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ADCOCK INGRAM HOLDINGS LIMITED - Unaudited group financial results and cash dividend declaration for the six-month period ended 31 December 2015

Release Date: 24/02/2016 07:05
Code(s): AIP     PDF:  
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Unaudited group financial results and cash dividend declaration for the six-month period ended 31 December 2015

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 GROUP FINANCIAL RESULTS AND CASH DIVIDEND DECLARATION
for the six-month period ended 31 December 2015

Salient features
Turnover increased 7% to R2 752 million
Gross profit improved 11% to R1 006 million
Trading profit increased 20% to R293 million
Dividend declared: 50 cents per share
B-BBEE level 4 achieved

INTRODUCTION

The divisional reorganisation of Adcock Ingram’s business, commenced early in the 2015 financial year, has in a sense been a contributing feature in
maintaining the positive trend of performance during the interim period presently under review. In a period of economic uncertainty and intensifying
currency devaluation, the Group’s improved factory efficiencies, better customer relations, pleasing service level statistics and a concentrated marketing
effort, yielded impressive market share gains, measured by IMS and Nielsen, particularly in the OTC and Consumer divisions.

FINANCIAL PERFORMANCE OF CONTINUING OPERATIONS

TURNOVER AND PROFITS

Group turnover increased by 7.1% to R2 752 million, partly aided by the 7.5% SEP price increase in April 2015 on the segment of products to which those
regulatory limitations apply. All segments, however, posted improvements in turnover over the prior period. Volume improvement was also encouraging,
but the benefits therefrom were unfortunately offset by the discontinuation of certain uneconomic product lines in the Consumer Division and the
repatriation of some MNC business in the Prescription division.

Given the adverse impact through currency devaluations, the collective gross margin improvement from 35.2% to 36.5% was more than encouraging,
this substantially arising through increased and more streamlined factory throughput, including lower inventory impairments, and sales mix benefits
when measured against the comparable period. The relatively high inventory holding in the current period provided some protection in the depreciating 
Rand environment.

Having regard to the relatively early stage of the divisional restructure in the period to 31 December 2014, a deliberately aggressive selling and
marketing plan was carried out during the current reporting period. A well mounted and cost-effective marketing programme was implemented and the
additional cost thereof is clearly evident in the statement of comprehensive income. What is particularly pleasing, however, is the expected outcome of
the more disciplined control over fixed and administrative expenditure.

The overall advantages of the reorganised divisional management structure started to reveal themselves in this period with trading profits increasing by
20% from R243.8 million to R292.6 million.

NON-TRADING EXPENSES

Non-trading expenses during the period includes share-based payments of R35.9 million of which R20.8 million relates to a once-off IFRS 2 charge, arising
through the implementation of the July 2015 B-BBEE scheme.

TAX AND Headline earnings

The effective tax rate of 32% is a consequence of certain expenditure being non-deductible for tax purposes.

Headline earnings from continuing operations for this interim period amounted to R164.8 million (Dec 2014: R157.9 million). This translates into headline 
earnings per share of 98.6 cents (Dec 2014: 93.6 cents). Excluding the once-off IFRS 2 charges of R20.8 million relating to the B-BBEE scheme, 
headline earnings from continuing operations would be R185.6 milllion (111.0 cents, an improvement of 19%).

CASH FLOWS

Cash generated from operations was R269.7 million despite working capital utilisation increasing by R93.2 million.

BUSINESS OVERVIEW

Turnover in the OTC division increased by 9% to R761.5 million (Dec 2014: R698.6 million). According to IMS, the Division posted growth ahead of the
market, with double digit ex-factory growth in Adco-dol, Allergex and Corenza-C, the top three brands. Despite increased throughput in the Clayville
factory, the punitive impact of the exchange rate and a detectable change in consumer buying patterns, put margins under pressure. OTC trading profit
of R128.6 million is reported, compared to R141.2 million in the comparable period.

