Wrap Text
Group Annual Results and Cash Dividend Declaration
for the year ended 30 June 2018
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")
Group Annual Results and Cash Dividend Declaration
for the year ended 30 June 2018
SALIENT FEATURES
Turnover increases 10% to R6,540 million
Gross profit improves 14% to R2,566 million
Trading profit increases 20% to R866 million
Headline earnings per share from continuing operations increases 26%
Total dividend increases 24% to 172 cents per share
INTRODUCTION
The Board of Directors (Board) is very pleased with the excellent earnings growth achieved by the Group in the past financial year, considering
the price-regulated environment in which it operates and difficult economic environment in South Africa. The results were achieved through continued
investment in well established brands, improved factory efficiencies, and relentless focus on customer service and product quality.
FINANCIAL PERFORMANCE
TURNOVER AND PROFITS
Group turnover during the year under review increased by 10.2% to R6,540 million (2017: R5,936 million), driven by an increase in mix of 5.4%, which
includes the Genop acquisition from 1 January 2018, an average realised price increase of 3.8% and improved volumes contributed the balance.
The gross margin improvement from 37.8% to 39.2% was realised from an improvement in the exchange rate, a change in the sales mix and
improved efficiencies at the Wadeville factory on the back of increased production of ARV's.
Operating expenses including those relating to Genop increased by 12.0%. Excluding Genop, expenses increased by less than 6%, resulting in a
19.6% improvement in trading profit to R866 million (2017: R724 million).
NON-TRADING EXPENSES
Non-trading expenses of R46.9 million include share-based expenses of R34.4 million, corporate activity costs of R7.3 million and impairments
of R5.2 million.
NET FINANCE COSTS AND HEADLINE EARNINGS
The improvement in the Group's net average cash position during the year resulted in net finance cost decreasing to R7.9 million (2017: R22.6 million).
Headline earnings for the period under review amounted to R644.7 million (2017: R513.7 million). This translates into headline earnings per share
from continuing operations of 387.7 cents (2017: 308.9 cents), an increase of 25.5%.
CASH FLOWS
Cash generated from operations amounted to R854.9 million (2017: R767.9 million) after working capital increased by R343.0 million (2017: R233.9
million) with additional investment in inventory as the Group took on new product portfolios and increased stockholding of raw materials for the
production of ARVs. Trade receivables remained well controlled and the average days outstanding are 65 (2017: 70 days).
The Group had net cash resources of R156 million (2017: R335 million) at the end of the year.
DIVIDEND DISTRIBUTION
The Board has declared a final dividend of 86 cents per share for the year ended 30 June 2018 out of income reserves. Total dividend distribution
will therefore be 172 cents per share, an improvement of 24% compared to 2017.
BUSINESS OVERVIEW
SOUTHERN AFRICA
OTC, which focuses on products in the pain, coughs, colds and flu, and anti-histamine therapeutic areas through the pharmacy channel, has seen a
turnover improvement of 7.6% to R1,989 million (2017: R 1,849 million) with top brands like Adco-Dol, Allergex, Alcophyllex and Napamol showing
double-digit growth. This business unit realised the full SEP price increase granted by government. Mix and volume improvements were healthy,
following innovative new product launches and decent demand for smaller pack size analgesics. OTC was appointed by Abbott Laboratories to perform
the sales, marketing and distribution of a range of products, namely Brufen, Creon, Duphalac and Calmettes, for South Africa, Lesotho and Swaziland.
A gross margin improvement was realised in this year, driven by an advantageous sales mix and the improvement in the exchange rate. As a result,
trading profit increased by 16.7% to R399.6 million (2017: R342.3 million).
Prescription turnover improved by 15.5% to R2,238 million (2017: R1,938 million), and the Division also showed double-digit growth in the private
market segment as measured by IQVIA. Mix, although adversely impacted by the loss of a low-margin multinational partner contract, improved by
10.1%, aided substantially by the acquisition of Genop (R223.8 million), and the on-boarding of the Astellas portfolio from Leo Pharma and Topzole
from Takeda. Volumes increased by 3.6% mainly as a result of the increased demand in the ARV private market and an average price increase of 1.8%
was achieved. A gross margin improvement was realised in the year, driven by increased ARV throughput at the Wadeville factory and a better sales
mix. As a result, trading profit of R239.4 million is 15.2% ahead of the prior year of R207.8 million.
