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AIP - Adcock Ingram Holdings Limited - Unaudited financial results for the six-
month period ended 31 March 2012
ADCOCK INGRAM HOLDINGS LIMITED
Incorporated in the Republic of South Africa
Registration number 2007/016236/06
Income tax number 9528/919/15/3
Share code: AIP ISIN: ZAE000123436
("Adcock Ingram" or "the Company" or "the Group")
Unaudited financial results for the six-month period ended 31 March 2012
Salient features
- Turnover increased 5% to R2,25 billion
- EBITDA decreased 15% to R490 million
- HEPS decreased 10% to 198,7 cents
- Dividend per share increased 6,2% to 86 cents
- Cash on hand: R568 million
Adcock Ingram is a leading South African pharmaceutical manufacturer, marketer
and distributor. The Company has a 10% share of the private pharmaceutical
market in South Africa with a strong presence in over-the-counter brands. The
Company is South Africa`s largest supplier of hospital and critical care
products. Its footprint extends to India and other territories in sub-Saharan
Africa.
The extensive product portfolio includes branded and generic prescription
medicines and over-the-counter/fast moving consumer goods (FMCG) brands,
intravenous solutions, blood collection products and renal dialysis systems.
Vision
To be recognised as a leading world-class branded healthcare company.
Consolidated statements of comprehensive income
Unaudited Unaudited Audited
six months six months year
ended ended ended
31 March 31 March 30
September
2012 Change 2011 2011
Note R`000 % R`000 R`000
Continuing
operations
REVENUE 2 2 276 815 4 2 195 4 534 235
740
TURNOVER 2 2 251 450 5 2 152 4 453 567
267
Cost of sales (1 200 931) (1 093 (2 284
230) 606)
Gross profit 1 050 519 (1) 1 059 2 168 961
037
Selling and (294 405) 18 (250 (530 005)
distribution 046)
expenses
Marketing expenses (102 843) 13 (91 377) (206 981)
Research and (40 173) 21 (33 213) (70 723)
development expenses
Fixed and (177 746) 12 (158 (292 614)
administrative 153)
expenses
Operating profit 435 352 (17) 526 248 1 068 638
Finance income 2 8 151 36 022 63 778
Finance costs (11 081) (15 648) (30 225)
Dividend income 2 17 214 7 451 16 890
Profit from 449 636 (19) 554 073 1 119 081
continuing
operations before
taxation
Taxation (107 913) (165 (326 129)
645)
Profit for the 341 723 (12) 388 428 792 952
period from
continuing
operations
Loss after taxation (28 152) (28 152)
for the period from
a discontinued
operation
Profit for the 341 723 (5) 360 276 764 800
period
Other comprehensive (45 135) (19 209) 17 591
income
Exchange differences (31 690) (19 046) 4 709
on translation of
foreign operations
Movement in cash (13 445) (163) 12 882
flow hedge
accounting reserve,
net of tax
Total comprehensive 296 588 341 067 782 391
income for the
period, net of tax
Net profit
attributable to:
Owners of the parent 335 296 353 361 754 205
Non-controlling 6 427 6 915 10 595
interests
341 723 360 276 764 800
Total comprehensive
income attributable
to:
Owners of the parent 293 246 334 152 770 658
Non-controlling 3 342 6 915 11 733
interests
296 588 341 067 782 391
Continuing
operations
Basic earnings per 198,4 (10) 221,3 458,5
ordinary share
(cents)
Diluted basic 198,1 (10) 220,8 457,5
earnings per
ordinary share
(cents)
Headline earnings 198,7 (10) 221,3 465,1
per ordinary share
(cents)
Diluted headline 198,4 (10) 220,7 464,2
earnings per
ordinary share
(cents)
Consolidated statement of changes in equity
Attributable to holders of the parent
Non-
distri-
Share Share butable Retained
capital premium reserves income
R`000 R`000 R`000 R`000
Balance at 30 September 2010 17 365 1 190 290 349 061 1 357 939
(audited)
Share issue 4 465
Movement in treasury shares (471) (272 158)
Share-based payment expense - 3 185
continuing operations
- discontinued operation (831)
Subsequent acquisition of non-
controlling interests in:
- Ayrton Drug Manufacturing 42