Prescription turnover of R892.4 million is marginally ahead of the comparable period (Dec 2014: R880.9 million), this the result of static volumes in the
Generics portfolio and the singular effect of a repatriation of certain products to multinational partners. A large percentage of the contributions arising
from the SEP price increase and a much improved performance from ARV sales were unfortunately absorbed through the aforesaid circumstances. Gross
margins, however, improved in this period due to better production recoveries, increased ARV sales volumes and lower inventory write-offs. Trading
profits of R87.1 million are accordingly well ahead of the comparative performance of R57.9 million.

Consumer turnover of R328.1 million is 8% ahead of the comparable period (Dec 2014: R304.2 million) with Panado, Probiflora, Compral and Cepacol all
posting healthy growth. Trading profit improved by 10% to R42.1 million (Dec 2014: R38.3 million).

Hospital turnover increased by 12% to R626.2 million (Dec 2014: R557.8 million) notwithstanding an increasingly competitive environment and with
good cost control, trading profit increased to R21.6 million (Dec 2014: R1.1 million).

The Group’s revised B-BBEE structure was successfully implemented in July 2015. The level 4 rating achieved under the new B-BBEE codes, in contrast
to the level 3 rating held previously, will hopefully contribute towards providing reciprocal advantage to the Company and stakeholders under this
imperative modality for conducting business in South Africa.

INDIA

Following the Board’s decision to dispose of the Group’s Indian operating subsidiary, this operation has been treated as an asset held-for-sale and is
reflected in the financial statements as a discontinued operation. Amortisation and depreciation of assets in such subsidiary were accordingly suspended
in the current period.

CHANGES TO THE BOARD AND IN DIRECTORS’ FUNCTIONS

On 11 November 2015, Clifford Raphiri, the Company´s lead independent director, was appointed Non-Executive Chairman. Former Non-executive
Chairman, Brian Joffe assumed the role of Deputy Chairman. Kevin Wakeford resigned as Chief Executive Officer and Andrew Hall, the Company´s Deputy
Chief Executive Officer and Chief Financial Officer, was appointed Chief Executive Officer. Dorette Neethling, the Group Financial Executive was appointed
Acting Chief Financial Officer. Lindsay Ralphs resigned as a Non-executive Director and was replaced by David Cleasby.

On 2 February 2016, Clifford Raphiri, now Non-executive Chairman, relinquished his chairmanship of the HR, Remuneration and Nominations Committee,
but remains a member of this Committee. Mpho Makwana relinquished his membership of the Risk and Sustainability Committee and assumed
chairmanship of the HR, Remuneration and Nominations Committee. David Cleasby assumed membership of the Risk and Sustainability Committee and
the Chief Financial Officer will no longer be a member of the Social Ethics and Transformation Committee.

On 23 February 2016, Dorette Neethling was appointed to the Board as executive director and Chief Financial Officer. 

PROSPECTS

During calendar year 2015 and particularly during the period under review, the Group continued to make progress in restoring its status and regaining the
respect of the broader South African pharmaceutical market. The trend of improvement in the Group’s operating performance, in this and immediately
past periods, bears testimony to the beneficial outcome arising from the refocused effort of management under the divisional restructure.

While the improvement in profits during the subject period would suggest a continuing level of growth going forward, stakeholders will be acutely aware
of the economic challenges that lie ahead. Recent increases in interest rates, consequential inflation, continued under-recovery of currency losses under
government’s SEP reimbursement model and the potential further decline in disposable incomes, will surely have an effect on future sales volumes and
profitability.

Notwithstanding these direct challenges, continued effort will be invested to enhance the quality and efficacy of brands, build customer relationships
and maintain service levels within each of the operating divisions. The Group provides an excellent range of products into the market and management
will continue to diligently apply themselves to maximise opportunities for optimal achievement. Concurrently with normal trading activities, there is a
purposeful process in place to seek to expand the Group’s non-regulated product portfolio, through partnerships and acquisitions.


DIVIDEND DISTRIBUTION

The Board has declared an interim gross dividend out of income reserves of 50 cents per share in respect of the six months ended 31 December 2015. The
South African dividend tax (“DT”) rate is 15% and the net dividend payable to shareholders who are not exempt from DT is 42.50 cents per share. Adcock
Ingram currently has 175 748 048 ordinary shares in issue of which 149 902 758 qualify for dividends. The income tax reference number is 9528/919/15/3.

