with a vaccination policy, influenza rates, capability dealing with retail market and retailers in America, dealing with policy, it's a completely different business.

So when we looked at how do we simplify CSL? How do we get back to that gritty determined, focused company? We said we've got to separate these 2 businesses. Trying to create them as one business and integrate, doesn't work. So Paul led this, he's the driver because he knows we want to get back to focus, discipline, and we're still going to do it. We're going to separate the business out.

It will separate and it will leave us, but don't think we're doing it because we think it's not a great business. It is a great business.

Thank you. We have one more pre-submitted question from Mr. [ Williamson ]. Mr. Chairman, the market's reaction to the company's last 2 major earnings announcements has been severe, wiping up billions in shareholder value in single trading days. This suggests a profound loss of confidence in management's forward guidance and strategic narrative.

How does the Board diagnose this clear disconnect between the company's communications and the market's expectations? And what specific oversight mechanisms is the Board implementing to ensure future strategic announcements restore rather than erode investor confidence?

Again, a lot of issues embedded in that. I mean, we know there's choppiness at the moment, geopolitically. We have had to endure a tax -- additional taxes in America called the Inflation Reduction Act was imposed upon our immunoglobulin portfolio in America. So that cut 2% of our growth into this year. It's just an additional tax on companies selling over essentially over $1 billion that's called Part D.

So we have -- we are aware of that. We've recognized also that some of the investments we've made in -- some of the investments we've made over a number of years haven't delivered the sort of returns we're looking for and that would include the 112 trial, would be our Phase III trial. So we know that we have to generate even higher returns from our existing business today.

And Paul is driving that really hard. It's why we have an engineer focused on this stuff every day, how do we extract more value from what we're doing? And that's what we're doing. Because we know we -- some of the optionality we thought we had, had been challenged by geopolitical matters or just challenged by our inability to do the phase -- some of the Phase IIIs that didn't work for us.

And to be frank, some of the infrastructure we're moving on, shareholders have to understand, it's been built up over almost a decade built up a lot of infrastructure to do a very large and complicated trial, the 112 trial globally. We rebuilt the Marburg R&D facility, that decision was made 7, 10 years ago, some of the R&D infrastructure we put together.

And fundamentally, when we looked at R&D productivity, and again, our engineer wanted to look at our productivity. We just weren't productive enough, is the bottom line. And so we just can't say, well, let's just continue what we're doing. So Paul and his team came up with a plan. It's a significant shift for the company, but we are shutting sites. We're changing the way we're operating, we're cutting costs, we're refocusing.

Yes, it's true. Now that's whilst we're still growing, but we've had challenges because of some of these other factors, but this is a growth company. So what can I say about the market? I think the market misunderstood I believe the underlying strength of our plasma business. We're essentially shutting plasma centers, not because our IG portfolio wasn't growing, it's because they were inefficient centers and all the great work Paul and his team have done in the adoption of Rica has meant we had higher yields and more efficiency.

And we're building efficiencies in our manufacturing plants as well. We just didn't need more expensive plasma, so we shut down the sites. Some people saw that as a sign that we lost faith in the sector. So I think over time, when it's clear that the underlying strength of the company remain are what they are and that this year of transition that we're actually orchestrating at the moment, and you, the shareholders, are having to wear the cost, it's an expensive thing for us to reorganize. That is true.

But it's going to deliver value, it's going to deliver higher focus, it's going to deliver simplicity, and I believe it's going to deliver new products and our ability to compete effectively, and therefore, generate higher returns for you.

Will it take time? Yes. Can I predict when the share market responds? No, I can't. I think it's a mug's game. It's a mug's game focusing for us on the share price alone. We have to run the company, Paul and his team superbly. We're going to do what we're going to do. And we believe, given everything we're doing, including the share buybacks, it will one day be reflected in the share price.

How long that takes? I don't think it's a matter of just simple communication that we bring out some glossy PR and that will fix everything. No. It's about what we do, it's about how we deliver and there's a little bit about how we say what we're doing. I accept that in this modern world of highly responsive markets. So that's what we're doing.

Thank you. We will now move to Chair -- 2 questions from people here in the room. I ask that you move to the microphone and please give your name to the Computershare monitor who will read that name out to us.

Thank you, Chairman, introducing [ Mike Croby ] from the Australian Shareholders' Association.

Good morning, Mr. Chair and Board. My name is [ Mike Croby ], and as mentioned, I'm a with what is really Australia's retail shareholder sort of support group. Today, I hold proxies for about 1.08 million shares to the value of about $230 million. So I think that makes the 16th largest shareholder on your register.

And look, thank you very much for meeting us in advance, so we could share some of our concerns with you, and that was very productive for us. We note Mr. Chair, the reports of your comments in the press on the unacceptable failures at CSL in R&D and particularly in the D part at the Australian campuses.

You said I believe or was reported that there was something fundamentally wrong with the way R&D is carried out in Victoria. Now we shareholders are used to chairs and CEOs spoking that their people are their greatest asset. So this was a moment of great candidness that we actually appreciate it and it is in keeping with some of your retrenchment programs that you've signaled as well.

But it is rather unusual. So we're interested in what particular performance issues that your review identified with the Australian R&D centers? I mean we will come from this part of the world and some of us have actually been in R&D in the past. And what progress has been made against what you did see with the shortcomings in order to keep the staff First question. go onto my second general question or would you have to stop there?

Look, I'll do a brief answer and then get Paul to comment on. Look -- and to be frank, it's always -- yes, do you look back and say, the R&D challenges within CSL were clear. It was global. And Paul will comment on that. The Australia is part of it though my dream has always been for and Australia to be the center of our excellence and innovation and to drive.

And I was frustrated, we just didn't have enough quality candidates coming out of the pipeline. I probably drifted into territory that is probably not sensible. Do I love some of the cheerleaders for work from home? No, I don't. Do I get very annoyed when I turn to places and there aren't people working there? Yes, I do. So sure, I get a little frustrated. That's a reality. I'll let Paul talk about the -- in more detail what we did and the analysis.

Thank you, Brian, and thanks for the question, and thanks for your support of CSL. It's great to have a chair and a Board who's so passionate about innovation. So 1 thing I want to make sure everybody understands is we are not at all diminished in our goals for innovation. Innovation is the cornerstone of what has made this company and will make this company successful.

Innovation comes in many different shapes for CSL. It comes in new clinical assets as well as life cycle management extension of our commercial portfolio. In both of those categories, our performance over the last several years has diminished and we need to aggressively address both of them equally for our success. Life cycle management has been a key critical attribute of the success of our plasma-derived therapy portfolio, and we need to continue to drive that.

And that doesn't just take R&D. That takes a relationship between research and development and commercial and cutting, as Brian likes to call it, knowledge of the market and knowledge where you can differentiate. So how commercial and research and development work together is extremely important. In terms of the R&D, what I'll call clinical productivity, we have a great example of what I'd love to see more of recently.

We launched in Denbury, developed prior to 2010 in our own labs in Melbourne and recently launched. I need 4 or 5 more in Denburys. And we need to be able to drive the translation of science, both internally and externally developed these preclinical assets. We need to transition them in industry-leading times to the clinic because they are no good until you get them in the clinic, and you're able to see the safety and efficacy profile.

When you look at our clinical trial execution overall, our metrics had slowed. Our clinical protocols became very complex. And we were really burdened by that large clinical trial CSL112, which was 20,000-plus patients. So when I looked with the team at where we were as an organization, we had grown to almost 20 R&D sites. Very hard to be relevant, very hard to be connected to both the ecosystem very hard to optimize your relationship between R&D and commercial when people are spread across 20 sites.

We have gone aggressively after fixed cost. We're reducing our 20 global sites to 3 main hubs with 3 support hubs, a difficult decision, but one that is critical for us to get the speed and urgency to move the portfolio. And we're really looking at how that overall governance happens in terms of how we govern and move medicines through the pipeline to be success.

Thank you very much. And I think the man next to Dr. Daniels will be an interesting asset to the Board on basis of this. So we're looking forward to your contribution and Mr. Price also from the investment process.

So my second general question was: This financial year, CSL sold the plasma collection business in China, about 7 years after acquiring it at a significant loss of USD 167 million or roughly half price you paid for it. Now I also understand that COVID rather than expectedly happen in the interim.

Most large businesses in this country, and we have seen many of them go through the COVID dip and then come back out the other side stronger and more focused. So what went wrong strategically with the business for sounds the right sort of thing, plasma collection business, your car overall all sounds good to shareholders but basically lost a lack of money. And was there a due diligence issue associated with the M&A [indiscernible]

Look, thinking back to my medical days, retrospectoscope was a fine instrument. You always look back I think could you've done better, could you have done better, due diligence in the M&A.? There's no doubt, China is a really important country in a very big country. I'll get Paul to specifically talk about itself, but it's not the simplest place in some ways.

And I agree, it's disappointing. You hate losing money, you hate wasting money. It's true. I mean, but it's not -- when you get to a company our size, it's not going to be the first or last time we do things that you go, that didn't work. Paul?

Yes, I would say our aspiration was to make the same difference in China that we had around the world for plasma-derived proteins, and plasma economics was critical in that evaluation. What we could not do in China that we've been able to do around the rest of the world was get more products that were meaningful commercially. So although albumin was meaningful, we could not get immuglobulin or any of the infra marginals to be meaningful in the China marketplace.

And it just made the economics because the acquisition of plasma cost was on par to global prices, and we couldn't just generate the revenue to drive the economics of plasma. So at some point, it became an economic decision. We love China. We want to be in China. It's an important market. We just can't get the economics to work.

Next question.

Thank you, Chairman. Introducing [indiscernible].

I'm from We're an ethical share trading platform. We work with retail and institutional investors to engage with ASX-listed companies like CSL, around environmental social and governance issues. Throughout this year, we've been engaging with your company about how the company is considering and managing the risks of gas and how that's being communicated to shareholders.

Gas is fuel characterized as volatile, uncertain and risky Sharp price increases are highly possible as the East Coast gas market here in Australia has predicted a shortfall in supply as early as 2026-'27 in states like Victoria, where our company has a number of manufacturing facilities.

As noted in our company gambling with Gas report, CSL uses burning natural gas, predominantly to generate steam and boilers and heat and electricity and cogeneration units at some manufacturing facilities. I firstly want to acknowledge the company's positive engagement with and our institutional investor partners over the past few months on this issue.

We were pleased to hear about your decarbonization road map and your plans to report further in the 2026 financial year as part of the Australian sustainability reporting standards. We were also pleased with your recognition of the need to keep shareholders informed on the risks of managing operational risks of gas -- excuse me, let me try that again, on the need to keep shareholders informed on your progress in managing operational risks, which include disruptive gas supply and climate risks, hence my presence here today.

So to come to my questions, I have 2 related questions for the Board. Can you expand for shareholders here in the room today and online? How are you thinking about gas, its use, its risks in the context of your business? And what steps did you take to assess the level of risk that reliance on gas poses to the company?

