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UNAUDITED CONDENSED
CONSOLIDATED INTERIM RESULTS
FOR THE SIX MONTHS ENDED 30 JUNE 2012
Cipla Medpro South Africa Limited
Registration number 2002/018027/06
JSE code CMP
ISIN ZAE000128179
UNAUDITED CONDENSED
CONSOLIDATED INTERIM RESULTS
FOR THE SIX MONTHS ENDED 30 JUNE 2012
- Revenue of R1,080 billion increased by 28%
- Normalised HEPS and EPS of 35,0 cents increased by 31%
- Third largest pharmaceutical company in South Africa,
by value*
- Fastest growing, of the top 10 pharmaceutical companies
in South Africa, by value*
- Interim dividend of 8,5 cents (2011: 6,5 cents) per share
*Source: IMS June 2012
CONDENSED CONSOLIDATED
STATEMENT OF COMPREHENSIVE INCOME
Unaudited Unaudited Audited
6 months 6 months Year
ended ended ended
30 June 30 June 31 December
2012 2011 2011
R'000 R'000 R'000
Revenue 1 079 786 842 812 1 767 561
Gross profit 579 140 490 250 1 055 516
Other income 1 017 79 712 121 264
Other operating expenses (366 571) (268 647) (725 705)
Profit before finance costs
and income tax 213 586 301 315 451 075
Finance costs (36 084) (31 030) (58 212)
Finance income 1 209 4 131 15 586
Profit before income tax 178 711 274 416 408 449
Income tax expense (52 740) (81 803) (121 462)
Profit for the period 125 971 192 613 286 987
Profit attributable to:
Equity holders of the parent 122 160 190 084 281 961
Non-controlling interest 3 811 2 529 5 026
Profit for the period 125 971 192 613 286 987
Other comprehensive income for the
period (net of income tax)
Total comprehensive income
for the period 125 971 192 613 286 987
Total comprehensive income
attributable to:
Equity holders of the parent 122 160 190 084 281 961
Non-controlling interest 3 811 2 529 5 026
Total comprehensive income
for the period 125 971 192 613 286 987
Number of shares ('000)
In issue (including treasury shares) 446 462 454 027 446 462
Weighted average
(excluding treasury shares)
Basic 440 023 447 587 446 945
Diluted 444 721 450 055 449 264
Earnings per share (cents)
Basic 27,8 42,5 63,1
Diluted 27,5 42,2 62,8
RECONCILIATION OF HEADLINE EARNINGS
Unaudited 6 months Unaudited 6 months Audited Year
ended ended ended
30 June 30 June 31 December
2012 2011 2011
R'000 R'000 R'000
Profit attributable to equity holders
of the parent 122 160 190 084 281 961
Adjusted for: (64) 215
Gain on disposals of property,
plant and equipment (74) (72)
Loss on disposal of joint venture 385
Total tax effects of adjustments 10 (98)
Headline earnings 122 160 190 020 282 176
Headline earnings per share (cents)
Basic 27,8 42,5 63,1
Diluted 27,5 42,2 62,8
CONDENSED CONSOLIDATED SEGMENTAL REPORT
Unaudited Unaudited Audited
6 months 6 months Year
ended ended ended
30 June 30 June 31 December
2012 2011 2011
R'000 R'000 R'000
Segment revenue
external customers
SEP 791 388 607 826 1 258 717
OTC 220 533 186 482 391 955
Other operating segments 67 865 48 504 116 889
Total 1 079 786 842 812 1 767 561
Segment result
SEP 161 903 235 961 440 836
OTC 35 287 54 482 100 641
Other operating segments 16 396 10 872 26 857
Unallocated item legal settlement# (117 259)