Limited
- Addclin Research (Pty) 1 345
Limited
Disposal of business
Total comprehensive income (19 209) 353 361
Profit for the period 353 361
Other comprehensive income (19 209)
Dividends (177 157)
Balance at 31 March 2011 16 898 918 597 332 206 1 535 530
(unaudited)
Share issue 21 2 903
Movement in treasury shares (31) (19 269)
Share-based payment expense 3 500
Acquisition through business
combination
Subsequent acquisition of non- (4 162)
controlling interests in
Ayrton Drug Manufacturing
Limited
Total comprehensive income 35 662 400 844
Profit for the period 400 844
Other comprehensive income 35 662
Dividends
Distribution out of share (136 943)
premium
Balance at 30 September 2011 16 888 765 288 371 368 1 932 212
(audited)
Share issue 45 5 031
Movement in treasury shares (41) (25 509)
Share-based payment expense 9 069
Subsequent acquisition of non- (2 000)
controlling interests in
Ayrton Drug Manufacturing
Limited
Total comprehensive income (42 050) 335 296
Profit for the period 335 296
Other comprehensive income (42 050)
Dividends
Distribution out of share (183 831)
premium
Balance at 31 March 2012 16 892 560 979 338 387 2 265 508
(unaudited)
Attributable to
holders of the
parent
Total
attributable Non-
to ordinary controlling
shareholders interest Total
R`000 R`000 R`000
Balance at 30 September 2010 2 914 655 158 685 3 073 340
(audited)
Share issue 469 469
Movement in treasury shares (272 629) (272 629)
Share-based payment expense - 3 185 3 185
continuing operations
- discontinued operation (831) (831)
Subsequent acquisition of non-
controlling interests in:
- Ayrton Drug Manufacturing 42 (69) (27)
Limited
- Addclin Research (Pty) 1 345 (1 345)
Limited
Disposal of business (12 644) (12 644)
Total comprehensive income 334 152 6 915 341 067
Profit for the period 353 361 6 915 360 276
Other comprehensive income (19 209) (19 209)
Dividends (177 157) (21 045) (198 202)
Balance at 31 March 2011 2 803 231 130 497 2 933 728
(unaudited)
Share issue 2 924 2 924
Movement in treasury shares (19 300) (19 300)
Share-based payment expense 3 500 3 500
Acquisition through business 14 072 14 072
combination
Subsequent acquisition of non- (4 162) (5 156) (9 318)
controlling interests in
Ayrton Drug Manufacturing
Limited
Total comprehensive income 436 506 4 818 441 324
Profit for the period 400 844 3 680 404 524
Other comprehensive income 35 662 1 138 36 800
Dividends (6 607) (6 607)
Distribution out of share (136 943) (136 943)
premium
Balance at 30 September 2011 3 085 756 137 624 3 223 380
(audited)
Share issue 5 076 5 076
Movement in treasury shares (25 550) (25 550)
Share-based payment expense 9 069 9 069
Subsequent acquisition of non- (2 000) (8 752) (10 752)
controlling interests in
Ayrton Drug Manufacturing
Limited
Total comprehensive income 293 246 3 342 296 588
Profit for the period 335 296 6 427 341 723
Other comprehensive income (42 050) (3 085) (45 135)
Dividends (1 280) (1 280)
Distribution out of share (183 831) (183 831)
premium
Balance at 31 March 2012 3 181 766 130 934 3 312 700
(unaudited)
Consolidated statements of financial position
Unaudited Unaudited Audited
31 March 31 March 30 September
2012 2011 2011
Note R`000 R`000 R`000
ASSETS
Property, plant and equipment 1 377 191 983 322 1 161 558
Intangible assets 720 431 388 775 728 474
Other financial assets 139 013 139 012 140 210
Deferred tax 5 058 18 060 3 775
Investment in associate - 12 200 -
Non-current assets 2 241 693 1 541 369 2 034 017
Inventories 819 041 731 746 864 465
Trade and other receivables 1 312 297 1 173 341 1 202 858
Cash and cash equivalents 567 762 1 110 401 1 103 977
Taxation receivable 32 467 - 30 143
Current assets 2 731 567 3 015 488 3 201 443
Total assets 4 973 260 4 556 857 5 235 460
EQUITY AND LIABILITIES
Capital and reserves
Issued share capital 7 16 892 16 898 16 888
Share premium 560 979 918 597 765 288