Great. Thank you for the question. And look, we examine risk through what we call our business continuity process. So we look at risk for every part of our operation around the globe. All of our critical utilities, our wastewater treatment plants are key raw materials. And we assess that risk 1 by 1 and look at contingencies, for instance, procurement, making sure we have multiple suppliers.

So as you said, we've been working hard to take a look at gas and its risk when we've done the evaluation with everything else that we have ongoing, particularly here in Australia, we see that risk is low at this point. And so we have to put our resource and then allocate them to the other problems we're trying to solve.

Now that doesn't mean we don't have an aspiration to continue to challenge and look at gas from a sustainability viewpoint and a missions viewpoint, but at this point, with the risk being low, our strategy is focused on other activities that are higher risk for our operation.

Thank you, Chairman. Introducing [ Joseph Santa Isabel ].

It's more a comment more on asking a question, but I think most of it here a little bit taken it back to we're asking to approve a pay increase from our CEO when most of the actually bleeding, and you mentioned before, we're bleeding and we've been doing that for the last 5 years, which normally when people invest in companies, we invest in the medium to longer term.

We're not asking for a doubling in the last 6 to 12 months. So this is 5 years. We're now pulling money out for our normal retirement and day-to-day living expenses, we're crystallizing our losses. We find it very hard to be able to then approve pay increase for CSL. I would rather see that put aside and say, if you guys can get this business to where it used to be, then maybe in a couple of years' time, we can double that increase and get your money back.

But it's very hard to justify us approve some increases when these things are happening. And I know you mentioned a couple of times, especially twice or once 2 years ago now AGM, Brian, that you can't control the share market. Yes, I agree with you, but you can sometimes try to soften the blow. We get a lot of comments from managed funds, from brokers, from analysts. And whenever there's a negative outlook on CSL, we don't see anybody from CSL timing to refute that.

And so people get the instruction and say, well, if nothing is coming out of CSL, what they're telling is right or wrong, must be right. That's perception. So I don't know whether we've got an expensive high salary marketing team, but it falls in America and it can't come to the fall, surely, we've got other people that can take his place.

Look, thank you for a genuine question because it's clear, it's very frustrating that the share price has gone nowhere for quite a while and it's gone down a lot lately. There's no doubt that true. The company had a very good run for a very long time, that's also true. And so if I just step back, remembering net profit after tax grew 17% last year.

I mean -- so we did what we say we were going to do and we can only repeat that if we deliver on what we say we're going to do now over the next number of years, I believe the share price will reflect that. How we deal with the perception of the market, how we deal with -- are we not communicating well enough, they're all valid observations, questions.

It is something we're reviewing. We believe, Ken, our new CFO, is -- will assist us in that role. Time will tell. Broad shareholders, Ken. So sure, but we are cautiously optimistic that we understand some of those concerns. With regard to the troubles you've got to separate the share price from pay. It's blending 2 different things.

We have to have people paid. I mean you can go to the private equity model because I have some knowledge of that model as well, where they don't pay much pay at all. And the rewards are extraordinary, extraordinary if the companies do well. That isn't the ASX model. That's just not our model.

So our model is to pay people an appropriate pay for their job and that we want people to be appropriately motivated to do their job and be rewarded for the job. We do not believe it or remotely, we overpay our executives. We don't. We think they're a fabulous team, and they are here for the right reason. But comp -- the amount of time we spend on compensation, I might add, is disproportionate and distracting from trying to get on with the business.

It's remarkable. The the positive of it, it does improve and create a lot of shareholder engagement, which is what I like and what Megan Clark did a phenomenal job as Chair of our committee that looks after that. She met with an amazing number of shareholders, spoke them on all the details.

To some degree, we're in this difficult situation that there is a local expectation and there is an international market. It's very hard to reconcile that sometimes, but anyhow, Ken, your job now communicate well and to see if we can do this job better. Thank you.

Thank you, Chairman. Introducing [ Anthony David ].

My name is [ Anthony David ], you call me [ Tony ]. I was born with severe hemophilia B and was treated with various CSL products throughout my life. Unfortunately, I'm one of those Australians, one of thousands that were infected with Hep B, Hep C and cytomeglavirus. The infections destroyed my liver. I've had undergone 3 liver transplants in the last 15 years.

And if this liver fails, it's the end of the road for me, they've told me I can't get another one. The Hep C virus was removed from the main blood product that I was on by heat treating it at 80 degrees Celsius for 72 hours. This treatment was commenced in the U.K. in 1985.

Record show that CSL did not introduce this method of treatment until 1993. That's a further 8 years where patients like myself were exposed to this life-threatening virus. When I received this super heat-treated I wanted to add that before we could use this product, we had to use the old stock before we had the new stock and that went on for about 6 months.

So at last year's AGM, you stated that the contaminated blood product issue occurred before your time, records indicate you commenced your role as CFO and Managing Director of CSL in 1990, can you explain to the shareholders why you told them that this predated your tenure? And can you explain what it took CSL a further 8 years to introduce an 80-degree hydrid product

[ Tony ], we understand the issue. I believe last year, if I recall, we were dealing with -- I was dealing with the specifics, possibly wasn't completely clear the specifics of the person who was demonstrating outside as what I was responding to.

With regard to we'd have to go back and look at our records, if available. But I know there's been many inquiries that have looked at this, and we're happy to comment on everything we're doing to try and work with government to ensure clarity and fairness for people.

Yes. Well, with regard to CSL, not leaving patients behind. I feel that there's a second group of hemophilia that I've been, I'm lucky to still be alive, a lot have died and still suffering.

Look, there's no doubt, the viral transmission era predominantly in the '80s, if you accept that, predominantly '80s, yes, terrible time. So -- but anyhow Paul, can you talk about what we now do? p

Yes. Well, first off, we recognized a profound impact for you and many patients around the world and in Australia. But over the past year, we've actively engaged with the government, the Health Ministry, the National Blood Authority, right, to work with them to see how we could address the concerns raised. We've met with patients. We met with the Hemophilia Foundation awards. And we're continuing to work and advocate for the government who is at the time that you referred to, we were a government entity.

And then in 1994, when we were privatized, there was an indemnity done. So we are pulling out. We have a team dedicated to work on this with the government and with the patient organizations, and we will continue to do that.

We've written letters to the government as well. And they've brickwall and basically said that there's no indemnity there. So I don't know what the answer is.

Thank you, Chairman, introducing [ Richard Davis ].

Dr. Brian McNamee, AO Chairman of CSL. Please apologize to the thousands of living and dead Australians and to their families all of whom have suffered because as our company, tragically, imported produced and sold infected blood products. This disaster, Australia's greatest medical disaster, Australia's greatest medical iatrogenic disaster should not have occurred.

There is documented evidence that for years, our company separately secretly, secretly imported high risk commercial plasma, which was infected with hepatitis and AIDS. There is also documented evidence that for years, our company secretly mixed this imported infected commercial plasma with Australian Red Cross voluntary donated plasma.

Dr. McNamee, you're a physician, please apologize to these people.

Thank you, [ Richard ]. There's been a number of inquiries that have looked at this issue.

[indiscernible] rubbish. You know it. This issue came up before the Senate in 1995. And Senate [indiscernible] over and over again trying to get it discussed, but the Senate refused. And this is hindsight, they refused because it might affect CSL share price. There's never been an honest review of this issue. Sorry, but...

You're allowed to Look, I think it's fair to say that there were significant matters that occurred in that period. I think people believe CSL has more influence on government than we do. We work very hard with both the Red Cross now the National Blood Authority with living blood and the government to try and determine what else can be done, and we have people that do that and that's where we are. Thank you.

Thank you, Chairman. Introducing [ Kristin Stanley ].

I'm one of the patients who met with CSL this year hemophiliacs. I was, in fact, with hepatitis C. We met with Andrew Douglas, and we asked for Andrea to please use CSL's influence to bring the government and the Red Cross to the table and discuss this matter with actual hemophiliacs victims, not the hemophilia foundation. I've had dealings with the hemophilia foundation. They have said to me that what happened in the U.K. is different to Australia, and that's not the case. We've got the evidence to show it.

Now I run a group called Hemophilia Advocacy Australia. I deal with people who have been infected day after day, people with AIDS, people who have had 3 liver transplants like [ Tony David ]. Now people need to know before [ Tony's ] Life, he was a world champion darts player earning a lot of money touring the way it playing darts. He had that taken away from him because of greed, it was greed that caused this issue.

You did not want to heat treat the products efficiently because you would have lost yield. Losing yield means you lose money. Now we asked CSL to bring those parties together and the response we got was let's have another meeting. And then I was told by Andrea, you're not going to like what we're going to say at the next meeting.

So we didn't attend that meeting. We washed our hands with it. CSL, the private company, may not have had a hand in what happened, but your name is still attached to what happened. You need to do something to help us. We are not going away. We now have mainstream media support. And videos like you showed at the start, where you're showing how the products have helped people, that's amazing.

But I could show you 100 videos of people crying because their families have been killed. We've had families who have been completely wiped out with HIV. Parents who have lost 2 sons. We've had [ Tony David ] who can die any day, you need to do something to help us. We're asking you, we're begging to help us.

Look, I mean the passion and the clarity is clear. And we recognize a profound impact on patients. So we'll take it back. We'll review it.

Speak to victims. Not the hemophilia foundations. They do not represent victims correctly.

Look, I can understand that. Remembering that we are part of a system that included the Red Cross and most particularly Department of Health and the federal government.

You also give research funding to the Hemophilia Foundation. So it's in their best interests do the right thing by CSL.

No, no. That's not -- it's not...

The government funds the hemophilia foundation. It's in their best interests to keep the government to happy. You need to engage with proper victims.

At the end of the day, we also have to engage with the politicians. And I think we'll continue to do that. We'll work with the Minister.

We're doing that as well. We're dealing with Senator Roberts.

That's where the rubber hits the road here. It's a political matter. So we need a political will. We don't even have the authority to do it given what happened when we became a private company. We have no authority to speak on their behalf. That is clear also.

I'm not asking you to speak on the government's behalf, I'm asking you to use your political influence to help victims. You do have political influence.

I will look at it again, Paul and Andrea see what we can do. It's not a lack of awareness, understanding, empathy. We get it. These people are also -- they have many priorities. It's unclear how we make this their priorities.

Their priority so far has been to tell us that what happened in the U.K. didn't happen in Australia. We have said to them, we have the evidence, we'll show it to you. They do not want to see it. They do not want to engage with us. We need someone with some weight behind them to say help these people.

Okay. Thank you.

Thank you, Chairman. Introducing [ Michael Oakley ].

First of all, those 2 previous questions or the people who asked those questions for the the obvious health issues that they and their loved ones are facing. I hear efforts and the ambitions of the Directors today, and I welcome them, of course, but they seem to be very heavy on motherhood statements.

I don't know quite what else you could say to a group of shareholders. But today, if I'm right in saying the share price this morning has dropped by around 18%, down to $178. I just ask you all, can you tell us why this is so? And why the market knows something that the shareholders apparently don't?