Consumer turnover was almost flat at R686.7 million (2017: R688.8 million), in a challenging environment, characterised by limited consumer discretionary
spend. Despite the poor trading, the Division delivered a small improvement in trading profit to R112.2 million (2017: R110.0 million). In the second
half of the financial year, the Division underwent a leadership change. Subsequently, some reorganisation has taken place and we expect to see an
improvement in customer focus, brand support and trading performance.
Hospital turnover improved by 7.2% to R1,348 million (2017: R1,257 million) with an average realised price increase of 1.9%. Additional volumes
contributed 2.9% and mix 2.5%, following the award of the marketing rights to the Pharma Q injectable product range. The gross margin improved
as a result of a change in the sales mix with gains in the private market and the improved exchange rate. Trading profits improved by an impressive
63.0% to R95.3 million (2017: R58.5 million).
On the regulatory front in South Africa, the National Health Insurance Bill, Medical Schemes Amendment Bill and Health Market Inquiry Report have all
recently been issued. The Company is supportive of initiatives that broaden access to healthcare in South Africa and do not threaten the sustainability
of the local pharmaceutical manufacturing industry. Adcock Ingram will continue to engage government through the industry bodies in that regard.
The Company is a well-diversified Consumer, OTC, Prescription and Hospital pharmaceutical business with an extensive and affordable product portfolio
that is able to take advantage of the opportunities which may emanate from implementation of National Health Insurance.
REST OF AFRICA
Turnover in the Group's enterprises in Zimbabwe and Kenya collectively increased by 7.5% to R222.6 million (2017: R207.1 million) and achieved a trading
profit of R18.3 million, a good improvement on the R2.7 million reported in the prior year. The positive performance is attributable in Zimbabwe to a
significant improvement in demand for the top brands following improved stock availability, whilst the improvement in the Kenyan operation is due to
strict management focus by the OTC Division from South Africa. Operations in Zimbabwe remain unpredictable and investment may be required in the
short- to medium-term to recapitalise its facilities. Consequently, the Board is assessing the viability of the Group's continued presence in that country.
CHANGES TO THE BOARD AND IN DIRECTOR'S FUNCTION
Ms Jenitha John was appointed as Chairperson of the Audit Committee, effective 20 February 2018.
PROSPECTS
The Board expects trading conditions to remain difficult with constrained consumer spend and high levels of unemployment, but is confident in
the equity and resilience of the broad portfolio of brands in the Group. The recent decline in the value of the Rand is of concern and
against this background cost-control will be a focus in the year ahead.
Adcock Ingram is engaging constructively with the National Department of Health through the Pricing Committee on whether any short-term relief on
SEP will be available.
The Board remains committed in seeking additional affordable brands to augment its range of products and defend its position in the market. Expanding
the non-regulated portfolio to limit the impact of the exchange rate and SEP environment remains a focus in this regard.
DIVIDEND DISTRIBUTION
The Board has declared a final gross dividend out of income reserves of 86 cents per share in respect of the year ended 30 June 2018. The
South African dividend tax ("DT") rate is 20% and the net dividend payable to shareholders who are not exempt from DT is 68.80 cents per share.
Adcock Ingram currently has 175 748 048 ordinary shares in issue of which 149 905 089 qualify for ordinary 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 Tuesday, 25 September 2018
Shares trade ex distribution Wednesday, 26 September 2018
Record date Friday, 28 September 2018
Payment date Monday, 1 October 2018
Share certificates may not be dematerialised or rematerialised between Wednesday, 26 September 2018 and Friday, 28 September 2018, both
dates inclusive.