The salient dates for the distribution are detailed below:                          
Last date to trade cum distribution                                                                                                 Friday, 11 March 2016
Shares trade ex distribution                                                                                                        Monday, 14 March 2016
Record date                                                                                                                         Friday, 18 March 2016
Payment date                                                                                                                       Tuesday, 22 March 2016

Share certificates may not be dematerialised or rematerialised between Monday, 14 March 2016 and Friday, 18 March 2016, both dates inclusive.

CD Raphiri                                                                                                            AG Hall
Chairman                                                                                                              Chief Executive Officer

23 February 2016    

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

                                                                                                Unaudited   Change %     Unaudited       Audited   
                                                                                               six months               six months          year   
                                                                                                    ended                    ended         ended   
                                                                                              31 December              31 December       30 June   
                                                                                                     2015                     2014          2015   
Continuing operations                                                                  Note         R’000                    R’000         R’000   
REVENUE                                                                                   2     2 758 393                2 583 395     5 294 511   
TURNOVER                                                                                  2     2 752 416         7%     2 568 814     5 270 697   
Cost of sales                                                                                 (1 746 768)              (1 664 128)   (3 359 850)   
Gross profit                                                                                    1 005 648        11%       904 686     1 910 847   
Selling, distribution and marketing expenses                                                    (499 377)                (444 279)     (970 435)   
Drug management and regulatory expenses                                                          (57 836)                 (60 759)     (119 288)   
Fixed and administrative expenses                                                               (155 853)                (155 818)     (311 997)   
Trading profit                                                                                    292 582       20%        243 830       509 127   
Non-trading expenses                                                                      3      (42 135)                 (16 977)      (26 350)   
Operating profit                                                                                  250 447                  226 853       482 777   
Finance income                                                                            2         1 483                   10 624        13 144   
Finance costs                                                                                    (44 723)                 (57 189)     (100 525)   
Dividend income                                                                           2         4 494                    3 957        10 670   
Equity-accounted earnings                                                                          26 177                   32 511        65 608   
Profit before taxation                                                                            237 878       10%        216 756       471 674   
Taxation                                                                                         (67 461)                 (55 274)     (141 031)   
Profit for the period/year from continuing operations                                             170 417        6%        161 482       330 643   
Profit/(Loss) after taxation for the period/year from discontinued operation              4         2 075                 (16 530)     (131 834)   
Profit for the period/year                                                                        172 492                  144 952       198 809   
Other comprehensive income which will subsequently be recycled to               
profit or loss                                                                                    204 043                   40 562        61 722   
Exchange differences on translation of foreign operations:                                                                                         
– Continued operations                                                                             65 969                   14 673        10 581   
– Discontinued operation                                                                          127 189                   25 843        50 661   
Movement in cash flow hedge accounting reserve, net of tax                                          9 818                       46            77   
Other                                                                                               1 067                        –           403   
Other comprehensive income which will not be recycled to profit or               
loss                                                                            
Actuarial loss on post-retirement medical liability                                                     –                        –         (442)   
Total comprehensive income for the period/year, net of tax                                        376 535                  185 514       260 089   
Profit attributable to:                                                                                                                            
Owners of the parent                                                                              166 662                  141 892       197 932   
Non-controlling interests                                                                           5 830                    3 060           877   
                                                                                                  172 492                  144 952       198 809   
Total comprehensive income attributable to:                                                                                                        
Owners of the parent                                                                              367 363                  181 142       260 419   
Non-controlling interests                                                                           9 172                    4 372         (330)   
                                                                                                  376 535                  185 514       260 089   
Continuing operations                                                                                                                              
Basic earnings per ordinary share (cents)                                                            98.4         5%          93.9         195.3   
Diluted basic earnings per ordinary share (cents)                                                    98.3         5%          93.8         195.3   
Headline earnings per ordinary share (cents)                                                         98.6         5%          93.6         192.8   
Diluted headline earnings per ordinary share (cents)                                                 98.4         5%          93.5         192.8   
Discontinued operation                                                                                                                             
Basic earnings/(loss) per ordinary share (cents)                                                      1.2                    (9.8)        (78.1)   
Diluted basic earnings/(loss) per ordinary share (cents)                                              1.2                    (9.8)        (78.1)   
Headline earnings/(loss) per ordinary share (cents)                                                   1.2                    (9.8)        (32.7)   
Diluted headline earnings/(loss) per ordinary share (cents)                                           1.2                    (9.8)        (32.7)   
              