Paul, do you want to comment on our outlook state?

Yes. No, in our outlook statement, we're very clear that -- and the 2 factors that we have this year are the vaccination rates in the U.S. and China policy and our which are impacting this year's fiscal year results and...

What's the reaction today, so significant. A massive drop today down to $178 in a share that was $340. Now this is the vaccination and you've carefully avoided dimensioning Kennedy, which I guess is critically correct. But I just wonder why this has all happened on today's meeting, and we are now faced with another massive drop in our shareholdings.

As we know our forecast, as we know the information, we see the data for the vaccination rate albumin we share as real time as possible for those events. Well, we have a legal obligation to make sure the market is informed how the market takes that data and whether it extrapolates that data as if that's an enduring impact is what you might suggest to share price shows, as I said, therefore, we disclose this information, and we we have strategies in place, and we're actively doing them to show growth and performance in the short -- in the medium term.

I believe that will be reflected in the share price. But it's a market that if you are slightly below what they understand you might be, then the share price drops precipitously.

I certainly have today.

Thank you.

Thank you, Chairman, introducing [indiscernible].

Like a lot of shareholders, I think we're a bit disappointed with the share price. But my question goes to the issue of return on equity because the return on equity since financial year '22 has been around 15%, whereas in the 3 and 4 years prior to that, it had been in the 20s, 30s, I think at 1 stage even in the 40s.

So my question is, does that mean that this is the new normal or are your plans for the next 2 years to get that back into the 20s at least?

Look, thank you for the question. I'll get Paul to comment a bit more on operations. But we own a quality return today, but we certainly want to see it improving. The Vifor acquisition added a lot of our -- to our invested capital is no doubt. The Behring business is earning higher returns. Seqirus, putting vaccination rates to 1 side, is a high-returning asset. Vifor is not. That is true.

So we're trying to do what we can on the Vifor cost side, and we're doing a lot of activity to try and build the portfolio. I mean, we're a big company. So to flip where we are today into 20s and 30s, that's a massive change. So we're rigorously looking at...

Well, that's only recovering what it was 3 years ago.

Yes. That's just fine. So I'm trying to look forward now and except we are where we are. Vifor acquisition was done, and this is our new invested capital base.

Just a follow-up question. I noticed the buyback has been paused for the last 2 weeks. Is there any reason why we paused the buyback?

Yes, we always pause buyback leading into any announcement periods, whether it be the half year results, full year results, AGM. That's just fairly standard practice. You don't want to be -- give the impression that you know something that might -- you're buying the share price on a different set of information.

Wouldn't that be covered by our continuous disclosure requirements?

No, not really. No, it takes -- you have to work it up. Things have to be worked up. There's planning, et cetera, no, so it doesn't.

Thank you, Chairman. Introducing [indiscernible].

I'm [indiscernible] and I'm a 31 new shareholder in CSL. So I've been coming to a few of these. And I noticed my share increased today, he's another one under 31 years. A couple of questions back to the business.

Before we go on, as far as the share price is concerned, I just quote Warren Buffett's mentor, Benjamin Grain. "in the short term, the market is a voting machine. In the long term, it's a waiting machine." That's my comment on the share price.

Question about debt. In 2019, our net debt was about $3.5 billion. It's slowly crept up to this year, it's about $9.3 billion and it was over $10 billion last year, net debt I'm talking about. Partially do with the Seqirus proposed split.

Am I correct in assuming that after the split, this debt is mainly going to stay with CSL and not the Seqirus and also the level of debt we slowly got a plan to reduce of overall debt.

Thank you for your question. With regard to debt levels, we are looking at deleveraging down the 1.75x EBITDA multiple is sort of where we feel is sort of a reasonable number, so we're coming down to that. But -- and so we're using mainly our cash to buy back shares rather than repay debt. We think that's a more efficient thing for us to do.

Seqirus timetable has now been deferred pending U.S. -- view on the U.S. What we'd say is Seqirus is a really high cash-generative business. You can tolerate some debt. We haven't come to any final conclusion how we'd spread the debt. But in essence, both businesses can tolerate a modest amount of debt, which is what we're talking about.

Thank you, Mr. Chairman. Introducing [ Rex McKenzie ].

Mr. Chairman, I've been impressed over 20 years, how this company was doing well by doing good. And I thought this is a company that's worth having shares in. So I've invested in it over that period of time. And people have gradually become more demanding of the amount of money they're making out of it. If they could use to it. What did we do this year? It's a very good result.

Financially, the company is doing well, still by doing good, just not so well. So I'm more interested in further developments like, for example, I listened, I don't necessarily get the whole picture, but it looked quite a sensible thing to do.

So look at the research arm and say, well, we've got these skills and here's this company over here that in need of that sort of skill because they're going to take ages to get this product to market. Now it is a good thing to get this product to market if it's a good product.

So my question is, how is it doing?

Which the Denbury or another?

Purchase, I think, for about $1 billion of...

VarmX.

Yes, the VarmX program is actively and we just had actually a very deep meeting with the VarmX team at our King of Prussia site is doing well. We're enrolling for Phase III clinical trials and looking forward to bring it to registration.

Thank you, Chairman. Introducing [ Julian Smith ].

I'll start out by saying I'm actually live because some of the products that your company produced in the past, so thank you. I just wanted to know where CSL is up to with the U.S. administration tariff war? And I know that CSL it's probably impossible to answer. I know CSL has U.S. sites. And I wanted to know if that will help reduce the effect of the -- whatever the tariff rate is threatened.

Paul?

Thank you for the question. Obviously, we're working very closely with the administration. We did file our -- let's call it our 232 filing, which, in fact, details what you just said that if you look at our plasma-derived therapy, our biggest -- all of the product is sourced for the -- from the U.S. We have about 19,000 employees between our plasma network and our plasma fractionation plants. So we believe we're in a good position in terms of the investment in the U.S. and our tariff position.

I just -- I worked in the U.S. a while ago, and I used to think they shouldn't be asking why are things so cheap overseas. They should be asking why are things so expensive in the U.S.

Thank you.

Do we have anyone else who wishes to ask a question? We might -- Mike, we might have hold you, we have a number of questions online. So we'll see how we go.

Okay. Thank you to our online shareholders. The first question comes from the family.

Hello Board, with a 15% decline in share price today, it shows that the market expectations were misaligned to announcements today. what further actions will the Board and exec team need to take to ensure market expectations are aligned to the business performance and such sharp gyrations don't occur going forward.

Yes. So we have opportunity next week. We have our Capital Markets Day, where we meet with investors from around the world where we will go through the details of our strategy. We'll discuss the outlook challenges that we discussed today, but also really take the investors through the overall growth strategy for the mid and long term.

Okay. Another question from that family. The company market cap is now close to AUD 85 billion, which potentially is significantly undervalued to long-term growth prospects. Will the Board choose to increase buybacks to increase shareholder value further.

I mean you're right in one level. Share buybacks are an efficient way of returning capital to shareholders, and we have a multiyear capital program that we have identified. And with lower share price, it's true. We'll be buying more shares back, assuming the share price stays where it is. So this will be an efficient use of capital. It doesn't change our plan, to be honest, whether it's up or down 10% or 20%, we will be buying shares back.

Thank you. Our next question comes from Mr. and Mrs. How is your 29,000 workforce strategy predicting the impact of AI on Australian current and future jobs across the division.

Fortunately, I'll hand it to Paul.

Well, no, AI is going to be a powerful assistant in really making sure that we develop medicines and get them to the patients that need them. We've actually had a very focused approach to AI in terms of how we use it right now as an assistant for our employees. So for instance, we rolled out a new tool in our plasma centers to help the medical supervisors work through evaluations of our donors.

So there's examples, our plant floor where our operators can ask the system questions if they're having a problem. So we're looking at AI as a complement to our great people skill sets as well as introducing new opportunities to understand the biology and the capabilities within our research and development. AI can be a powerful tool for the productivity I talked about earlier in terms of speeding up the clinical translation as well as clinical trial execution.

So -- but we want to be thoughtful on it because it's very easy to do 150 projects versus do a handful of projects very well.

We're going to switch gears now. The next question relates to executive performance. Can the Chair please explain simply how the executive performance process looks?

Look, that's a fine question. I'm actually going to get Megan Clark to answer this because she has done a phenomenal job being Chair of our Remuneration Committee, and we're going to lose her, which we are sad about. So Megan here's your chance.

Thank you very much, Chairman, and thank you as well for the question. First of all, we want to make sure that attracts the absolute best people that we can to be able to do the very things that we do that the Chairman and the CEO have outlined. We also want to make sure that our remuneration aligns with you as shareholders.

So if we just look at the CEO's performance, he has his base salary, which we only asked for a 3% increase this year. his short-term incentive piece, which is aligned to all of the initiatives that you have heard the very strong focus on our operating model, getting our R&D pipeline and our R&D focus more aligned simplifying our organization, optimizing the plasma where the certainly the leading manufacturer in both our quality and everything we do in plasma, making sure that the yield increases are there, the margin increases are coming from our plasma business and very significantly how we manage capital.

And our CEO has done an extraordinary job really lifting out the way we deliver capital and you've seen the strong cash flow returns that we had last year. So that sits in our STI and then in our long-term incentive program, we align fully with shareholders on return on invested capital and earnings per share growth, earnings per share growth, really reflecting directly into the share price.

The way we structure this is also that 87% of our CEO's remuneration is at risk. And that really played out in last -- we had one of our long-term incentive rewards which vested in June of '25. And with the drop in the share price, our CEO was rewarded only at 38% of the value there.

So we structure it. It's a conservative structure. It's a very disciplined structure and it's extremely performance-based. And we straddle the fact that we are in the Australian market. As the Chairman has outlined, we did not provide really ridiculous reward. It really is aligned very much to the performance of the company.

Thank you, Megan. Our next question is an R&D question. The trial, while missing its primary endpoint overall demonstrated a highly statistically significant 31% risk reduction in major adverse cardiovascular events for the subgroup of post-MI patients with LDL cholesterol over 100. This is a powerful signal of efficacy in a well-defined patient population with a high unmet need.

Given this compelling evidence for an internally developed asset, why has the Board decided not to finish the job and commit to a confirmatory trial to bring this potentially life-saving therapy to market.

Paul...

So we looked at detail at those results. And like any clinical trial, you can keep them doing subpopulation analysis and eventually, you'll see perhaps some areas of encouragement. But when you look at that from a commercial market potential, the commercial market potential relative to the expense, it would take to redo additional clinical trials as well as build needed capacity to bring the product to market the math just did not work out.

So although we were intrigued and we published what we saw, we just don't see enough of a commercial market because lots of things have changed in that space since we worked on CSL112 with the introduction of new cardiovascular medicines. So the business case just is not there.

I have 1 more question online from the family. Can you give details regarding CFO, Joy Linton's resignation? She strikes me as a well qualified and capable person.

Look, thank you for the question. I'll ask Paul to comment on Joy's retirement.