Non-distributable reserves 338 387 332 206 371 368
Retained income 2 265 508 1 535 530 1 932 212
Total shareholders` funds 3 181 766 2 803 231 3 085 756
Non-controlling interests 130 934 130 497 137 624
Total equity 3 312 700 2 933 728 3 223 380
Long-term borrowings 322 031 340 934 346 811
Post-retirement medical 14 883 17 192 13 987
liability
Deferred tax 69 412 23 415 93 884
Non-current liabilities 406 326 381 541 454 682
Trade and other payables 752 481 714 964 954 076
Short-term borrowings 419 312 400 454 496 032
Cash-settled options 43 834 78 300 64 036
Provisions 38 607 31 579 42 859
Bank overdraft - - 395
Taxation payable - 16 291 -
Current liabilities 1 254 234 1 241 588 1 557 398
Total equity and liabilities 4 973 260 4 556 857 5 235 460
Consolidated abridged statements of cash flows
Unaudited Unaudited Audited
six months six months year
ended ended ended
31 March 31 March 30 September
2012 2011 2011
R`000 R`000 R`000
Cash flows from operating
activities
Operating profit before working 496 707 538 504 1 152 101
capital changes
Working capital changes (315 534) (274 374) (130 197)
Cash generated from operations 181 173 264 130 1 021 904
Finance income 8 151 36 022 63 778
Finance costs (11 081) (15 648) (30 225)
Dividend income 17 214 7 451 16 890
Dividends paid (1 280) (198 202) (204 809)
Taxation paid (129 180) (171 306) (341 156)
Net cash inflow/(outflow) from 64 997 (77 553) 526 382
operating activities
Cash flows from investing
activities
Decrease/(Increase) in other 1 197 - (6)
financial assets
Acquisition of businesses, net of - - (328 775)
cash
Proceeds on disposal of business - 84 989 84 989
Purchase of intangible assets (13 508) - -
Purchase of property, plant and (273 539) (217 343) (432 979)
equipment
Proceeds on disposal of property, 346 892 4 220
plant and equipment
Net cash outflow from investing (285 504) (131 462) (672 551)
activities
Cash flows from financing
activities
Acquisition of non-controlling (10 752) (27) (9 345)
interest
Proceeds from issue of share 5 076 469 3 393
capital
Purchase of treasury shares (25 550) (272 629) (291 929)
Distribution out of share premium (183 831) - (136 943)
Increase in borrowings 4 521 260 149 371 536
Repayment of borrowings (103 848) (98 792) (117 329)
Net cash outflow from financing (314 384) (110 830) (180 617)
activities
Decrease in cash and cash (534 891) (319 845) (326 786)
equivalents
Net foreign exchange difference on (929) (671) (549)
cash and cash equivalents
Cash and cash equivalents at 1 103 582 1 430 917 1 430 917
beginning of period
Cash and cash equivalents at end 567 762 1 110 401 1 103 582
of period
Notes to the consolidated financial statements
1 BASIS OF PREPARATION
1.1 Introduction
The abridged interim results have been prepared in accordance with International
Financial Reporting Standards ("IFRS"), IAS 34 Interim Financial Reporting, the
South African Companies Act, the Listings Requirements of the JSE Limited as
well as the AC 500 standards as issued by the Accounting Practices Board or its
successor. The financial results for the six-month period ended 31 March 2012
have not been reviewed or audited.
Mr Andy Hall, Deputy Chief Executive and Financial Director, is responsible for
this set of financial results and has supervised the preparation thereof in
conjunction with the Finance Executive, Ms Dorette Neethling.
1.2 Changes in accounting policies
The accounting policies and the methods of computation are consistent with those
of the previous annual financial statements, except for the adoption of the
following new and amended IFRS interpretations during the year:
- IAS 24 Related Party Disclosures (Amendment)
- IFRIC 14 Prepayments of a Minimum Funding Requirement (Amendment)
- Improvements to IFRS (issued in May 2010)
The adoption of standards and interpretations listed above did not have any
effect on the financial performance or position of the Group.