CD Raphiri AG Hall
Chairman Chief Executive Officer
28 August 2018
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Audited Audited
2018 % 2017
Continuing operations Notes R'000 change R'000
Revenue 2 6 562 865 10 5 957 700
Turnover 2 6 540 255 10 5 936 056
Cost of sales (3 974 235) (3 693 773)
Gross profit 2 566 020 14 2 242 283
Selling, distribution and marketing expenses (1 188 242) 11 (1 068 585)
Fixed and administrative expenses (511 401) 14 (449 275)
Trading profit 866 377 20 724 423
Non-trading expenses 3 (46 895) (47 128)
Operating profit 819 482 21 677 295
Finance income 2 18 270 15 665
Finance costs (26 187) (38 239)
Dividend income 2 4 340 5 979
Equity-accounted earnings 79 252 64 144
Profit before taxation 895 157 23 724 844
Taxation (251 084) (204 856)
Profit for the year from continuing operations 644 073 24 519 988
Profit after taxation for the period from discontinued operations - 41 132
Profit for the year 644 073 15 561 120
Other comprehensive income which will subsequently be recycled to profit or loss 6 406 (24 832)
Exchange differences on translation of foreign operations:
- Continuing operations 3 714 (5 732)
- Joint venture and associate (1 914) (17 486)
- Discontinued operations - (21 353)
Fair value profit on available-for-sale asset, net of tax 24 7
Movement in cash flow hedge accounting reserve, net of tax 4 582 19 732
Other comprehensive income transferred to profit or loss - (125 784)
Other comprehensive income which will not be recycled to profit or loss
Actuarial profit on post-retirement medical liability 634 511
Total comprehensive income for the year, net of tax 651 113 411 015
Profit attributable to:
Owners of the parent 637 943 553 534
Non-controlling interests 6 130 7 586
644 073 561 120
Total comprehensive income attributable to:
Owners of the parent 644 983 405 568
Non-controlling interests 6 130 5 447
651 113 411 015
Continuing operations:
Basic earnings per ordinary share (cents) 383.6 24 308.9
Diluted basic earnings per ordinary share (cents) 383.6 24 308.9
Headline earnings per ordinary share (cents) 387.7 26 308.9
Diluted headline earnings per ordinary share (cents) 387.7 26 308.9
Discontinued operations:
Basic earnings per ordinary share (cents) 24.0
Diluted earnings per ordinary share (cents) 24.0
Headline earnings per ordinary share (cents) 3.7
Diluted headline earnings per ordinary share (cents) 3.7
Total operations:
Basic earnings per ordinary share (cents) 383.6 15 332.9
Diluted basic earnings per ordinary share (cents) 383.6 15 332.9
Headline earnings per ordinary share (cents) 387.7 24 312.6
Diluted headline earnings per ordinary share (cents) 387.7 24 312.6
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Attributable to holders of the parent
Non-distributable
reserves
Total
attri-
butable
to Non-
Issued *NDR *NDR ordinary controll-
share Share Continuing Discontinued Retained share- ing
capital premium operations operations income holders interests Total
R'000 R'000 R'000 R'000 R'000 R'000 R'000 R'000
As at 1 July 2016 (audited) 17 147 666 873 483 515 144 998 1 916 040 3 228 573 26 024 3 254 597
Movement in share-based
payment reserve 23 710 23 710 23 710
Share-based expenses
transferred from non-
distributable reserves (303 885) 303 885
Disposal of business (18 465) (18 465)
Total comprehensive income (2 968) (144 998) 553 534 405 568 5 447 411 015
Profit for the year 553 534 553 534 7 586 561 120
Other comprehensive income (2 968) (144 998) (147 966) (2 139) (150 105)
Dividends (170 369) (170 369) (5 484) (175 853)
Balance at 30 June 2017
(audited) 17 147 666 873 200 372 2 603 090 3 487 482 7 522 3 495 004
Movement in treasury shares (1) (517) (518) (518)
Movement in share-based
payment reserve 16 463 16 463 16 463
Total comprehensive income 7 040 637 943 644 983 6 130 651 113
Profit for the year 637 943 637 943 6 130 644 073
Other comprehensive income 7 040 7 040 7 040
Dividends (235 904) (235 904) (11 239) (247 143)
Balance at 30 June 2018
(audited) 17 146 666 356 223 875 3 005 129 3 912 506 2 413 3 914 919
* NDR-Non-distributable reserves
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
Audited Audited
2018 2017
R'000 R'000
ASSETS
Property, plant and equipment 1 521 255 1 445 095
Intangible assets 626 242 349 997
Deferred tax 18 120 1 588
Other financial assets 34 010 41 746
Investment in joint ventures 445 150 392 013
Investment in associate 8 014 6 071
Non-current assets 2 652 791 2 236 510
Inventories 1 565 949 1 156 949
Trade and other receivables 1 641 295 1 567 802
Cash and cash equivalents 404 629 592 070
Taxation receivable 6 061 9 642
Current assets 3 617 934 3 326 463
Total assets 6 270 725 5 562 973
EQUITY AND LIABILITIES
Capital and reserves
Issued share capital 17 146 17 147
Share premium 666 356 666 873
Non-distributable reserves 223 875 200 372
Retained income 3 005 129 2 603 090