Yes. So Joy was -- is and was a great colleague for us at CSL, real team player, and she's decided to retire from the company. And there's a strong succession planning process that the Board runs for all the key executive positions, and we are fortunate to be able to place Ken in succession based on Joy's retirement. We wish Joy and her family the best of success in health, and I know we will continue to see Joy, and she'll be a strong supporter of CSL.

again from the ASA. Just a question on 42% voting against the remuneration report. Can you give us any color as to what the proxy houses concerns were? Because it looks like future earnings, the 87% that Dr. Clark mentioned, they're quite comfortable with because they're not sort of performance raise, but against the rem report.

I think we could all answer this, but again, I'd like Megan to answer this.

I think the Chairman has outlined the disappointment with the share price as a major factor. But just to go into some of the detail that was raised by our shareholders. There was a couple of key points, particularly the in the STI, the short-term incentive. So the issue raised is why did the CEO get 124% when in the short-term incentives when the share price performance has been down.

And really, this comes to that our CEO and the executive are delivering on every 1 of the levers that we need to win in our markets are doing exactly what the Board and the executive have agreed with increase our IG margin lift our plasma yield, have looked at decrease in the cost, the launch, the very successful launch under our CEO of ANDEMBRY.

The flu business, you saw the performance delivering in a very, very challenging environment Vifor with a 14% segment growth. And the focus that you've heard from our CEO on restructuring and refocusing our R&D. So these were the short-term aspects that have been handled very well. The impact, of course, on remuneration has been in the long term incentive, which aligns fully.

So it really is balancing the absolute focus on the things that we need to do future with the reality of the outcome. So that was 1 issue that was raised. One other issue that was raised was sales of CEO shares which I can talk so I'm happy to talk to you offline in more detail on this, but we saw those as meeting our governance guidelines, and we wrote to the proxy adviser and provided additional detail on that.

Chair, I have 1 more question online that's come in from Mr. I apologize that I am unable to attend the AGM in Melbourne. My question knowing what you know now, would the Board have proceeded with the acquisition of Vifor, noting a former member of the Board resigned from the CSL Board to take on the role of Vifor CEO?

Look, I think the Vifor transaction from a strategy perspective still looks fine. There's no doubt we've got the timing wrong. And I think that -- so loss of exclusivity and has come faster for the iron business than we were understood and our due diligence led us to believe. So there are things we could have done better, should have been done better or should have been disclosed to us better. Either way, I think Vifor is a good high-quality complementary business to us, but we did, yes, get our timing wrong on the transaction.

And that is it for questions, Chair.

Thank you. So ladies and gentlemen, that concludes our discussion on all items of business today. The poll will be formally closed within 10 minutes. For when I declare the meeting closed, and the votes will be counted and the results of the poll will be reported back to me and will also be announced on the ASX as it is practicable following the close of the meeting.

For those in the room, I now ask the Computershare representatives collect the red cards, which record the voting instructions on poll. Please forward those red cards at the end of the row so they can be collected. It's also bellbox at the exit room if you need more time.

I now declare the meeting closed, except for the conduct of the poll, which will close in 10 minutes. We will play a year-end view video while you finalize your votes and exit the meeting. Thank you for your attendance.

Thank you for standing by, and welcome to the CSL Limited Full Year Financial Results. [Operator Instructions]

I would now like to hand the conference over to Mr. Chris Cooper, Head of Investor Relations. Please go ahead.

Good morning, and welcome to CSL's Full Year Results Call for Fiscal 2025. It's Chris Cooper speaking, and I'm pleased to be joined by Paul McKenzie, CSL's Chief Executive Officer; and Joy Linton, CSL's Chief Financial Officer. As with past practice, Paul will provide an overview of the results, and then Joy will provide additional detail on the financials. We'll then move to Q&A.

Please note, this briefing is being webcast. And before we start, I draw your attention to the forward statement disclaimer contained in the slide deck.

I'll now hand over to CSL's Chief Executive Officer, Dr. Paul McKenzie.

Thank you, Chris. Good morning. I am Paul McKenzie, CSL's Chief Executive Officer and Managing Director.

Today, I will highlight our business performance for fiscal year '25 and provide some comments on our strategy to deliver enduring impact for our patients and shareholders. CSL's Chief Financial Officer, Joy Linton, will then take you through our financials. I will then provide more detail around our transformation initiatives and simplification announcements before closing with our outlook and guidance for financial year 2026. We will then take your questions.

You have seen that CSL has made key announcements today that I believe will drive growth for the company into the future. Growth was once again a key feature of our results for fiscal year '25. On a constant currency basis, all 3 business units grew sales, resulting in 5% growth in the CSL Group revenue. NPATA grew 14%. NPAT increased by 17%. Leverage improved to 1.8x net debt-to-EBITDA basis. Free cash flow increased by 58%, and we increased our final dividend by 12% to USD 1.62 per share. We are pleased with this performance, but we know we must rapidly adapt to position ourselves well into the next decade given a constantly evolving operating environment. It is from this position of strength, and I am excited to announce major transformational changes today, significant operating model changes that will improve CSL's clinical and commercial pipeline execution while reducing cost and simplifying decision-making across the organization.

The financial benefit is twofold. Firstly, we will target more than USD 0.5 billion in savings by the end of fiscal year '28. Secondly, we will look to balance the reinvestment of these savings in high-priority opportunities with the need to deliver sustainable, profitable growth. As always, we will be disciplined in allocating these funds with sustainable value creation as our guide, and we remain committed to delivering double-digit earnings growth over the medium term.

We have also announced an intent to demerge CSL Seqirus as an independent ASX-listed entity in fiscal year 2026. CSL's management team and Board believe there is a clear strategic benefit to the demerger. Both ASX-listed entities will be able to focus on their core capabilities and realize simplification benefits, which will drive growth, and each will have a sustainable capital structure and access to funding to pursue distinct growth strategies.

Finally, we are reintroducing a multiyear share buyback program starting this financial year. We continue to see attractive fundamentals in our key disease areas and are delivering on our strategy. These initiatives are designed to help us reliably drive our growth agenda and shareholder returns into the future.

Joy and I will speak about these in more detail shortly, but now I will turn to our individual business performance highlights for the last financial year, starting with CSL Behring on Slide 8, where revenue increased by 6% at constant currency. Demand for our core products remain strong, with PRIVIGEN and HIZENTRA growing 8% and 6%, respectively. I would remind everyone that the second half of the year was impacted by the implementation of the IRA Part D reform. Importantly, though, we are seeing increasing demand from core indications such as CIDP, PID and SID, which reinforces our confidence that there is a significant growth path in the demand for our products.

Our albumin portfolio grew by 7% driven by a strong performance in China. We are very proud that CSL's hemophilia franchise once again demonstrated market leadership with growth of 13% at constant currency. IDELVION remains to standard of care, achieving 10% growth for the year. The uptake of HEMGENIX continues to increase, and we remain positive on this therapy. In particular, the recent 4-year post-infusion data demonstrated durable efficacy and safety in adults with hemophilia B.

Aligned with our new strategic focus on diseases, you will see the bottom of the slide looks different this year with HAE and perioperative bleeding products reported separately. The HAE franchise grew 4%, but our new ANDEMBRY product was only approved and launched in the U.S. in the closing weeks of the fiscal year. ANDEMBRY offers the promise of eliminating HAE attacks for the majority of patients, with a simple once-monthly dosing being an easy-to-use prefilled auto-injector. I look forward to updating you on our global launch progress in fiscal year '26 at Capital Markets Day.

Finally, perioperative bleeding was impacted by a tender loss in the U.S. We are now past the first full year of this event and saw positive growth from the first half to the second half of the financial year. As market leader, we continue to view this as a highly attractive market with significant unmet need. During the period, we also made progress on our plans for label expansions for both KCENTRA and RiaSTAP.

Now turning to CSL Seqirus on Slide 9. Revenue for CSL Seqirus was up 2%, which was a robust result, given the decline in vaccination rates for infill -- this weak market back drop has been disappointing, and we view the softness in the U.S. seasonal category as highly irrational based on the vaccine risk/reward profiles and the scale of disease burden which this year reached a 15-year high.

I will talk more about the outlook for Seqirus later, but we do see cause for optimism in the global seasonal influenza market. In the U.S., for example, we are encouraged by the recent positive universal recommendation by ACIP, a clear sign that influenza is not going away, and it still has a severe impact on public health.

During the year, we delivered on our exciting geographical expansion plans earlier than expected when we received preferential recommendations in Germany and France for our FLUAD product. We also launched this product in Taiwan and South Korea. Another positive was recognition of our pre-pandemic capability. The majority of avian flu contracts globally were awarded to CSL, which was strong recognition of our best-in-class differentiated platforms. Finally, fiscal year '25 result also included revenue from the supply of KOSTAIVE to our partner in Japan.

On to CSL Vifor, where revenue was up 8% at constant currency, and we delivered global volume growth in iron. We maintained strong positions in EU markets, holding iron volumes despite generic entrants. Injectafer continues to be the leading branded high-dose IV iron product by market share and sales in the United States. Our Ferinject launch in China is progressing well with hospital listings and demand generation ahead of targets. The inclusion of the pediatric indication in the National Reimbursement Drug List that became effective on January 1 is expected to further drive hospital uptake and expand patient access.

For nephrology, VELPHORO was the standout, with sales growing significantly in the U.S. as a result of its inclusion in the TDAPA scheme. TAVNEOS delivered significant growth across all launch markets, helping patients with a rare and serious autoimmune disorder called AAV. FILSPARI was successfully launched in Germany, Austria and Switzerland. It is the only therapy in Europe that has demonstrated clinically meaningful kidney function preservation in adults with IgAN, a rare and progressive renal disease that is the leading cause of kidney failure.

Now I will hand over to Joy to take you through the financials in more detail.

Thank you, Paul, and good morning, everyone. It's great to be back in the CFO seat. And my thanks to John Levy for taking on the interim CFO role in my absence. John has recently retired from CSL after 36 years, and we wish him all the very best.

As Paul said at the beginning, we've delivered a strong result for 2025. NPATA was $3.3 billion, up 14% after adjusting for a currency headwind of $84 million.

Walking through the adjustments from NPATA to NPAT. Amortization of acquired intellectual property was $364 million, which was in line with our guidance. The net gain of $30 million primarily reflects the disposal of our China manufacturing business. After adjusting for tax and the noncontrolling interest, group NPAT grew 19% to $3.2 billion, while NPAT attributable to CSL shareholders grew 17% to $3.1 billion. And please note, we have once again provided forward guidance for these adjustments for financial year 2026 in the table on Slide 27 in the pack.

Turning to the group highlights and the financials in more detail. On a constant currency basis, total revenue for the group was up 5% to $15.6 billion. Gross profit was $8.5 billion, up 6%. Group operating result was up 7% to $6.9 billion. Research and development costs were down 5% as we discontinue some clinical programs. We expect a similar level of expenditure for R&D in FY '26 with a focus on prioritizing growth opportunities. For FY '26, we expect G&A costs to be held flat, providing operating leverage through the P&L. Net interest expense was down 6% due to a reduction in the debt as our balance sheet continued to delever, and I will talk more to the balance sheet shortly.