Unaudited Unaudited Audited
six months six months year
ended ended ended
31 March 31 March 30 September
2012 2011 2011
R`000 R`000 R`000
2 REVENUE
Continuing operations
Revenue comprises:
- Turnover 2 251 450 2 152 267 4 453 567
- Finance income 8 151 36 022 63 778
- Dividend income 17 214 7 451 16 890
2 276 815 2 195 740 4 534 235
3 SEGMENTAL REPORTING
Continuing operations
Turnover
Southern Africa 2 161 865 2 070 643 4 296 829
OTC 874 685 740 675 1 608 046
Prescription 752 145 815 535 1 632 071
Hospital 535 035 514 433 1 056 712
Rest of Africa and India 144 117 125 609 257 476
2 305 982 2 196 252 4 554 305
Less: Inter-company sales (54 532) (43 985) (100 738)
2 251 450 2 152 267 4 453 567
Contribution after marketing
expenses (CAM)
Southern Africa 620 555 685 571 1 369 231
OTC 318 870 327 312 680 703
Prescription 198 037 253 704 485 182
Hospital 103 648 104 555 203 346
Rest of Africa and India 35 116 32 043 62 744
Less: Inter-company (2 400) - -
653 271 717 614 1 431 975
Less: Other operating expenses (1) (217 919) (191 366) (363 337)
Fixed and administrative expenses (177 746) (158 153) (292 614)
Research and development expenses (40 173) (33 213) (70 723)
Operating profit 435 352 526 248 1 068 638
(1) Other operating expenses
including Research and Development
and shared services are managed on
a central basis and are not
allocated to operating segments.
4 INVENTORY
The amount of inventories written 17 029 11 890 20 907
down recognised as an expense in
cost of inventories
5 CAPITAL COMMITMENTS
Capital commitments
- contracted 235 873 406 191 292 983
- approved 54 024 110 555 120 845
289 897 516 746 413 828
6 HEADLINE EARNINGS
Earnings per share is derived by
dividing earnings attributable to
owners of Adcock Ingram from
continuing operations for the
period, by the weighted average
number of shares in issue.
Headline earnings is determined as
follows:
Earnings attributable to owners of 335 296 353 361 754 205
Adcock Ingram from total operations
Adjusted for:
Earnings attributable from - 28 397 28 397
discontinued operation
Earnings attributable to owners of 335 296 381 758 782 602
Adcock Ingram from continuing
operations
Adjusted for:
Loss/(Profit) on disposal of 509 (64) (857)
property, plant and equipment
Impairment of investment - - 12 200
Headline earnings 335 805 381 694 793 945
7 SHARE CAPITAL
Number Number Number
of shares of shares of shares
`000 `000 `000
Number of ordinary shares in issue 200 604 199 941 200 156
Number of A and B shares held by (25 944) (25 944) (25 944)
the BEE participants
Number of ordinary shares held by (1 451) (728) (1 042)
the BEE participants
Number of ordinary shares held by (4 285) (4 285) (4 285)
Group company
Net shares in issue 168 924 168 984 168 884
Headline earnings and basic
earnings per share are based on:
Weighted average number of shares 168 982 172 496 170 697
Diluted weighted average number of 169 254 172 929 171 049
shares
8 SUBSEQUENT EVENTS
There are no material events which have occurred subsequent to the reporting
date and up until the issue of these results which require additional
disclosure.
SALIENT FEATURES
Turnover increased 5% to R2,25 billion
EBITDA decreased 15% to R490 million
HEPS decreased 10% to 198,7 cents
Dividend per share increased 6,2% to 86 cents
Cash on hand: R568 million
FINANCIAL REVIEW
The six-month period under review saw Adcock Ingram facing several challenges,
both internal and external, that tested the Company`s business model and
strategy. Although the financial results achieved were disappointing, the
Company continues to invest in its supply chain, products and people, all of
which give confidence for improved future performance.
Headline earnings
The Company achieved headline earnings for the six months ended 31 March 2012 of
R335,8 million. This represents a 12% decrease from the comparable figure for
2011 of R381,7 million. This translates into a decrease of 10,2% at the headline
earnings per share (HEPS) level and 10,4% at the earnings per share (EPS) level.
Turnover
The acquisition of NutriLida and the conclusion of new co-promotion and
distribution agreements with multi-national (MNC) partners supported turnover
growth of 5% to R2,251 million (2011: R2,152 million). This was achieved
notwithstanding the loss of sales of DPP-containing products and the reduced
Anti-Retroviral (ARV) tender award. Price reductions averaged 2% for the half-
year.
In the Prescription division, no Single Exit Price (SEP) increase was granted
during the period under review and revenue declined by 8%. Over-the-counter
(OTC) turnover growth of 18% benefited from the inclusion of NutriLida, with
volumes increasing by 8%. However, price deflation of 3% was experienced in this
segment, reflecting increased competition. Hospital revenue grew by 4% as full
production resumed post the factory upgrade, but the business segment continued
to experience price deflation.