           
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

                                                                        Attributable to holders of the parent
                                                                                    Non-distributable
                                                                                        reserves

                                                                      Discon
                                                                      tinued                        Total
                                 Issued                            operation                 attributable          Non-
                                  share       Share   Continuing   held-for-      Retained    to ordinary   controlling
                                capital     premium   operations        sale        income   shareholders     interests         Total
                                  R’000       R’000        R’000       R’000         R’000          R’000         R’000         R’000
As at 1 July 2014                16 878     510 920      426 415                 1 784 688      2 738 901       118 578     2 857 479
Share issue                           6       1 187                                                 1 193                       1 193
Movement in share-based
payment reserve                                           11 497                                   11 497                      11 497
Acquisition of non-controlling
interests in Ayrton Drug
Manufacturing Limited                                                                 (31)           (31)         (100)         (131)
Total comprehensive income                                39 250                   141 892        181 142         4 372       185 514
Profit for the period                                                              141 892        141 892         3 060       144 952
Other comprehensive
income                                                    39 250                                   39 250         1 312        40 562
Balance at 31 December
2014 (unaudited)                 16 884    512 107       477 162                 1 926 549      2 932 702       122 850     3 055 552
Share issue                           4        831                                                    835                         835
Movement in share-based
payment reserve                                            4 601                                    4 601                       4 601
Acquisition of non-controlling
interests in Ayrton Drug
Manufacturing Limited                                                                                               (1)           (1)
Total comprehensive income                                23 237                    56 040         79 277       (4 702)        74 575
Profit for the period                                                               56 040         56 040       (2 183)        53 857
Other comprehensive
income                                                    23 237                                   23 237       (2 519)        20 718
Disposal of non-controlling
interest in Bioswiss (Pty)
Limited                                                                                                        (14 101)      (14 101)
Dividends                                                                                                       (4 537)       (4 537)
Balance at 30 June 2015
(audited)                        16 888     512 938      505 000           -     1 982 589      3 017 415        99 509     3 116 924
Share issue                           1         188                                                   189                         189
Discontinued operation                                 (252 688)     252 688                            –                           –
Movement in share-based
payment reserve                                          14 369                                    14 369                      14 369
Implementation of BEE
scheme                             258     153 746       (5 624)                  (44 587)        103 793      (79 883)        23 910
Total comprehensive income                               200 701                   166 662        367 363         9 172       376 535
Profit for the period                                                              166 662        166 662         5 830       172 492
Other comprehensive
income                                                   200 701                                  200 701         3 342       204 043
Dividends                                                                        (117 952)      (117 952)                   (117 952)
Balance at 31 December
2015 (unaudited)                 17 147    666 872       461 758     252 688     1 986 712      3 385 177        28 798     3 413 975