The reported effective tax rate was 15.9% due to favorable FX movements on our euro tax balances as well as the geographic profit mix. We expect the tax rate to be 18% to 20% in FY '26. Return on invested capital increased from 10.5% to 11.5% due to the growth in our profit. Cash flow from operations increased strongly by 29% to $3.6 billion, reflecting the growth in the business and working capital management initiatives. Free cash flow also increased strongly and was up 58% to $2.9 billion as our CapEx continued to reduce. And for FY '26, CapEx is expected to be around $800 million, plus or minus $100 million, and our future plans include expanding our Ig capacity in the U.S. over the medium term. NPATA EPS was up 10%, and the total dividend was up 11% to USD 2.92 per share. In Australian dollars, this is approximately AUD 4.57, which is up 15% on the previous year.

Turning to the next slide, the results for CSL Behring where revenue was up 6%, gross profit up 8%, and the operating result was up 9%. Gross margin for CSL Behring improved 130 basis points over the prior year from 49.7% to 51% of constant currency, consistent with our guidance. We are confident that the gross margin will continue to show year-on-year improvement. However, we will no longer guide to a specific time frame. As Paul said, we remain committed to delivering double-digit earnings growth over the medium term.

When we set the gross margin target, we shared the key factors that would drive the recovery, and you'll see these on the right-hand side of the slide. They remain the levers we are focused on to return Behring gross margin to its historical highs.

However, a couple of uncontrollables are impacting timing. To begin with, as you will be aware, FX has not worked in our favor. And you also know we've taken deliberate action to reduce cost per liter with improved efficiencies and a gradual decline in donor fees. We are delighted with the successful rollout of the RIKA and iNomi platforms, and it is delivering as planned. However, we did make the decision to bolster labor costs in the centers to ensure that we could deliver this significant change. We now need to reduce those costs and have announced the closure of 22 centers as part of this.

While we have been pleased to offer innovative new products to our patients, in some cases, this has been slower than our expectations. ANDEMBRY was impacted by the delayed approval in the U.S. and HEMGENIX take-up has been slower than anticipated despite the excellent 4-year data Paul mentioned earlier. The strength of our intravenous Ig product PRIVIGEN has been pleasing, but it is a lower-margin product compared with HIZENTRA. We are targeting double-digit growth in HIZENTRA in FY '26 driven by our convenient prefilled syringe formulation, which will drive margin improvement.

Finally, we've made strong progress on yield, and we'll continue to focus on manufacturing efficiencies going forward, and these are very much progressing to plan. To reiterate, we are confident in consistent year-on-year improvements in the CSL Behring gross margin, and we believe that these are the levers that will get us there.

On the next slide is CSL Seqirus and CSL Vifor. As Paul mentioned, CSL Seqirus delivered revenue growth of 2%, which was pleasing given the challenging market backdrop. CSL Seqirus' margin did come under pressure due to the competitive nature of the market. Sales and marketing costs for CSL Seqirus were up as the business prepares to launch into new markets of Germany, France and Korea. For CSL Vifor, revenue was up a solid 8%, demonstrating the resilience of the iron portfolio and the strong uptake of the new product launches in nephrology. CSL Vifor's operating result was up 14% as we continue to find ways to make the business more efficient.

On the next slide, I'd like to talk about capital management. As you'll see on the chart, our balance sheet has delevered quite significantly due to our strong cash flow. For FY '25, our net debt-to-EBITDA finished the year at 1.8x. This gives us sufficient capacity and flexibility to support investment in growth initiatives. It also gives us the opportunity to return some capital to shareholders. And today, we have announced a multiyear, on-market share buyback program, which we anticipate will start with AUD 750 million in FY '26. We expect this will progressively increase over the medium term. We are targeting a leverage range of 1.5 to 2x net debt to EBITDA.

And with that, I'll hand back to Paul to talk to the strategic initiatives that we are announcing today.

Thank you, Joy. Now I would like to talk about the different strategic initiatives we announced today.

So let's now turn to Slide 19. As an engineer, I spent my career dealing with complexity. CSL has a track record of succeeding in this type of environment, whether it be developing therapies in the lab or being a world-class manufacturer of plasma-derived products. However, in a constantly changing world, it is necessary to evolve our approach.

Over the past few years, I observed several changes. Operational model complexity has increased as CSL has scaled. We have seen a more uncertain macro environment as demonstrated by the implementation of policies such as the IRA, then the threat of sector-specific tariffs and Most Favored Nation pricing. And our R&D output has not been where we had hoped it would be. So it is with -- wave of value creation.

Firstly, we are making our organizational structure simpler and more effective. We will make significant changes to our R&D organization, removing fixed costs and redirecting that spend to important clinical portfolio work. We want to double-down on the pace and quality of our innovation and increase the productivity of our pipeline, both in the speed of translational research and maximizing life cycle management opportunities for our portfolio. To enhance clinical and commercial pipelines, a distinctive new portfolio development and commercialization operating model, we'll seamlessly integrate efforts across research and development, business development and commercial. CSL Behring and CSL Vifor will combine medical and commercial capabilities, delivering further synergies and additional revenue growth opportunities across our multiple commercial channels. And we have taken the hard but necessary decision to reduce head count across the entire organization.

Efficiency has been a focus of mine since I joined CSL as Chief Operating Officer. Many of you know and will be aware of the emphasis I placed on that in our plasma and manufacturing networks in particular. With the rollout of the RIKA plasmapheresis system and I-Nomogram, our donor collection network has become more efficient with improving yields. So we are able to optimize our network and have closed 22 of our underperforming centers, representing 7% of our U.S. footprint. This does not signal an end to new center openings but a continued focus on reducing our collection costs. In aggregate, these changes will result in an annual pretax savings of over $0.5 billion by the end of financial year 2028. They will be delivered progressively over the next 3 years with the majority achieved by the end of financial year 2027 and full run rate savings by the end of financial year 2028.

As I mentioned earlier, we will incur one-off restructuring cost of approximately $700 million to $770 million on a pretax basis and $560 million to $620 million on a post-tax basis, all to be recognized in financial year 2026. The cash flow impact in fiscal year '26 will be $400 million to $450 million. Importantly, I believe the changes we are making will enable CSL to refocus on what makes us successful. We will be a simpler organization deeply concentrated on providing enduring patient impact.

The outlook for CSL is strong. We see positive fundamentals in our key therapeutic areas that show appealing growth opportunities for CSL. The initiatives I have announced today are designed to benefit us in continuing our growth journey.

We have also today announced our intent to demerge CSL Seqirus as an independent ASX-listed entity. We strongly believe a demerger provides a compelling strategic rationale for both entities. Each company will have a renewed focus on their respective core differentiating capabilities, allowing for the acceleration of transformation and efficiency projects. A demerger will reduce complexity, making both businesses more agile and efficient to manage. Each business will have a dedicated management team and Board focused on independent strategies and decision-making as they strengthen their leadership positions in their respective sectors. As part of that, we are pleased to announce Mr. Gordon Naylor as the Chair-Elect of Seqirus. He is an excellent fit for the role, having played a key role in the operational and financial transformation of Seqirus when CSL acquired the Novartis business in 2015.

The demerger will create 2 global leaders in health care and unlock meaningful simplification benefits. As we have described previously, Seqirus is a global leader in seasonal influenza vaccines and critical pandemic preparedness contracts. It has a highly differentiated and market-leading product portfolio centered around innovations in cell and adjuvant technologies in a $7 billion industry with attractive long-term fundamentals. As a stand-alone entity, Seqirus will have greater autonomy to set its own strategic direction, including capitalizing on potential opportunities that may arise in a highly dynamic market.

The remaining CSL group will continue to have leading market positions in multiple rare and serious diseases. These franchises have a long track record of delivering value to shareholders, and our scalable platforms will continue to benefit from the positive long-term outlook and demand for their therapies.

The simplification benefits of a demerger also enable an acceleration of the transformation and efficiency initiatives announced today. We are targeting completion of the demerger before the end of financial year 2026. It will be subject to third-party consents, regulatory approvals, and we will conduct a voluntary shareholder vote.

Finally, to the outlook on Slide 24. In CSL Behring, we anticipate continued robust demand for our core therapies as well as the uptake of newer products such as ANDEMBRY and HEMGENIX. With the rollout of the RIKA and iNomi platforms now complete, gross margin is expected to continue to improve. This will also be helped by strengthening our growth profile for our higher-margin HIZENTRA product.

In financial year 2026, CSL Seqirus expects seasonal influenza revenue to stabilize year-over-year driven by improved performance in both the U.S. and other key geographies. We expect a substantially lower contribution from avian influenza and COVID-19 in fiscal year '26.

CSL Vifor is well positioned to maintain a strong market-leading position despite new entrants into the iron market. The nephrology franchise will continue to benefit from the ongoing launch excellence of therapy such as TAVNEOS and FILSPARI.

At the group level, FY '26 revenue growth is anticipated to be approximately 4% to 5% over fiscal year '25 at constant currency. CSL's NPATA for fiscal year '26, excluding the nonrecurring restructuring costs, is anticipated to be in the range of approximately $3.45 billion to $3.55 billion at constant currency, representing growth over fiscal year '25 of approximately 7% to 10%.

Please be aware that this guidance assumes no impact from pharmaceutical sector tariffs. It is our current expectation that any such policy would not impact our ability to deliver on the strategic initiatives outlined today. CSL has significant operations in the U.S. and the majority of our commercial portfolio is drug-sourced from there.

I look forward to our teams implementing the transformational initiatives we have announced today, and we look forward to keeping the market updated on our progress as we deliver sustainable profitable growth.

A key date to mark in your calendars is our Capital Markets Day and site tours, which will take place in the U.S. from the 4th to the 6th of November. We will be providing further information on the initiatives outlined today throughout that event.

With that, I will now hand back to Chris Cooper to coordinate the Q&A.

Thank you, Paul. In addition to Paul and Joy, we are also joined for the Q&A session by several other representatives of CSL's leadership team. In the room with us are Andy Schmeltz, CSL's Chief Commercial Officer; Ken Lim, CSL's Chief Strategy Officer; and Herve Gisserot, SVP and General Manager of CSL Vifor.

[Operator Instructions] The first question comes from Saul Hadassin at Barrenjoey.

Paul, maybe a first question for you. Just on the Behring performance in second half fiscal '25 and particularly the Ig portfolio. Even with the impact of the Medicare changes, the revenue itself looked quite soft, certainly, versus consensus. Just wondering if you can talk to what the reason for that was. I know you called out some tender or contract losses, but just your expectations for Ig growth into '26 would be great.

Great. Thanks, Saul. I hope you're doing well. Thanks for the question. Look, we continue to see great demand across all indications for our Ig portfolio. We did see the full year impact of some tender losses, low-margin tenders, that we chose not to participate in, and that is what you're seeing as a reflection in the second half.

But I'll ask Andy to give some more perspectives.