Profits
Gross profit for the six months decreased by 0,8% to R1 050 million (2011: R1
059 million) with margins declining from 49,2% to 46,7% (September 2011: 48,7%).
Gross margin as a percentage of sales was adversely impacted by the inclusion of
MNC revenue at lower than average gross margins, production inflation and by the
weaker Rand, which affected imported raw materials and finished products. The
average exchange rates for procurement were R7,57 (2011: R7,06) and R10,48
(2011: R9,64) for US Dollar and Euro imports, respectively, with total contracts
settled during the period amounting to R366,1 million (2011: R330,8 million).
Operating profit declined by 17% to R435 million (2011: R526 million) with the
percentage on sales reducing from 24,5% to 19,3% (September 2011: 24,0%).
Operating expenses increased by 15,5% to R615 million (2011: R533 million), with
new businesses, including amortisation of the acquired trademarks, not in the
base contributing R24 million to the increase and M&A-related project costs
increasing by R22 million. Excluding these, base costs were up by 7%.
After net finance costs and dividends received, profit before tax declined 19%
to R450 million (2011: R554 million). The effective tax rate for the period was
24,0% (2011: 29,9%), as the Company utilises the remaining portion of its
Strategic Industrial Project allowance of R308 million. As a result, the profit
after tax from continuing operations declined 12% to R342 million (2011: R388
million).
Cash flows and financial position
Cash generated from operations was R181 million (2011: R264 million) after
working capital increased by R316 million.
Trade accounts and other receivables increased by R117 million with trade
accounts receivable days at the end of the period being 62 days, an improvement
from the 65 days reported at September 2011.
Inventory decreased by R40 million with inventory days improving from 134 days
at September 2011 to 123 days. Trade and other accounts payable decreased by
R239 million.
After net finance income, dividends and taxation, the cash inflow was R65
million. The upgrade at the Aeroton facility has been completed and the
construction of the high-volume liquids facility at Clayville is progressing
well, with total capital expenditure amounting to R274 million (2011: R217
million).
A further R25 million of treasury share purchases were made by the special
purpose vehicles party to the Broad-Based Black Economic Empowerment (BBBEE)
transaction concluded in April 2010. Subsequent to September 2011, an amount of
R100 million was repaid on the capex loan facility. The remaining loans of R254
million for the upgrade at the Aeroton plant and of R446 million for the high-
volume liquids plant are being repaid in quarterly instalments from March 2012,
with the final instalment due in the last quarter of the 2013 calendar year.
Cash equivalents decreased by R535 million during the six months, leaving a
healthy gross cash position of R568 million (September 2011: R1,1 billion).
Interim dividend
The Board has declared a gross interim dividend out of income reserves of 86
cents per share for the six months ended 31 March 2012, an increase of 6% over
the comparable distribution in 2011. The dividend will be subject to Dividend
Tax of 15% which will result in a net dividend to those shareholders who are not
exempt from paying dividend tax of 73,1 cents per share. No Secondary Tax on
Companies (STC) credits have been utilised. As at the declaration date, Adcock
Ingram has 174 697 484 ordinary shares in issue, including 5 736 163 treasury
shares. There are also 25 944 261 "A" and "B" ordinary shares in issue, all held
as treasury shares, which are entitled to a dividend.
BUSINESS OVERVIEW
COMMERCIAL
Southern Africa
The segment encompasses all of the businesses in the Southern African region
namely, OTC, Prescription and Hospital. The most significant impact on the
period has been the withdrawal of DPP-containing products and the disappointing
ARV tender award at the last adjudication in December 2010. The negative net
sales impact in the half-year under review was R55 million for DPP-containing
products and R100 million for ARV`s. The NutriLida acquisition has offset this
effect by R98 million for the period. The region overall posted a sales increase
of 4,4% in a tough economic climate that has seen pressure on the consumer as
well as aggressive competition.
Overall the business, as measured in IMS, has performed well in the private
market with a value growth of 10,1% (excluding DPP) in pharmacy and market share
has increased in a declining FMCG market.
OTC sales increased by 18% to R875 million (2011: R741 million), assisted by the
acquisition of NutriLida in the last quarter of 2011. Adcock Ingram is now
number 1 in the Wellbeing category in FMCG(1) and number 2 in Pharmacy(2).