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

                                                                                                 Unaudited      Unaudited     Audited
                                                                                               31 December    31 December     30 June
                                                                                                      2015           2014        2015
                                                                                        Note         R’000          R’000       R’000
ASSETS              
Property, plant and equipment                                                                    1 471 029      1 540 308   1 490 828
Intangible assets                                                                                  283 934        827 632     743 156
Deferred tax                                                                                         3 542          4 891      12 091
Other financial assets                                                                              84 420        138 349      91 106
Investment in joint ventures                                                                       337 907        239 835     279 135
Non-current assets                                                                               2 180 832      2 751 015   2 616 316
Inventories                                                                                      1 292 841      1 032 932   1 207 581
Trade and other receivables                                                                      1 394 038      1 383 248   1 408 728
Cash and cash equivalents                                                                          192 115        459 429     147 379
Taxation receivable                                                                                 63 987         79 678      77 948
Current assets                                                                                   2 942 981      2 955 287   2 841 636
Assets classified as held-for-sale                                                         4       828 560              –           –
Total current assets                                                                             3 771 541      2 955 287   2 841 636
Total assets                                                                                     5 952 373      5 706 302   5 457 952
EQUITY AND LIABILITIES              
Capital and reserves              
Issued share capital                                                                                17 147         16 884      16 888
Share premium                                                                                      666 872        512 107     512 938
Non-distributable reserves: Continuing operations                                                  461 758        477 162     505 000
                            Discontinued operation held-for-sale                           4       252 688              –           –
Retained income                                                                                  1 986 712      1 926 549   1 982 589
Total shareholders’ funds                                                                        3 385 177      2 932 702   3 017 415
Non-controlling interests                                                                           28 798        122 850      99 509
Total equity                                                                                     3 413 975      3 055 552   3 116 924
Long-term borrowings                                                                               507 260      1 015 332     513 753
Post-retirement medical liability                                                                   22 935         22 194      22 796
Deferred tax                                                                                        78 213         51 788      81 854
Non-current liabilities                                                                            608 408      1 089 314     618 403
Trade and other payables                                                                         1 296 475      1 266 310   1 328 431
Bank overdraft                                                                                     421 008        228 719     304 210
Short-term borrowings                                                                               16 636         10 693      13 273
Cash-settled options                                                                                 6 973         16 362       6 519
Provisions                                                                                          61 588         39 352      70 192
Current liabilities                                                                              1 802 680      1 561 436   1 722 625
Liabilities classified as held-for-sale                                                    4       127 310              –           –
Total current liabilities                                                                        1 929 990      1 561 436   1 722 625
Total equity and liabilities                                                                     5 952 373      5 706 302   5 457 952

CONSOLIDATED STATEMENTS OF CASH FLOWS

                                                                                               Unaudited       Unaudited     Audited
                                                                                              six months      six months        year
                                                                                                    ended           ended       ended
                                                                                             31 December     31 December     30 June
                                                                                                    2015            2014        2015
                                                                                                   R’000           R’000       R’000
Cash flows from operating activities              
Operating profit from continuing operations                                                       250 447         226 853     482 777
Operating loss from discontinued operation                                                        (1 110)        (26 583)   (138 119)
Operating profit                                                                                  249 337         200 270     344 658
Non-cash items                                                                                    113 628         153 980     379 892
Operating profit before working capital changes                                                   362 965         354 250     724 550
Working capital changes                                                                          (93 249)          39 493   (126 423)
Cash generated from operations                                                                    269 716         393 743     598 127
Finance income, excluding receivable                                                                4 504          16 120      14 409
Finance costs, excluding accrual                                                                 (44 050)        (60 592)   (103 871)
Dividend income                                                                                    19 150           3 957      10 670
Dividends paid                                                                                  (117 952)               –     (4 537)
Taxation paid                                                                                    (52 075)        (18 053)    (87 312)
Net cash inflow from operating activities                                                          79 293         335 175     427 486
Cash flows from investing activities              
Decrease in other financial assets                                                                  6 686             606      37 962
Disposal of business                                                                                    –               –     (2 663)
Purchase of property, plant and equipment – Expansion                                            (25 454)        (20 216)    (23 560)
                                          – Replacement                                          (18 762)        (32 988)    (56 304)
Proceeds on disposal of property, plant and equipment                                                 137             573       2 243
Disposal of non-controlling interest in Blue Falcon Trading (Pty) Limited                        (11 616)              –            –
Net cash outflow from investing activities                                                       (49 009)        (52 025)    (42 322)
Cash flows from financing activities              
Acquisition of non-controlling interests in Ayrton Drug Manufacturing Limited                           –           (131)       (132)
Proceeds from issue of share capital                                                                  189           1 193       2 028
Proceeds from sale of investment                                                                   30 410               –          –
Increase in borrowings                                                                                  –          15 278      23 915
Repayment of borrowings                                                                           (2 932)               –   (506 031)
Net cash inflow/(outflow) from financing activities                                                27 667          16 340   (480 220)
Net increase/(decrease) in cash and cash equivalents                                               57 951         299 490    (95 056)
Net foreign exchange difference on cash and cash equivalents                                       19 984           2 981       9 986
Cash and cash equivalents at beginning of period/year                                           (156 831)        (71 761)    (71 761)
Cash and cash equivalents at end of period/year*                                                 (78 896)         230 710   (156 831)
              