Sure. Thanks. Look, our Ig business is up a healthy 7% over the year, and we're really proud of our sustained leadership in Ig, and we look forward to continued mid- to high single-digit growth over the next several years, and that accounts for emerging competition. That said, it's really more competitive than ever before, and we're being very purposeful in where we play and in how we play. We're in this for the long run, and we're not focused on individual periods, 6-month intervals.

There are some unique dynamics in this year's result, particularly impacting the second half of the year. As you mentioned, some non-regrettable tender losses in select markets, we're not going to chase tenders where it doesn't make sense. There's some variability in purchasing patterns and then there's the impact of the U.S. Part D reform. So if you take that Part D reform into account, our Ig portfolio revenue grew 9% this year on a like-for-like basis. So underlying demand continues to be strong, and we're ready to compete to grow.

And just another question, Paul. In the context of the reduction to operating costs, the focus on more efficient R&D, I guess, what is maybe missing from the presentation is expectations around an acceleration in top line, and it's arguably the top line that has been disappointing for the company over the last couple of years. I guess as you look out to fiscal '26 and '27 and '28, this commentary about, I guess, reinvigorating the portfolio developments and the commercialization model, as you're taking out cost, how much confidence do you have that you can actually start to accelerate that top line back to a level that I think investors are used to seeing within the broader CSL Group?

Yes. Thanks, Saul, for the question. And look, our change in operating model is really important for our clinical and commercial portfolio success. And that change in operating model is really bringing together research and development, business development and commercial in lockstep. And it's really those 3 groups that have to work hand-in-hand to develop not only our clinical portfolio, but to maximize our commercial portfolio. And really, this is what we're going after. And we've had some disappointments in the last couple of years in R&D, and our footprint became quite dispersed and very fixed from an overall cost viewpoint, and it's those fixed costs are what we're trying to bring back down so that we can invest back in our clinical portfolio and commercial LCM progress.

So our goal is to continue to source key clinical assets, both internally and externally, which will help us continue to grow the top line. But top line comes from both clinical progression as well as indication expansion and life cycle management. And I hope you see in our highlights, the indication expansion that we're targeting for KCENTRA and DOAC reversal and also RiaSTAP in the U.S., and important conversations that we had with the FDA to free those up, which are quite important to our journey.

Thank you, Saul. Our next question comes from Davin Thillainathan at Goldman Sachs.

Can I just touch on the Behring gross margin commentary? Clearly, the thinking there is there's perhaps lesser conviction you'll be able to get back to where you were pre-COVID by FY '27 and '28. I understand that you've touched on some factors, largely some slower rollouts of some products. But as I think about those time frames, there's still a far way to go to FY '28. Like, what else is happening do you feel within the business that gives you lesser conviction on that gross margin target?

Yes. I'll ask Joy to make more detailed comments. But overall, if you look at the levers on the slide that Joy highlighted, all of those levers are executing to plan, albeit slightly off in time. And Joy will go through all the details for our progress. But I want to be clear, we remain confident to get back to the 57% gross margin.

Agreed. Davin, we have not lost conviction at all on returning our margins to historical highs. All we're doing today is saying we're not going to put a time line on it. We've put a couple of time lines on it to date. And there's things that invariably end up being a bit outside our control. The cumulative impact of the FX headwinds we've had to date is not insubstantial. There's been some headwinds in our product mix, which we talked through. And we're still on the cost per liter journey.

The yield improvements are terrific and going actually probably ahead of plan, but they are creating some shorter-term fixed cost absorption in the centers, which is why we made the call to close some centers to keep getting that fixed cost down. So they're kind of like the 3 areas. We're absolutely committed to returning to historical highs. We can see our way there. All we're doing today is saying we're not putting a time line on it.

Okay. And my next question would be on the Ig part of the franchise. I understand you've seen some, I guess, tender losses and the intention there to not participate. But can you give us a sense of how you actually leverage your competitive advantage in this part of your franchise? Fractionation expansion was one factor that was previously attributed to perhaps how you differentiate. But any other factors that you can call out where you feel you can outperform, thinking into the '26, '27 and beyond period?

Well, let me comment on a few, right? Productivity overall across every part of the business is critical for our success. So productivity in how we look at our yield and operations, from plasma collection and sourcing at the centers all the way through to how we isolate the actual grams and then present them to the patients, those journeys are executing to plan, and it's really critical that we deliver those. The next productivity is the commercial and medical affairs productivity. It's how we influence and understand how patients use the product in the marketplace. It's how we look for real-world evidence and differentiation of that real-world evidence, so that we can look for better ways to serve our patients around the globe.

And then I'll ask Andy to comment on his approach on commercial productivity and how we're looking at focusing on different channels and how those channels should unleash growth across the next several years.

Yes. Thanks. Look, we are very proud of our leadership in Ig, and we have every expectation not only to sustain that leadership, but to expand it. We have many efforts underway to expand the diagnosis of primary immunodeficiency, not only in the U.S. but internationally as well. It's under-diagnosed. And of course, our Ig replacement indications, primary immunodeficiency, secondary immunodeficiency, that's all about Ig, not about any other mechanisms that are going to be viable there.

We also are really investing in the U.S., expanding our immunology field force over the past year, and we have our first ever direct-to-patient omnichannel campaign for HIZENTRA that asks HIZENTRA patients with primary immunodeficiency to seek a doctor asking for HIZENTRA. So we're confident that those efforts are going to pay off, and we're going to expand our leadership over time.

Great. Thanks, Andy. I'll just add one more comment on the efforts of our R&D team around SID, for instance, we're looking and working with the FDA in several indications where we can further leverage Ig against those cancers and their use for secondary immunodeficiency. So good work by the team on the real-world evidence and the conversations with the FDA. We have started a trial in several areas. Some are real-world evidence trials and some are actual physical clinical trials.

Thank you, Davin. Our next question comes from Andrew Paine at CLSA.

Just on the pretax savings from the strategic transformation. Just wanting to know how you think this will be reinvested into the business. What I mean is, what do you think the largest opportunities are that we should be looking at? And also, do you think the entire savings will be redeployed?

Yes. Obviously, any savings, we'll look hard at in our capital allocation of what's the best use of those dollars. First, we need to execute the savings, and you see there are 3-year savings. A lot of the reason they're more towards the tail end of that 3-year period is our work, the appropriate work we need to do with European Works Councils and appropriate social plans.

But when we really look at the savings, we want to look at opportunities to enhance our clinical and commercial portfolios, particularly our clinical portfolios in that Phase I and Phase II part of the business where we can ensure that, one, we can bring the right disease knowledge and insights; and two, we can move them rapidly from decision point to decision point in terms of how we invest. So right now, we're saying we look to reinvest about 50% of the savings. But again, we'll be disciplined in our approach to do that.

I don't know, Joy, if you wanted to add anything?

No, I agree, Paul. I think what we're trying to do is balance short-, medium-, long-term revenue growth with also ensuring that we continue to deliver double-digit earnings growth along the way.

Okay. And just on the RIKA system, obviously, that's been rolled out and switched on. Just kind of timing of that, when do you think that's going to start to hit the P&L? I assume there's nothing for the FY '25, but when should we start to see those benefits flow through? And I guess, how is that assumed within your guidance that you've given?

Yes. So as you know, Andrew, it takes 12 months from when we collect the plasma to when you see it in the P&L. We turned the individual I-Nomogram on or around Christmas, and so it will be the second half of FY '26 before you see that in the P&L. Similarly, the plasma centers that we are closing now, you won't see that in the P&L until FY '27. It's another reason the savings tend to be a little more back-ended just because of the length of time it sits in inventory. Interestingly, you can start to see it in the cash because that's the inventory, but it will take a little while to come through the P&L.

Okay. So that's, I guess, fully accounted for in the guidance you've given today.

It is. The forward guidance, yes, it is. Correct.

Thanks, Andrew. The next question comes from David Bailey at Morgan Stanley.

Yes. Just firstly, just maybe on the supply and demand fundamentals for both plasma and Ig, if we can. It looks like there's some fairly substantial yield initiatives coming through the system. So I just want to understand how you're seeing the supply and demand outlook for both of those factors at the moment. And then within that, just any observations around demand for Ig and CIDP, just noting there's been some reasonable growth from a new therapy in that space.

Yes. No, thank you. Look, we look at the demand as robust, and I'll ask Andy to go through very specific details. And look, our whole plan is to balance the demand in the marketplace with appropriate supply. And now we just have more levers to do that. The yield increases in plasma, the yield increases in manufacturing, allow us to be a bit more picky in terms of how we execute, where we put our Ig across the globe and what kind of tenders we participate in. And that's really important for us as we move forward because we want to both drive top line revenue as well as margin in the business.

But Andy, maybe you can give some perspectives on demand.

Yes, sure. So look, the Ig market and opportunity is very solid. We continue to see strong growth in primary immunodeficiency, secondary immunodeficiency and CIDP, all the indications that were being used. And that's why we're confident with our leadership role that we're going to continue to have mid- to high single-digit growth over the next several years.

For the impact of this new entrants with FcRn specifically, look, this is good for patients in CIDP, of course. That said, the benefit risk profile of the FcRn class really isn't fully characterized, and it does appear to be quite different than that for Ig. the reality is, of course, that FcRns are not in the consideration mix for when Ig replacement is needed, so not for PID, not for SID, and that's more than half our current business. We're confident that Ig will remain the first-line leader in CIDP, and FcRns are going to be good for patients who are intolerant to or who don't respond to Ig. So we really look forward to continued CSL Ig portfolio growth with PRIVIGEN with HIZENTRA. And that kind of mid- to high single-digit growth profile over the midterm takes into account any possible impact from FcRns.

Okay. If I look at your R&D guidance for '26 and I look at your top line guidance, it implies about 8.3% of revenue. Maybe just thinking about the $500 million, there's going to be some fixed cost reduction in R&D within that. But I suppose my questions are, can you give us a bit more of a sense as to the phasing of that $500 million? And then secondly, how should we be thinking about R&D as a proportion of revenue on a medium- to longer-term basis relative to your current 10% target?

Yes. I just want to highlight in terms of the phasing of the savings just to make sure that's clear. So in these reductions, we have an active plan where we work through all parts of the organization of where we think we need to surgically apply these cost reductions, in fixed costs, site locations, capabilities that we built that were fit for purpose a few years ago when we were, say, executing a CSL112 trial, more operational skill sets, which aren't as appropriate from a capability as you're looking to rebuild your clinical portfolio overall. So these fixed cost savings, particularly the people side, it takes time given a lot of our footprint is in Europe, where you need to work through the appropriate works councils and social plans to be able to deliver the savings. So the tail ending of that is really a reflection of our best estimate for the timing of those as we work through them.

And Joy, if you want to add some comments on that.

And on the R&D guidance, David, we haven't provided a percent of revenue number. That's quite intentional because as we go into our new product development and commercialization model, it is going to be as opportunities arise, and we need to kind of see what those opportunities look like and it's not like we're going to have the same R&D number every year. So it's why we've given you a number, kind of plus or minus, I think, what was it, $1.35 billion, plus or minus a bit. And so we'll try and guide to a dollar amount based on what we see in that near term in the R&D side because it will change versus the way it's been traditionally where we were spending to a percent of revenue number. So this is one of the demonstrated outputs of the new strategy going forward.