Dependence on SEP products has reduced from 66% to 62%. Contribution after
marketing expenses decreased by 2,6% to R319 million (2011: R327 million). This
business has experienced the impact of the poor economic climate as consumers
have continued to be under pressure. Adcock has however managed to increase
market share in this highly competitive environment.
Excluding the DPP and ARV tender impact, the Prescription business has performed
well due to new multi-national collaborations, sound performance of Adcock
Ingram`s core brands and continued progress in the generics business. Overall
turnover has declined by 7,8% (14,7% increase excluding DPP and ARV tenders) to
R752 million (2011: R816 million).
Hospital turnover increased by 4% over the comparable period to R535 million
(2011: R514 million), as volumes increased by almost 5%.
The Renal division continues to grow market share in the public and private
sectors with growth reflected in all portfolios. In the generic market, the
division continued to invest in injectable analgesics, antibiotics and
speciality drugs. The Transfusion Therapy division was impacted by lower blood
donor numbers which increased only 2% compared to the 2011 comparable period.
The relationship with Baxter remains collaborative, with Baxter having performed
an audit of the upgraded facility in February 2012. No additional product has
been imported from Baxter during the period under review, as the Aeroton factory
is now able to meet market demand.
Rest of Africa and India
It has been a challenging six months for the business, but revenue growth of
14,7% over the same period last year was still achieved. There was good growth
in the first quarter of the year, driven mainly by aggressive media advertising
and promotions in Ghana as well as strong growth of the core pharmaceutical
export business. In the second quarter, results were adversely affected by
product recalls in Kenya and the temporary shutdown of the liquids plant in
Ghana.
In Kenya, sales of our flagship OTC analgesic, Dawanol, fell due to the
introduction of counterfeit Dawanol in the market which required a recall of
stock in the trade. The recall is complete and the business has obtained
authority to distribute new stock with hologram security measures. In addition,
two key products were withdrawn from the Kenyan market by their regulator after
a third party manufacturing site failed a regulatory inspection in January 2012.
A new manufacturing site has been approved and the relaunch of one of the
products is planned for June 2012.
In Ghana, poor quality water supply at the liquids factory led to the temporary
shutdown of the facility in February. A rapid but significant upgrade of the
plant to the required standards was initiated and 70% of manufacturing capacity
was restored by the end of April 2012.
(1) Source: Nielsen
(2) Source: IMS
SUPPLY CHAIN
The upgrade at the Wadeville facility is now complete. The plant underwent a US
Food and Drug Administration (FDA) audit in the first quarter of the financial
year. The outcome of the audit was satisfactory and the final report is awaited.
Oracle manufacturing software was implemented at the plant in January 2012,
which temporarily disrupted production.
The Clayville effervescent plant is performing well and the high-volume liquids
plant is progressing, albeit with some time extensions. The plant will be ready
for validation batches in July 2012 and inspection by the South African
Medicines Control Council (MCC) in August 2012.
The completion of the construction of the Aeroton facility was achieved in late
January 2012 and validations are expected to be performed until December 2012.
The finalisation of this project will result in the facility attaining
compliance with the international Pharmaceutical Inspection Convention and
Pharmaceutical Co-operation Scheme - jointly referred to as PIC/s - standards
adopted by the MCC.
LOGISTICS
Distribution volumes on a unit basis have increased 23% compared to the same
period last year, and warehouse capacity remains a focus. Distribution expenses,
as a cost per unit, have decreased year-on-year, and further transport and cost-
saving opportunities have been identified and remedial action to realise the
savings has been instituted. Further cost-savings initiatives are being explored
by rationalising the different distribution networks in the Group.
TRANSFORMATION
Adcock Ingram`s BBBEE transformation scorecard was certified by an accredited
verification agency in February 2012, maintaining a level 4 BBBEE status, but
importantly benefitted from the Black Employee Share Scheme which was finalised
in March 2011.
The Owner Driver Scheme is progressing well and is expected to be fully
implemented by September 2012. This should increase the Enterprise Development
score and support an improvement to level 3 BBBEE status.
REGULATORY ENVIRONMENT
The Department of Health announced an SEP increase of 2,14% in March 2012. An
announcement on the regulation of logistics fees is still awaited.
PROSPECTS
The upgrades to the Critical Care and Wadeville manufacturing plants have been
completed and these will operate at full capacity for the second half of the
year. The expansion to the Midrand distribution centre remains on course to be
finished by the end of the financial year. The completion and commissioning of
the high-volume liquids plant at Clayville, also scheduled for this year, will
conclude the Group`s investment in its supply chain. Internationally-accredited
manufacturing plants and direct to customer distribution capability will
strengthen the Group`s competitiveness.