              
* Made up as follows:              
Cash and cash equivalents                                                                         192 115         459 429     147 379
Bank overdraft                                                                                  (421 008)       (228 719)   (304 210)
Net cash position per statement of financial position                                           (228 893)         230 710   (156 831)
Cash at banks and short-term deposits attributable to discontinued operation                      149 997               –           –
Cash and cash equivalents at end of period/year                                                  (78 896)         230 710   (156 831)

Notes to the consolidated financial statements

1   BASIS OF PREPARATION
1.1 Introduction
    The abridged unaudited interim results for the six months ended 31 December 2015 have been prepared in compliance with the Listings
    Requirements of the JSE Limited, International Financial Reporting Standards (IFRS), the requirements of the International Accounting Standards,
    IAS 34: Interim financial reporting, SAICA Financial Reporting Guidelines as issued by the Accounting Practices Committee and Financial
    Pronouncements as issued by the Financial Reporting Standards Council and the Companies Act, No. 71 of 2008. The Board of directors take full
    responsibility for this set of financial results which have been prepared by Ms Dorette Neethling, Chief Financial Officer.

1.2 Changes in accounting policies
    The accounting policies adopted are consistent with those of the previous financial year.

                                                                                              Unaudited       Unaudited     Audited   
                                                                                             six months      six months        year   
                                                                                                    ended           ended       ended   
                                                                                            31 December     31 December     30 June   
                                                                                                   2015            2014        2015   
                                                                                                  R’000           R’000       R’000   
2   REVENUE                                                                                                                             
   Turnover                                                                                    2 752 416       2 568 814   5 270 697   
   Finance income                                                                                  1 483          10 624      13 144   
   Dividend income                                                                                 4 494           3 957      10 670   
                                                                                              2 758 393       2 583 395   5 294 511   
3   NON-TRADING EXPENSES                                                                                                            
   Impairments                                                                                     1 356               –       5 351   
   Transaction costs                                                                               4 881               –      13 678   
   Share-based payment expenses                                                                   35 898          16 977      15 081   
   Lease cancellation expenses                                                                         –               –         500   
   Profit on disposal of business                                                                      –               –     (8 260)   
                                                                                                 42 135          16 977      26 350   
                                                           

                                                                                              Unaudited       Unaudited     Audited
                                                                                             six months      six months        year
                                                                                                    ended           ended       ended
                                                                                            31 December     31 December     30 June
                                                                                                   2015            2014        2015
                                                                                                  R’000           R’000       R’000
4   DISCONTINUED OPERATION
    The Board has resolved to dispose of Adcock Ingram Private Limited (India).
    The results of India are presented below and the net assets were reclassified as
    held-for-sale as completion of this disposal is expected by year-end.
    REVENUE                                                                                       118 096         133 688     264 415
   TURNOVER                                                                                      114 614         130 517     257 672
   Cost of sales                                                                                (40 280)        (42 176)    (86 864)
   Gross profit                                                                                   74 334          88 341     170 808
   Selling, distribution and marketing expenses                                                 (59 041)        (74 700)   (144 796)
   Fixed and administrative expenses                                                            (11 103)        (40 224)    (84 156)
   Trading profit/(loss)                                                                           4 190        (26 583)    (58 144)
   Non-trading expenses                                                                          (5 300)               –    (79 975)
   Operating loss                                                                                (1 110)        (26 583)   (138 119)
   Finance income                                                                                  3 482           3 171       6 743
   Finance costs                                                                                   (297)           (203)       (458)
   Profit/(Loss) before taxation                                                                   2 075        (23 615)   (131 834)
   Taxation                                                                                            –           7 085           –
   Profit/(Loss) for the period/year                                                               2 075        (16 530)   (131 834)
    ASSETS
    Property, plant and equipment                                                                  14 798
   Intangible assets                                                                             556 060
   Inventories                                                                                    39 840
   Trade and other receivables                                                                    67 865
   Cash and cash equivalents                                                                     149 997
   Total assets                                                                                  828 560
   LIABILITIES 
   Long-term borrowings                                                                            5 868
   Trade and other payables                                                                      118 126
   Provisions                                                                                      3 316
   Total liabilities                                                                             127 310
   Foreign currency translation reserve related to assets classified as held-for-sale            252 688
   Net assets                                                                                    448 562