Total shareholders' funds 3 912 506 3 487 482
Non-controlling interests 2 413 7 522
Total equity 3 914 919 3 495 004
Long-term borrowings - 251 492
Post-retirement medical liability 16 340 16 793
Deferred tax 118 914 73 138
Non-current liabilities 135 254 341 423
Trade and other payables 1 838 930 1 637 197
Bank overdraft 248 877 5 619
Short-term borrowings - 416
Cash-settled options 2 413 7 384
Provisions 130 332 75 930
Current liabilities 2 220 552 1 726 546
Total equity and liabilities 6 270 725 5 562 973
CONSOLIDATED STATEMENTS OF CASH FLOWS
Audited Audited
2018 2017
R'000 R'000
Cash flows from operating activities
Operating profit from continuing operations 819 482 677 295
Operating profit from discontinued operations - 8 416
Operating profit 819 482 685 711
Other adjustments and non-cash items 378 360 316 097
Operating profit before working capital changes 1 197 842 1 001 808
Working capital changes (342 968) (233 935)
Cash generated from operations 854 874 767 873
Finance income received 17 363 16 938
Finance costs paid (25 605) (41 612)
Dividend income received 30 100 21 368
Dividends paid (247 143) (175 853)
Taxation paid (246 663) (133 281)
Net cash inflow from operating activities 382 926 455 433
Cash flows from investing activities
Decrease in other financial assets 5 232 32 356
Acquisition of business (note 4) (327 623) (9 875)
Disposal of businesses (note 5) - 291 096
Purchase of property, plant and equipment - Expansion (84 684) (75 930)
- Replacement (134 564) (87 308)
Purchase of intangible assets (4 450) (70 821)
Proceeds on disposal of property, plant and equipment 6 911 2 298
Net cash (outflow)/inflow from investing activities (539 178) 81 816
Cash flows from financing activities
Purchase of treasury shares (518) -
Increase in borrowings - 9 917
Repayment of borrowings (276 177) (252 223)
Net cash outflow from financing activities (276 695) (242 306)
Net (decrease)/increase in cash and cash equivalents (432 947) 294 943
Net foreign exchange difference on cash and cash equivalents 2 248 (2 954)
Cash and cash equivalents at beginning of year 586 451 294 462
Cash and cash equivalents at end of year 155 752 586 451
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1 BASIS OF PREPARATION
1.1 INTRODUCTION
The audited consolidated annual financial statements for the year ended 30 June 2018 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. These summarised results for the year ended 30 June 2018, extracted from the audited consolidated financial statements, which
the Board of directors take full responsibility for, have been prepared by Ms Dorette Neethling, Chief Financial Officer. Both these
summarised results and the consolidated financial statements were audited by the independent external auditors, Ernst & Young Inc.
and copies of their unqualified audit opinion are available for inspection at the Company's registered office.
1.2 CHANGES IN ACCOUNTING POLICIES
The accounting policies adopted are consistent with those of the previous financial year except for the adoption of the following
amended IFRS standards and interpretations during the year which did not have any effect on the financial performance or position of
the Group:
- IAS 7: Statement of cash flows - disclosure initiative amendments
- IAS 12: Income taxes - recognition of deferred tax assets for unrealised loss - amendments
2 REVENUE
2018 2017
R'000 R'000
Turnover 6 540 255 5 936 056
Finance income 18 270 15 665
Dividend income - Black Managers Share Trust 4 340 5 979
6 562 865 5 957 700
3 NON-TRADING EXPENSES
Impairments 5 235 217
Transaction costs 7 315 6 251
Share-based payment expenses 34 345 40 660
46 895 47 128
4 ACQUISITION OF BUSINESSES
4.1 GENOP HOLDINGS PROPRIETARY LIMITED (GENOP)
On 1 January 2018, Adcock Ingram Healthcare Proprietary Limited acquired 100% of Genop, a highly specialised instrument, surgical
and pharmaceutical products company focused on the ophthalmic, optometry, skincare, aesthetic and plastic surgery segments in
Southern Africa. Genop owns and markets the well-known Epi-max branded range of consumer products.
The fair value of the identifiable assets as at the date of acquisition was:
Audited
2018
R'000
Assets
Inventories 87 003
Trade and other receivables 89 383
Property, plant and equipment 18 291
Marketing-related intangible assets 121 385
Cash and cash equivalents 9 082
Taxation receivable 1 579
326 723
Liabilities
Trade and other payables 99 602
Short-term borrowings 24 297
Deferred tax 27 622
Provisions 2 255
153 776
Total identifiable net assets at fair value 172 947
Goodwill arising on acquisition 163 758
Purchase consideration 336 705
Net cash acquired with the business (9 082)
Net cash consideration 327 623
The fair value of the trade receivables equals the net amount of trade receivables and amounts to
R74.3 million.