The multi-national partner of choice strategy continues to deliver value with
the recent addition of co-operation agreements with Novo Nordisk and Lundbeck.
Additional collaborations are being explored to continue the path of revenue
stream diversification and decrease the dependence on mature products. Supply
chain collaborations will address the challenge in extending multi-national
collaboration partnerships into sub-Saharan Africa.
Whilst registration delays at the MCC continue to impede the ability of the
Group to bring new products to market, new product launches are planned for
early in the third quarter in the Feminine Health and OTC segments.
The Group continues to search for acquisition opportunities in high growth
emerging markets, particularly Africa and India. The successful registration and
resourcing of its wholly-owned Indian subsidiary represents important capacity
in support of this objective.
The effect of the current economic climate on consumer spending is concerning.
Margins will continue to be impacted by cost pressures, particularly labour,
transport and utilities, and by active ingredient prices which are directly
linked to currency fluctuations.
CHANGES TO DIRECTORS
Mr Mpho Makwana was appointed as an independent non-executive director with
effect from 1 February 2012.
DIVIDEND
The Board has declared a gross interim dividend out of income reserves of 86
cents per share, for the six months ended 31 March 2012.
The salient dates for the dividend are as follows:
Last date to trade: Friday, 15 June 2012
Shares trade "ex" dividend: Monday, 18 June 2012
Record date: Friday, 22 June 2012
Payment date: Monday, 25 June 2012
Share certificates may not be dematerialised or rematerialised between Monday,
18 June 2012 and Friday, 22 June 2012, both dates inclusive.
By order of the Board
NE Simelane
Company secretary
Johannesburg
28 May 2012
Comprehensive additional information is available on our website: www.adcock.com
Corporate Information
Directors:
KDK Mokhele (Chairman)*
JJ Louw (Chief Executive Officer)
EK Diack*
AG Hall (Deputy Chief Executive Officer and Financial Director)
T Lesoli*
M Makwana*
CD Raphiri*
LE Schonknecht*
RI Stewart*
AM Thompson*
* Non-executive
Company secretary:
NE Simelane
Registered office:
1 New Road, Midrand, 1682
Postal address:
Private Bag X69, Bryanston, 2021
Transfer secretaries:
Computershare Investor Services (Pty) Limited,
70 Marshall Street, Johannesburg, 2001
PO Box 61051, Marshalltown, 2107
Auditors:
Ernst & Young Inc.
Wanderers Office Park, 52 Corlett Drive, Illovo, 2196
Sponsor:
Deutsche Securities (SA) (Pty) Limited
3 Exchange Square, 87 Maude Street, Sandton, 2146
Bankers:
Nedbank Limited
135 Rivonia Road, Sandown, Sandton, 2146
Rand Merchant Bank
1 Merchant Place, cnr Fredman Drive and Rivonia Road, Sandton, 2196
Attorneys:
Read Hope Phillips, 30 Melrose Boulevard, Melrose Arch, 2196
Forward-looking statements:
Adcock Ingram may, in this document, make certain statements that are not
historical facts and relate to analyses and other information which are based on
forecasts of future results and estimates of amounts not yet determinable. These
statements may also relate to our future prospects, developments and business
strategies. Examples of such forward-looking statements include, but are not
limited to, statements regarding exchange rate fluctuations, volume growth,
increases in market share, total shareholder return and cost reductions. Words
such as "believe", "anticipate", "expect", "intend", "seek", "will", "plan",
"could", "may", "endeavour" and "project" and similar expressions are intended
to identify such forward-looking statements, but are not the exclusive means of
identifying such statements. By their very nature, forward-looking statements
involve inherent risks and uncertainties, both general and specific, and there
are risks that the predictions, forecasts, projections and other forward-looking
statements will not be achieved. If one or more of these risks materialise, or
should underlying assumptions prove incorrect, our actual results may differ
materially from those anticipated. Forward-looking statements apply only as of
the date on which they are made, and we do not undertake any obligation to
update or revise any of them, whether as a result of new information, future
events or otherwise.
29 May 2012
Date: 29/05/2012 07:05:01 Supplied by www.sharenet.co.za
Produced by the JSE SENS Department.
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