    Included in the Group’s consolidated statement of cash flows are cash flows from the
    India discontinued operation. These cash flows are included in operating, investing and
   financing activities as follows:

   Cash inflow from operating activities                                                           4 358
   Cash outflow from investing activities                                                          (445)
   Cash outflow from financing activities                                                          (208)
   Net cash inflow                                                                                 3 705

                                                                                              Unaudited       Unaudited     Audited
                                                                                               six months      six months        year
                                                                                                  ended           ended       ended
                                                                                            31 December     31 December     30 June
                                                                                                   2015            2014        2015
                                                                                                  R’000           R’000       R’000
5   SEGMENT REPORTING
    As at December 2014 the assets and liabilities of the OTC, Consumer and Prescription
    products were integrated and managed as the Pharmaceutical division in Southern
    Africa.  The Group regarded this as a single primary business segment for statement
    of financial position purposes. The prior year figures have now been restated in line
    with the current group structure.
   Turnover                                                                                                                       
    Continuing operations:
   Southern Africa                                                                             2 608 213       2 441 439   5 022 770
       OTC                                                                                       761 465         698 568   1 454 224
       Consumer                                                                                  328 122         304 152     628 991
       Prescription                                                                              892 380         880 914   1 812 735
       Hospital                                                                                  626 246         557 805   1 126 820
   Rest of Africa and India*                                                                     159 117         134 731     270 761
   Less: Intercompany sales                                                                     (14 914)         (7 356)    (22 834)
                                                                                              2 752 416       2 568 814   5 270 697
    Discontinued operation:
   India                                                                                         114 614         130 517     257 672
                                                                                              2 867 030       2 699 331   5 528 369
   Trading and operating profit   
    Continuing operations:  
   Southern Africa                                                                               279 318         238 518     520 894
       OTC                                                                                       128 642         141 174     260 717
       Consumer                                                                                   42 050          38 298      79 301
       Prescription                                                                               87 054          57 909     148 099
       Hospital                                                                                   21 572           1 137      32 777
   Rest of Africa and India*                                                                      13 264           5 312    (11 767)
   Trading profit                                                                                292 582         243 830     509 127
   Less: Non-trading expenses                                                                   (42 135)        (16 977)    (26 350)
   Operating profit                                                                              250 447         226 853     482 777
   Total assets 
    Continuing operations: 
   Southern Africa                                                                             4 199 702       3 936 264   4 064 031
       OTC                                                                                     1 442 263       1 346 847   1 419 863
       Consumer                                                                                  350 916         441 509     393 820
       Prescription                                                                            1 318 918       1 112 274   1 209 513
       Hospital                                                                                1 087 605       1 035 634   1 040 835
   Rest of Africa                                                                                260 529         218 025     193 171
   India joint venture                                                                           228 624         145 388     171 787
   Other – shared services                                                                       434 958         678 580     348 597
                                                                                                5 123 813       4 978 257   4 777 586
    Discontinued operation: 
   India                                                                                         828 560         728 045     680 366
                                                                                              5 952 373       5 706 302   5 457 952
   * Research and development services in India.  
  