Total 213 586 301 315 451 075
# The unallocated item relates to the RBSA settlement.
CONDENSED CONSOLIDATED
STATEMENT OF FINANCIAL POSITION
Unaudited Unaudited Audited
30 June 30 June 31 December
2012 2011 2011
R'000 R'000 R'000
ASSETS
Non-current assets 2 073 741 1 974 426 2 050 278
Property, plant and equipment 437 473 435 049 444 457
Intangible assets 1 565 193 1 507 557 1 535 443
Other investments 10 6 8
Loans receivable 3 191 3 191
Deferred tax assets 67 874 31 814 67 179
Current assets 952 279 805 316 786 857
Inventory 401 153 317 370 414 907
Income tax receivable 8 110 926 1 312
Trade and other receivables 451 987 363 635 350 264
Loans receivable 3 778 7 891 3 881
Cash and cash equivalents 87 251 115 494 16 493
Total assets 3 026 020 2 779 742 2 837 135
EQUITY AND LIABILITIES
Capital and reserves 2 043 966 1 940 403 1 954 087
Non-controlling interest 14 605 9 501 12 544
Total equity 2 058 571 1 949 904 1 966 631
Non-current liabilities 337 906 315 685 340 134
Loans, borrowings and provisions 320 117 296 999 325 344
Deferred tax liabilities 17 789 18 686 14 790
Current liabilities 629 543 514 153 530 370
Trade and other payables 497 245 398 688 342 136
Loans, borrowings and provisions 51 114 10 054 51 976
Income tax payable 1 648 29 118 29 295
Bank overdrafts 79 536 76 293 106 963
Total liabilities 967 449 829 838 870 504
Total equity and liabilities 3 026 020 2 779 742 2 837 135
CONDENSED CONSOLIDATED
STATEMENT OF CHANGES IN EQUITY
Unaudited Unaudited Audited
6 months 6 months Year
ended ended ended
30 June 30 June 31 December
2012 2011 2011
R'000 R'000 R'000
Total equity at beginning
of the period 1 966 631 1 784 868 1 784 868
Total comprehensive income
for the period 125 971 192 613 286 987
Share buy-back (49 983)
IFRS 2 Share-based Payments 1 204 165 1 455
Changes in ownership interest 1 407
Dividends paid (35 235) (27 742) (58 103)
Total equity at end of the period 2 058 571 1 949 904 1 966 631
Comprising:
Capital and reserves 2 043 966 1 940 403 1 954 087
Non-controlling interest 14 605 9 501 12 544
Total equity 2 058 571 1 949 904 1 966 631
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
Unaudited Unaudited Audited
6 months 6 months Year
ended ended ended
30 June 30 June 31 December
2012 2011 2011
R'000 R'000 R'000
Cash flows from operating activities 145 004 147 905 112 008
Cash flows from investing activities (38 317) (59 127) (107 021)
Cash flows from financing activities (8 502) (24 729) (70 609)
Net increase (decrease) in cash
and cash equivalents 98 185 64 049 (65 622)
Cash and cash equivalents at
beginning of the period (90 470) (24 848) (24 848)
Cash and cash equivalents at end
of the period 7 715 39 201 (90 470)
COMMENTARY
OVERVIEW
We present our interim results for the period ended 30 June 2012. The delays in registration of our medicines
continue to impact on the growth of our company. We do, however, feel that this situation will improve during
the second half of 2012. The difficult trading conditions persist with a volatile and weakening exchange rate and
the implementation of the negligible Single Exit Price (SEP) price increase on certain products. As a result of our
continuing policy to take out forward exchange contracts (FECs) to limit our exposure to the USD currency, we
recorded unrealised losses on the mark to market valuation (fair valuation) of FECs of R34,2 million (2011: unrealised
gains of R28,6 million), as required by International Financial Reporting Standards (IFRS). As a result of the exchange
rate and the change in our product mix our gross profit margin has decreased; however, our trading results still
reflect significant improvements due to the increase in revenue of more than 28%.
As reported on SENS on 22 June 2012 and 29 June 2012, our 2011 provisional annual results were restated before
the approval of our 2011 Integrated Annual Report, to account for the subsequent event relating to the Reckitt
Benckiser South Africa (Pty) Ltd (RBSA) settlement.
REVIEW OF OPERATIONS
Cipla Medpro Holdings (Pty) Ltd (Cipla Medpro), a wholly owned subsidiary of Cipla Medpro South Africa Ltd
(CMSA or the group), continues its growth and was ranked third largest pharmaceutical company by value for the
12 months to June 2012. Cipla Medpro had the highest Evolution Index (EV) of the top 10 pharmaceutical
companies in South Africa for the 12 months to June 2012 (104,4) as well as the six months to June 2012 (107,9)
(IMS, June 2012).
Cipla Medpro's share in the total private market was 5,1% for the 12 months to June 2012 and 5,2% for the
six months to June 2012. The total private market grew by 9,6% for the 12 months to June 2012 and by 8,2% for
the six months to June 2012. Cipla Medpro's performance again outstripped the market and grew by 14,4% for the
12 months to June 2012 and by 16,8% for the six months to June 2012 (IMS, June 2012).
We remain focused on growing our over-the-counter (OTC) business and can already see gains from the strategies
in place.
Our oncology division is up and running and an exciting space to be in for the future.
Our small animal (Cipla Vet) business grew by 10,1% to R12,0 million (2011: R10,9 million) and our large animal
(Cipla Agrimed) business grew by 46,8% to R49,9 million (2011: R34,0 million).