Thank you, David. Next question comes from Sacha Krien at Evans & Partners.

Look, I just want to follow on with David Bailey's questions on the Ig growth. I think previously, we were sort of talking to high single-digit volume growth. We now seem to be talking about mid- to high single digits. I'm just wondering, are you seeing any sort of price competition in the market that we should be aware of? I know you didn't participate in these tenders, but clearly, others have. Is that the reason why we've seen that growth rate come down a bit?

I'll ask Andy to comment.

Sure. I mean, yes, look, the Ig category is increasingly competitive, and we are being very purposeful in where and how we play. And so just to kind of put it in context here, with fiscal year '26, we mentioned in the second half of fiscal year '25 that we had some non-regrettable tender losses. And in fiscal year '26, we'll see the impact from the tender in the U.K. that we chose not to go as low. So there are areas where price is coming down, and we're being purposeful where we want to compete and where we don't want to compete.

But if you take into account the tenders that we did not win, and again, it's not regrettable, that's about 3% or 4% of Ig growth that we could have had in '26 that we chose not to get. And we're okay with that because we're in this for the long haul, and we're being very purposeful in where we play. So the bottom line is there are spots where there's price competition, and we're going to be purposeful in where and how we choose to engage.

I guess in the context of we're talking about MFN and other U.S. policy risks where there was potentially an expectation that you might need to lift prices to offset some of those pressures, I'm just wondering, maybe my question is, what do you foresee is the potential impacts of tariffs in your MFN? And if you do need to, can you lift offshore prices to mitigate that, to some extent?

So again, for tariffs, I just wanted to reiterate that we don't see tariffs at this point, based on what we understand, to be impacting our fiscal year '26 and our ability to deliver on these guidances. And that's really because of our global footprint, but particularly our footprint in the U.S. where we have a significant infrastructure and that for plasma-derived products, the active pharmaceutical ingredient is sourced from U.S. plasma operations as required by regulatory.

But I wanted to remind you, during COVID, we were one of the few companies that stayed true to our patients in Europe. And during that time, because we stayed true to those patients in Europe, we were able to achieve price increases across 22 countries during that COVID period, which we've been able to maintain. So as you know, we've never been a company that's chased price. We typically go CPI in general across the overall portfolio, particularly in our Ig portfolio, and we'll continue to do that. But if there's a tender that creates the opportunity to get price, we'll certainly be competitive. And that's what Andy is saying in terms of being very selective, in terms of where we choose to put our Ig moving forward. Price will certainly be competitive. And that's what Andy is saying in terms of being very selective, in terms of where we choose to put our Ig moving forward.

Okay. One quick clarification, if I can. So just in terms of tariffs, are you saying that it's your expectation that the country of origin of most of your Behring products will be deemed to be the U.S.

For our plasma-derived proteins, the active pharmaceutical ingredient comes from the plasma, correct.

Thank you, Sacha. Our next question comes from David Low at JPMorgan.

Can I just start with a reasonably simple one just on the guidance. So just to be clear, FY '26 includes Seqirus? I mean I see that the demerger is planned this year. And could I also get you to talk to whether some of these savings will show up in '26? It sounds like they're generally more long dated.

David, Joy here. So yes, our guidance includes all of CSL as we know it today, and that's really for 2 reasons. One is we don't exactly know the timing of the demerge yet. And of course, you will know that the majority of Seqirus' earnings sit in the first half of the year, and there's really no expectation that the demerge would happen this side of Christmas. So I think that's primarily why we've gone there.

And you'll have to just repeat the second part of your question, which I've temporarily forgotten.

On whether savings will show up in '26.

Yes, any savings are included in that guidance. As we've said already today, there's also some intentional reinvestment in '26 to drive future revenue growth. But a lot of those savings are coming in '27 for the reasons we've talked about before: extended works council negotiations in Europe and, of course, anything that goes into inventory is an FY '27 number.

I mean the other comment I would make on the guidance, if you haven't got around to reading the footnotes yet, if you were to take out the Part D reform, that 7% to 10% becomes 10% to 13%. So FY '26, it is impacted by the second part of the first full year impact of Part D reform. And it's also reflective that the Seqirus business, while we're starting to see some positive signs in influenza, seasonal influenza, we're not going to get the benefit again of the pandemic business, which was largely a '25 story. So there's a couple of reasons there why that guidance at the low end is single digit.

My second question is sort of similar. So Paul, you've committed to double-digit growth in the medium term. You've got $500 million of savings pretax, $400 million post, and half of that is going to get reinvested. So effectively, when I look at my numbers over the next few years, I've got savings of $200 million to add back, which a starting point would lead to earnings upgrade. But it seems to me that what you're actually committing to is that double-digit earnings growth requires these savings. But Joy, you've just mentioned Medicare Part D. That's done by the end of the calendar. So are we saying that there is a double-digit growth story here without the savings and we can add that on top or the savings is part of it, please?

You should assume the savings are required. We need to extract the savings. We need to reinvest for the medium-term growth of the business, and all that is included in the double digit.

Thank you, David. The next question comes from Craig Wong-Pan at RBC.

Just wanted to touch on Ferinject. The growth did soften in the second half. And I know in your slides, you called out generic competition in the EU. Could you just talk about what sort of, I guess, the landscape? Has competition intensified in the second half?

Sure. I'll ask Herve to comment on that.

Yes. Thanks for the question. So first, we are overall very pleased with our Ferinject performance in fiscal year '25. We are indeed facing generic competition in the EU and in certain markets ex U.S. In EU, in particular, we still see limited competition so far. Just to give you an example, Sandoz and Teva are commercially active in about 10 countries across the region despite the fact that they have been approved in 20 countries, which does suggest that they have some significant supply limitations. We have also seen an approval for Viatris, but so far, they are not commercially active.

So our focus is really on tendering excellence. As Andy said, for Ig, we are very much focused on price preservation because we are here for the long run. Iron is really for us a critical franchise, and it's a long-term play. We are also leveraging non-pricing criteria. For example, we are clearly differentiated in terms of supply reliability versus generic competition. We have a longer shelf life. We are trying to optimize our carbon footprint, which is more and more a criteria in some of the tenders. Our administration time is shorter than generic competition. So we are leveraging all these things to try to differentiate ourselves, not just based on price, but based on some other factors.

And in Europe, despite this increasing competition, we have been able to hold volume almost flat with targeted investments. In countries where we do not face generic competition, we are clearly investing and growing the business double digit in volume and value. And in countries where we do face generic competition, we invest when we win tenders, so to drive demand. So we try to be flexible, agile. And so far, I think the strategy has really paid off.

Sorry, just to follow up on that, the second half numbers we saw for Ferinject, the decline there, that's mainly kind of lost volumes because you're holding price sort of pretty stable?

We are not holding price, we are just smart, I guess, with our pricing strategy. So we are trying to strike the right balance between volume and price. But yes, we see generic competition intensifying, which was expected when we discussed the H1 results.

I might just add, it's not unlike Behring. We don't have to win every tender, and we're in it for the long run, and we're balancing growing volume in growing markets, but at making sure that we can maintain and grow margins along the way.

And maybe if you allow me, I would like to add a comment, which is a comment about our intercontinental region. The ex EU, ex U.S. business, where we see extremely strong growth because a big part of our Ferinject strategy is market expansion worldwide. And here, we are extremely successful. Just to give you a sense, this region, ex U.S., ex EU in terms of volume, is bigger than EU and U.S. combined. And the revenue generated by this region is 3x higher than the U.S. revenue. So when you look at Ferinject and especially the outlook, you have to understand that, yes, we are facing more and more generic competition, but we have a huge opportunity in a number of geographies where Ferinject is still a very new product, like in China and Canada, where we are in the launch phase.

And then just for my second question, I just want to touch on ANDEMBRY and how that's performed in rest of world markets. Could you elaborate if you see much switching from patients from HAEGARDA or your broader HAE franchise? Or is that sort of mainly winning new patients?

Yes, I'll hand off to Andy for specifics on the launch progress, but I could say just in my recent travels to China -- and we just filed in China, which is a great achievement. And if you think about a product, got approved in the U.S., Japan, Europe and filed in China, all in the same year, which, in my 30-plus years in the industry, has never happened. So it is a great product. Obviously, it was worth the wait for us and worth the wait for patients. We're very excited by what it can do with its once-a-month dosing, auto-injector, patients are waiting for it, and we're seeing strong demand as we come out of the gate.

But I'll let Andy give some specifics.

Yes. Totally agree with Paul's comments. We're really excited about the prospects for ANDEMBRY for hereditary angioedema patients. Outside the U.S., which launched first here given the delay by the FDA, we've seen strong uptake in the first 5 months out of the gate in both Germany and Japan. And in Germany, specifically, we have enough data that we know we have stronger performance in those first 5 months than either TAKHZYRO, ORLADEYO had during their launches, and so that bodes very well.

In the U.S., really, approval was in mid-June. So we don't have that much performance data from fiscal year '25, but we're really pleased with the early signals we're seeing over the first month out there, very active participation in our quick start program, which enables patients to start therapy right away before the insurance approval process. And we have an integrated limited distribution specialty pharmacy network that will enable acceleration and a seamless patient experience. So we're very excited, and we need a few more months before we're able to share with you specifics. I think at Capital Markets Day, we'll have an update on the launch progress.

You mentioned also HAEGARDA. And HAEGARDA, I think, will still have a very clear role for patients who need C1 inhibition. In the U.S., specifically, HAEGARDA has about a 25% share in the prophylaxis space. And so we would expect that ANDEMBRY would take no more than 1 in 4 patients who may switch from HAEGARDA. The focus for us are on, of course, the market-leading agents. And while HAEGARDA, there will be some impact, HAEGARDA, we believe, still will have a very strong and clear role in the HAE prophylaxis.

Thank you, Craig. Our next question comes from Andrew Goodsall at MST Marquee.

The first one, just if I could ask you to characterize what your U.S. Ig sales look like just in terms of where you set versus, say, market volumes and also maybe the impact of the IRA but just focusing on U.S.A.

Sure. I'll ask Andy to give some specifics on that. But the demand across all PID, SID, CIDP remains very strong.

But Andy, you can give some insight specifically to that region.

Yes. I mean our business for our Ig portfolio across PRIVIGEN and HIZENTRA is about 50-50 U.S. and international, and we're growing both in the U.S. and internationally. HIZENTRA has greater penetration already in the U.S. and is newer internationally. So it's a lower base. So HIZENTRA will grow a little bit more internationally. But we see with the portfolio, over time, HIZENTRA will catch up because we believe that's where we're investing in life cycle, that's we're investing in broader indications. And it just so happens that the margin is better on HIZENTRA as well. So I believe strong prospects both in U.S. and international markets.