                                                                                              Unaudited       Unaudited     Audited   
                                                                                               six months      six months        year   
                                                                                                  ended           ended       ended   
                                                                                            31 December     31 December     30 June   
                                                                                                   2015            2014        2015   
                                                                                                  R’000           R’000       R’000   
6   INVENTORY                                                                                                                           
     The amount of inventories written down recognised as an expense in profit or loss:                                                  
    Cost of sales                                                                                 17 992          31 906      97 800   
    Non-trading expenses                                                                               –               –     (8 375)   
                                                                                                  17 992          31 906      89 425   
7    CAPITAL COMMITMENTS                                                                                                                
    – contracted                                                                                  12 460          21 140       7 000   
    – approved, but not contracted                                                                13 083          10 841      33 026   
                                                                                                  25 543          31 981      40 026   
8    HEADLINE EARNINGS                                                                                                                   
    Headline earnings is determined as follows:                                                                                         
    Continuing operations                                                                                                               
    Earnings attributable to owners of Adcock Ingram from total operations                       166 662         141 892     197 932   
    Adjusted for:                                                                                                                      
    (Earnings)/Loss attributable from discontinued operation                                     (2 075)          16 530     131 834   
    Earnings attributable to owners of Adcock Ingram from continuing operations                  164 587         158 422     329 766   
    Adjusted for:                                                                                                                      
    Loss/(Profit) on disposal/scrapping of property, plant and equipment                             255           (475)     (1 750)   
    Tax effect on disposal of property, plant and equipment                                          (7)               –       (227)   
    Impairment of property, plant and equipment                                                        –               –       7 390   
    Share of non-controlling interest in the impairment of property, plant and equipment               –               –     (1 819)   
    Profit on disposal of business                                                                     –               –     (8 260)   
    Adjustments relating to equity-accounted joint ventures                                            –               –         412   
    Headline earnings from continuing operations                                                 164 835         157 947     325 512   
    Discontinued operation                                                                                                             
    Earnings/(Loss) attributable to owners of Adcock Ingram from discontinued operation            2 075        (16 530)   (131 834)   
    Adjusted for:                                                                                                                      
    Impairment of intangible assets                                                                    –               –      74 432   
    Loss on disposal/scrapping of property, plant and equipment                                        –               –       2 241   
    Headline earnings/(loss) from discontinued operation                                           2 075        (16 530)    (55 161)   
                                                                                                     ’000            ’000        ’000   
9    SHARE CAPITAL                                                                                                                      
    Number of shares in issue                                                                    175 748         201 652     201 685   
    Number of treasury shares held                                                               (9 454)        (32 800)    (32 800)   
    Net shares in issue                                                                          166 294         168 852     168 885   
    Headline earnings and basic earnings per share are based on:                                                                       
    Weighted average number of shares                                                            167 219         168 795     168 834   
    Diluted weighted average number of shares                                                    167 492         168 844     168 841   
 

CORPORATE INFORMATION

Directors
Mr D Cleasby (Non-executive Director)
Mr A Hall (Chief Executive Officer)
Prof M Haus (Independent Non-executive Director)
Mr B Joffe (Deputy Chairman)
Dr T Lesoli (Independent Non-executive Director)
Mr M Makwana (Independent Non-executive Director)
Dr A Mokgokong (Non-executive Director)
Mr R Morar (Non-executive Director)
Mr C Raphiri (Independent Non-executive Chairman)
Mr M Sacks (Independent Non-executive Director)
Dr R Stewart (Independent Non-executive Director)

Company secretary
NE Simelane

Registered office
1 New Road, Midrand, 1682

Postal address
Private Bag X69, Bryanston, 2021

Transfer secretaries
Computershare Investor Services Proprietary Limited
70 Marshall Street, Johannesburg, 2001
PO Box 61051, Marshalltown, 2107

Auditors
Ernst & Young Inc.
102 Rivonia Road, Sandton, 2146

Sponsor
Rand Merchant Bank (A division of FirstRand Bank Limited)
1 Merchant Place, corner Fredman Drive and Rivonia Road, Sandton, 2196

Bankers
Nedbank Limited, 135 Rivonia Road, Sandown, Sandton, 2146
Rand Merchant Bank, 1 Merchant Place, corner Fredman Drive and Rivonia Road, Sandton, 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 di?er 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.  




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