Cipla Medpro was awarded R353 million (excluding VAT) in the respiratory products tender and expects a further
R100 million from other tenders, excluding antiretroviral's (ARVs).
Turnover of the factory (CMM) continues to improve and an increase of more than 65% was recorded when
compared to the corresponding comparative period. We are pleased to report that a profit before interest and
tax (PBIT) has been recorded at CMM of R1,9 million for the first six months (2011: loss before interest and tax of
R10,1 million), which is a significant improvement of R12,0 million. The improvement is mainly attributable to the
increased and more stable uptake from the State on the ARV tender.
REVIEW OF RESULTS
Statement of comprehensive income
Actual earnings per share (EPS) and headline earnings per share (HEPS) have decreased by 34,6% to 27,8 cents
(2011: 42,5 cents) as a result of the inclusion of the non-recurring settlement income in 2011 of R68,8 million
(2012: Rnil), the unrealised FEC gains in 2011 of R28,6 million (2012: unrealised FEC losses of R34,2 million) and
RBSA legal expenses and notional interest of R10,0 million in 2012 (2011: Rnil). These calculations are based on
440,0 million (2011: 447,6 million) weighted average number of shares in issue for the first six months of 2012
(before the effects of dilution are taken into account). Headline earnings have decreased to R122,2 million
(2011: R190,0 million). There were no items included in the 2012 reconciliation of headline earnings (2011: gain on
disposal of property, plant and equipment of R0,1 million, net of tax).
On a normalised basis, after adjusting for the items referred to above, our normalised EPS and HEPS have increased
by 30,6% to 35,0 cents (2011: 26,8 cents).
We are pleased to report an increase in revenue of 28,1% to R1,080 billion (2011: R842,8 million) despite the
slow registrations at the Medicines Control Council (MCC), however, the gross profit margin has decreased to
53,6% from 58,2% at 30 June 2011, mainly due to the change in our product mix and exchange rate. This growth
in revenue has been achieved organically with a significant increase in the demand of ARVs from the State. It is
pleasing to note that the increased demand in ARVs has allowed CMM to reach satisfactory production levels which
resulted in a small PBIT for the first six months.
PBIT for the period decreased by 29,1% to R213,6 million (2011: R301,3 million), with operating expenses increasing
to R366,6 million (2011: R268,6 million) for the current period. Excluding the positive impact of the settlement
income in 2011 and the unrealised FEC movements, PBIT grew by 21,5%. Profit after tax for the period was
R126,0 million (2011: R192,6 million). The effective tax rate improved slightly to 29,5% (2011: 29,8%) and remains
slightly higher than the statutory tax rate.
Net finance costs increased from R26,9 million to R34,9 million mainly as a result of the following:
- notional interest of R2,1 million (2011: Rnil) on the outstanding RBSA settlement amount (IFRS adjustment);
- notional interest on extended credit terms of R16,5 million (2011: R12,0 million) (IFRS adjustment); and
- interest on the Nedbank Ltd long-term loan facilities of R12,0 million (2011: R10,4 million).
Statement of financial position
Loans, borrowings and provisions, less the net cash position, have increased to R363,5 million (2011: R267,9 million)
mainly as a result of the RBSA settlement amount. The group's net cash surplus decreased from R39,2 million at
30 June 2011 to R7,7 million at 30 June 2012 as a result of:
- the final dividend of R33,5 million paid in May 2012; and
- provisional tax payments of R73,0 million at the end of June 2012.
Debtors days have increased slightly, when compared to December 2011, to 67 days (31 December 2011: 64 days
and 30 June 2011: 67 days). Creditors days are currently at 152 days (31 December 2011: 170 days and 30 June
2011: 185 days) with the reduction as a result of us continuing to settle certain invoices early to take advantage of
the exchange rate, where possible. The inventory days have decreased to 148 days (31 December 2011: 181 days
and 30 June 2011: 156 days) as the high levels of ARVs have normalised.
Statement of cash flows
Cash flows generated from operating activities are R145,0 million (2011: R147,9 million), after adjusting for
the non-cash flow effects of depreciation of R14,6 million (2011: R11,5 million), IFRS 2 Share-based Payment
expenses of R1,2 million (2011: R0,2 million) and FEC unrealised losses of R34,2 million (2011: unrealised gains of
R28,6 million). The final dividend relating to 2011 of R33,5 million was paid to shareholders during May 2012.
Investing activities resulted in outflows of R38,3 million (2011: R59,1 million) due to acquisitions of property, plant
and equipment and intangible assets. A net R8,5 million was utilised for financing activities (2011: R24,7 million),
mainly for the working capital and instalment sale facilities at the factory.
