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Update on Trading Environment
Adcock Ingram Holdings Limited
(Incorporated in the Republic of South Africa)
Registration number 2007/016236/06
ISIN: ZAE000123436
Share code: AIP
(“Adcock Ingram” or “the Company”)
UPDATE ON TRADING ENVIRONMENT
Shareholders are referred to the Trading Statement based on trading for the quarter ended 31 December 2013,
issued on 31 January 2014.
Second quarter trading as at the end of February has shown no improvement, with year-to-date consolidated
revenue effectively flat on that of the previous corresponding period, and the Southern African business 6% behind
the corresponding period. The performance of the OTC and Prescription Generics portfolios remains of concern,
exhibiting volumes significantly behind those of the corresponding period, and January IMS Private Sector data on a
MAT basis showing Adcock Ingram lagging the market growth in those sectors. March ex-factory sales in the
Southern African business show some encouraging signs, but it is not yet evident if this is a direct result of
wholesaler buy-ins in anticipation of the SEP increase due for implementation on 21 March 2014.
Gross profit as a percentage of sales remains under extreme pressure as a result of the unfavourable revenue mix,
Rand depreciation of more than 20% in Adcock Ingram’s basket of currencies, which negatively impacts imported
active ingredients and other materials, and certain facilities running significantly below capacity, particularly oral
liquids.
Shareholders are reminded that the operating expenditure in the 6-month period ended 31 March 2013 included an
abnormal foreign exchange gain of R42 million, and that the Cosme business in India was only incorporated into the
Group from late January 2013 onwards, and the Zimbabwean business consolidated from April 2013 onwards.
Furthermore, costs related to the failed CFR bid process are expected to total approximately R140 million. These
costs are currently under review and will be settled to the extent due and payable. As disclosed in November 2013,
R35 million of these costs were expensed in the 2013 financial year, thus an amount in excess of R100 million is likely
to be expensed in the 6-months ending 31 March 2014.
Once the Company has reasonable certainty on an accurate range of earnings for the period ending 31 March 2014,
an update on SENS will be accordingly issued.
The Company is currently undergoing a process of re-evaluation of some of its processes and structure.
Whilst the road ahead is likely to be bumpy the Chairman of the Board is optimistic that the operational
management will be up to the task of successfully building on the proud history of the Company over the short to
medium term.
The financial information on which this trading update is based has not been reviewed and reported on by the
Company’s external auditors.
Midrand
19 March 2014
Sponsor
Deutsche Securities (SA) Proprietary Limited
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