And sorry, just in the U.S., if you compare yourself to say, the market data being TDAPA or peers, would you be growing volumes in line with those in the last 6 months, 12 months?

Yes. I mean we're holding our share. It's quite competitive now. We're holding our share in the U.S. I mean, look, with HIZENTRA, we were the first and only subcutaneous offering, and now there's competition. So share is being challenged a little bit, but that's what you would expect when you have new entrants into a marketplace. But with HIZENTRA, we still have approaching 60% share of the business. So we're growing well.

So I'm right in assuming most of the weakness was ex U.S.A., not your core market in the U.S.

Yes. The U.S. is going very well. And I think we've been very explicit about the tender losses where we've chosen that it doesn't make sense for us.

And they were all ex U.S.

Those are all international, of course.

I'd probably slip a couple of questions there, but if I could just finish with tariffs and just your conversation around re-domiciling and if there was a grace period offered, how, just conceptually, that play out?

Sorry, can you repeat the question, make sure I understand it.

Sure. If you've offered to re-domicile in the U.S. And so if tariffs were applied to pharmaceuticals and plasma, but a grace period offered, which is what the President has been talking about, how would that play out for you just conceptually?

Yes. So I mean, I'm not quite sure I relate to the re-domicile point. But just in general for tariffs, if you look at our plasma-derived products, as required from regulatory, the plasma is sourced all in the U.S., and that's where our operations are for the plasma sourcing, and that provides the active pharmaceutical ingredient. That provides us the tariff conversation strength in our view.

Okay. But I guess re-domiciling just meant the finishing component, obviously, not the rest is already there.

Correct. Yes. But the main thing from a tariff discussion is the active pharmaceutical ingredient, which comes from the plasma sourced in the U.S. I think you may be referring to we're talking about adding Ig capacity over the medium term in the U.S., but that was always part of our plan, independent of the current administration's activities. It was really about balancing Ig capacity around the world. And as you know, we're continuing to execute the plan to Horizon 2, and we will come to a point where we will decide on retrofitting existing modules and/or investing new. And that's part of what we're going through and the pros and cons of how we approach that, and that's why you see the potential for Ig capacity expansion in the U.S.

Thank you, Andrew. Our next question comes from Lyanne Harrison at Bank of America.

I might talk on Seqirus. You mentioned that you expect seasonal influenza revenue to stabilize over the next couple of years. But one of your peers at its recent results mentioned that for this year, it's expecting total flu sales to be down in the mid-teens and that they also expect to take market share. Can you comment on where your confidence with Seqirus lies given where you're thinking the revenue would be for this year?

Yes. Thanks, Lyanne, for the question. I hope you're doing well. In terms of the seasonal stabilization, it's really about the channels that we compete in. So we've been investing over the last couple of years in the pediatric segment. So if you looked at our share of the pediatric segment a couple of years ago, it was a big shiny 0And since then, we've moved up into the double digits, and we're looking to end the year around circa 20% as we included in our fiscal year '26.

So it's really about really how you look at the channels. For us, it's both pediatric and IDN as well as competing and faring well in the retail segment. So where we see the stabilization is our ability to compete actively across these channels. And in these channels, as you know, most of the vaccine fatigue is in that 18 to 64 category. So the pediatric channel, which represents about 35 million doses, is a pretty significant portion of growth for us. That said, we're also, for the first time, into Germany and France. Germany is a $300 million-plus market. We've had 0% opportunity there because we did not have the STIKO recommendation. We now have the STIKO recommendation and are looking to expand. So I think it's really our differentiated portfolio and our surgical precision around the channels that we're in.

Can you also comment on what the pricing competition has been like going into this '25, '26 flu season?

Yes. I would say, as you have more capacity in the market, we did see for certain retail contracts, competitive pressures present themselves. And given the diversity of our portfolio, we're able to satisfy that and go after that in different ways. So we do not chase, as you know, we're transitioning out of egg. A lot of the price pressures that you saw were specifically in egg, some more limited price pressures in what I'll call the higher-value segment of flu. But we've been able, given our profile, to look at those price pressures less from an egg viewpoint, which I think has been the predominant push down of the prices.

Thank you, Lyanne. our next question comes from David Stanton at Jefferies.

Just a follow-up on Lyanne's question. I'll stick with Seqirus for my first one. I saw you had an operating segment result of 47.4% -- compared to '25 for '26, please.

David, thanks for the question. So it's early days, right? So we do think that we're seeing a stabilization of seasonal flu. That's good for us because, as Paul has already said, we're out of egg and egg is lower margin. So that is a net positive on the margin for us. However, just need to be thoughtful that the pandemic revenue that we saw in '25 doesn't repeat at the same level in '26, and that is particularly high margin. And the second timing factor is we're still moving from Parkville to Tullamarine production, and there's a bit of duplicated costs still sitting in those numbers in '26. So look, there's some ups and downs from Parkville to Tullamarine production, and there's a bit of duplicated costs still sitting in those numbers in '26. So look, there's some ups and downs. I would have thought if we could go out of '26 flat, that would be a good outcome.

Understood. Very clear. And second for me, final question, just more of a big picture question here. Given the refreshed focus on development and its impact on amortization, maybe for '27 plus, not for '26 because you've given us guidance there, but should '27 CSL potentially move back to focusing more on NPAT guidance instead of NPATA guidance? And if not, why not, please?

I'll take that one as well. We're really guiding for '26 today. Clearly, the transformational initiatives that we've announced today, everything from a change in our operating model through to the intention of demerge, will necessarily create a number of changes in the way in which we report our results in '27, and we'll update you when we've worked all of that out.

Thanks, David. Our next question comes from Steve Wheen at Jarden.

Chris. I'm just a little confused on the gross margin messaging, particularly in light of the fact you're talking now also to the manufacturing cycle being 12 months where it's always been 9 months. But you mentioned that the fixed cost absorption is not going the right way. I would have thought if you're collecting more of the same amount of people, the fixed cost absorption is absolutely going move favorably for gross margin. You've got out of some gross margin sort of cheaper tenders and you're spending less on donor fees plus you've got an FX tailwind. I just don't see why you're changing the time horizon around when you'd get back to pre-COVID when all the drivers that you've been talking about are in play.

I'll take that. Thanks, Steve. Yes, you're right. We talked 9 to 12 months. I guess I've talked 12 today, but 9 to 12 is unchanged. FX, I'm not in the game of guessing what FX will do. Notwithstanding our comment today, all we're really saying today on the overall guidance is if the FX rate stayed the same as it was today, we would have a tailwind in '26 to the tune of, what have we said, $65 million. So that's not really trying to make a prediction on forward FX rates. That's just saying if things remain unchanged per today.

To comment on fixed cost absorption, the yield benefits in the centers means, you're exactly right, we're collecting more plasma from the donors and then it's going into our Horizon 1 or into the manufacturing network, and we're extracting more Ig from every liter of plasma we're collecting. That then means we don't need to collect quite as much plasma as we otherwise did, all other things being equal.

We have been sitting on underperforming centers, and you could say, "Well, why didn't you close them earlier?" So we needed the plasma whereas now we have a cheaper, more effective way to get that plasma, which is via the yield initiatives. But we're still sitting on the fixed cost of those centers, so that's why we've gone ahead and announced the closure of 22 centers. That will go a long way to getting rid of that sort of unfavorable absorption. And as I mentioned in the talking points, we've also got a bit of extra labor sitting in the centers that we put in to really make sure that RIKA worked well, which it did. But again, we need to take that labor out of those centers now. So it just enables us to do that next level of cost reduction going forward.

Okay. That makes sense. And just quickly last question. The $500 million to $550 million of savings, how much of that are you seeing in the guidance that you're providing for R&D and G&A in FY '26? And therefore, just trying to work out what the potential upside is for '27 in terms of pure cost savings.

Yes. So in the '26 guidance, there's a relatively small percentage of those overall savings, and they would be predominantly in R&D, not in G&A. So as we fine-tune our operating model across R&D, across Behring and Vifor, and across operations as we continue our CSL operating system, the enabling functions or the G&A functions will follow in terms of readjusting their operating model. So specifically to your question, it's a relatively small number and it's predominantly in R&D this year. And then as the savings accelerate into '27 and '28, they'll be more diversified across the whole portfolio.

Yes. And my one build would be, as we bring together the Behring and Vifor commercial and medical teams, that will start to deliver some savings in that commercial expense line, sales and marketing line as well. And again, then it will be how we choose to reinvest that because we need to keep driving for growth.

So why is G&A going up in FY '25, but you're keeping flat...

Consulting costs in order to start delivering some of the savings.

Thank you, Steve. Our next question comes from Marcus Curley at UBS.

Just quickly following up on that. Could you talk a little bit about at what form the reinvestment comes in? I'm just thinking in terms of where it turns up, in the P&L or the cash flow.

Yes. I'd say right now, we're evaluating what forms it will come in, but it can come in all shapes and sizes, right? It will come in acceleration of a clinical trial. So it would be an R&D expense. It would come in potentially an acquisition or licensing agreement for a new asset, right? It would come in perhaps a reinvestment in a particular commercial channel that we want to expand. So we're looking across the entire business.

These savings, we want to put to beneficial use and things that are going to drive both the top line as well as our margin. So it will come in all shapes and sizes. And it's really about expanding that clinical and commercial portfolio to be successful. So it could come as a real-world evidence study for iron or real-world evidence study for Ig. Within IT are also certainly investment areas that people have raised. So we're very careful on how we think about those reinvestments because we want them to return value in a reasonable time period.

And I might just add, it's also part of the rationale of starting the share buyback now because the buyback provides another mechanism of returning funds to shareholders in the short term, and I think creates that discipline around the reinvestment programs that we have.

Okay. And then just secondly, could you talk about what potential mitigation strategies you may have to offset any tariffs on the non-plasma parts of the business?

Yes. Again, I think for many other parts of our portfolio, the active pharmaceutical ingredient is actually sourced in the U.S. as well. So that would mitigate it. And then for other parts of the organization, we will look at our supply chain and how we balance that supply chain and where the products come from.

Do you think there's an opportunity to do a broader CSL deal? You obviously talked about you're looking at the investment in the U.S. from an Ig perspective. Do you think that it's capable of wrapping into a broad exemption for the whole overall business?

I would say let's see how the overall tariff conversation goes before we jump to those of type arrangements.

We have one more question in the queue. And after that we'll draw the meeting [ to a close. Our last question comes from Sacha Krien at Evans & Partners ].

On the Most Favored Nation pricing, I'm just wondering if you can give some comments or general comments on potential impacts and mitigation strategies across the business.

Yes, I'd say it's a bit too early. We're not really clear on where that policy will go. But again, in terms of our portfolio, we've been very disciplined in terms of our pricing approaches around the globe. But until we have the specifics, and we're monitoring it closely, there would be too much speculation to tell you anything concrete at this point. So let's see how it plays out.

Thank you, Sacha. We have no further questions in the queue. So I'd like to thank you for your interest in CSL, and we'll now draw the meeting to a close. Thank you, and goodbye.