BASIS OF PREPARATION
The condensed consolidated interim financial results have been prepared in accordance with the recognition and
measurement criteria of all applicable standards and interpretations of IFRS, the disclosure requirements as set
out in IAS 34 Interim Financial Reporting, the Companies Act of 2008, as amended, where applicable the AC 500
standards as issued by the Accounting Practices Board or its successor, and the Listings Requirements of the JSE Ltd.
The accounting policies and methods of computation applied in the preparation of these consolidated interim
financial results are consistent with those followed in the preparation of the consolidated financial statements for
the year ended 31 December 2011.
The condensed consolidated interim financial results for the six months ended 30 June 2012, have not been audited
or reviewed by the group's external auditors.
C Aucamp (Chief Financial Officer) is responsible for these condensed consolidated financial results and has been
involved with the preparation thereof in conjunction with MW Daly and E van der Merwe, all three of whom are
qualified Chartered Accountants (South Africa).
DIRECTORATE
There have been no changes to the board and it continues to function in accordance with its approved charter.
SUBSEQUENT EVENTS
The directors are not aware of any matter or circumstance which is material to the financial affairs of the group,
which has occurred subsequent to 30 June 2012, that has not been otherwise dealt with in these condensed
consolidated interim financial results.
PCS Luthuli JS Smith
Chairman Chief Executive Officer
8 August 2012
DECLARATION OF ORDINARY DIVIDEND
Notice is hereby given that an interim cash dividend (dividend number 5) of 8,5 cents per share (gross) has been declared
by the board in respect of the six months ended 30 June 2012, an increase of 30,8% when compared to the interim
dividend of 6,5 cents in 2011 (before the effects of dividend withholding tax, where applicable). The company's policy to
maintain a dividend cover of between four and five times, has been complied with when the results are analysed on a normalised
basis. The dividend cover is based on normalised earnings due to the non-cash effect of the unrealised gains and losses on
FECs that may or may not be realised in the future, as well as the effects of once-off items. The dividend has been
declared out of income reserves.
The salient dates for the payment of the interim dividend are detailed below:
Last day to trade cum dividend Friday, 28 September 2012
Shares trade ex dividend Monday, 1 October 2012
Record date Friday, 5 October 2012
Payment date Monday, 8 October 2012
Share certificates may not be dematerialised or rematerialised between Monday, 1 October 2012 and Friday, 5 October 2012,
both dates inclusive.
In terms of the new Dividends Tax effective 1 April 2012, the following additional information is disclosed:
1. Local dividend tax rate is 15%;
2. No STC credits have been utilised;
3. Net local dividend amount is 7,225 cents per share for shareholders liable to pay the new Dividends Tax and 8,5 cents
per share for shareholders exempt from paying the new Dividends Tax;
4. The issued share capital of CMSA as at the date of this declaration is 446 461 759 ordinary shares; and
5. CMSAs tax reference number is 9987069144.
By order of the board
MW Daly Durban
Company Secretary 8 August 2012
FORWARD-LOOKING STATEMENTS
This announcement contains certain forward-looking statements with respect to the financial
condition and results of the operations of Cipla Medpro South Africa Ltd that, by their nature,
involve risk and uncertainty because they relate to events and depend on circumstances that
may or may not occur in the future. These may relate to future prospects, opportunities and
strategies. If one or more of these risks materialise, or should underlying assumptions prove
incorrect, actual results may differ from those anticipated. By consequence, all forward-
looking statements have not been reviewed or reported on by the group's auditors.
CORPORATE INFORMATION
Non-executive directors PCS Luthuli (Chairman); MB Caga; JvD du Preez; ND Mokone;
MT Mosweu; SMD Zungu
Executive directors JS Smith (Chief Executive Officer); C Aucamp (Chief Financial Officer)
Company Secretary MW Daly
Registration number 2002/018027/06
JSE code CMP
ISIN ZAE000128179
Registered address 1474 South Coast Road, Mobeni, KwaZulu-Natal, 4052
Postal address PO Box 32003, Mobeni, 4060
Transfer secretaries Computershare Investor Services (Pty) Ltd
Telephone +27 31 451 3800
Facsimile +27 31 451 3889
Email investor@ciplamedpro.co.za
Whistle-blowing hotline 0800 21 21 51 (toll free)
Sponsor Nedbank Capital
Auditors Mazars
Legal advisors Norton Rose South Africa (incorporated as Deneys Reitz Inc.)
www.ciplamedsa.co.za
Date: 16/08/2012 07:05:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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