Marketing-related intangible assets relate to the Epi-Max brand. Epi-Max was fair valued, at
acquisition, from R11.7 million to R120 million which gave rise to a deferred tax liability of R30.3 million.
The royalty relief methodology was used to determine the valuation, by applying a 9% royalty rate
and market related discount rate.
Goodwill represents the difference between the purchase consideration and the fair value of the
net assets acquired as there are no further separately identifiable intangible assets. The significant
factors that contributed to the recognition of goodwill include, but are not limited to the
acquisition of a specialised and quality pharmaceutical business with a management team with
proven experience, knowledge, skills and track record in their field.
From the date of acquisition, Genop contributed R223.8 million towards revenue and reported a
profit before income tax of R6.2 million.
If the Genop acquisition had taken place at the beginning of the reporting period, the revenue
would have been R452.3 million and profit before income tax would have been R24.5 million.
Analysis of cash flows on acquisition
Transaction costs of the acquisition (included in cash flows from operating activities) (5 662)
Net cash acquired with the business (included in cash flows from investing activities) 9 082
Transaction costs of R5.7 million have been expensed and are included in non-trading expenses.
Audited
2017
R'000
4.2 VIRTUAL LOGISTICS PROPRIETARY LIMITED (VIRTUAL)
On 1 April 2017, Adcock Ingram Healthcare Proprietary Limited acquired 100% of the shareholding
of Virtual Logistics Proprietary Limited (Virtual), a national fine distribution company.
The fair value of the identifiable assets as at the date of acquisition was:
Assets 25 413
Liabilities 15 408
Total identifiable net assets at fair value 10 005
Goodwill arising on acquisition 5 595
Purchase consideration 15 600
Deferred consideration (8 000)
Net bank overdraft acquired with the business 2 275
Net cash consideration 9 875
The fair value of the trade receivables equaled the gross amount of trade receivables and amounted to R16.1 million.
None of the trade receivables were impaired and it was expected that the full contractual amounts could be
collected.
Goodwill represented the difference between the purchase consideration and the fair value of the net assets
acquired as there were no further separately identifiable intangible assets. The significant factors that contributed
to the recognition of goodwill include, but were not limited to, the establishment of a fine distribution network,
expanding the Group's national footprint.
During the previous financial year, Virtual contributed R21.7 million towards revenue and reported a profit before
income tax of R0.9 million.
If the Virtual acquisition took place at the start of the previous financial year, the revenue would have been R84.9
million and profit before income tax would have been R3.1 million.
Analysis of cash flows on acquisition
Transaction costs of the acquisition (included in cash flows from operating activities) (1 467)
Net bank overdraft acquired with the business (included in cash flows from investing activities) (2 275)
Transaction costs of R1.5 million were expensed and were included in non-trading expenses.
A payment of R8.0 million of the purchase price, which was fully provided for in the previous financial year, was
deferred and subject to the achievement of profit targets. During the 2018 financial year the deferred amount was paid.
5 DISCONTINUED OPERATIONS
Adcock Ingram Private Limited (India) and 53.47% of Ayrton Drug Manufacturing Limited (Ayrton)
in Ghana were disposed of on 14 October 2016 and 7 December 2016 respectively. The loss of
control on disposal resulted in the foreign currency translation reserve relating to both entities
being recycled to profit and loss during the previous financial year.
5.1 STATEMENT OF COMPREHENSIVE INCOME
Profit for the period from discontinued operations 6 374
Profit on disposal of the discontinued operations 34 758
Profit for the period from discontinued operations 41 132
Profit/(Loss) attributable to:
India 46 638
Ayrton (5 506)
41 132
Profit attributable to:
Owners of the parent 39 903
Non-controlling interests 1 229
41 132
5.2 CASH INFLOW ON DISPOSAL
Consideration received 338 601
India 327 565
Ayrton 11 036
Net cash disposed of with the discontinued operations (47 505)
India (48 807)
Ayrton 1 302
Net cash inflow 291 096
6 SEGMENT REPORTING
Audited Audited
2018 2017
R'000 R'000
Turnover
Continuing operations
Southern Africa 6 338 389 5 754 241
OTC 1 989 225 1 849 038
Prescription 2 237 620 1 937 925
Hospital 1 347 698 1 256 753
Consumer 686 699 688 807
Other - shared services 77 147 21 718
Rest of Africa 222 624 207 052
Research and development services in India 19 494 18 396
6 580 507 5 979 689
Less: Intercompany sales (40 252) (43 633)
6 540 255 5 936 056
Discontinued operations
India - 67 206
Rest of Africa (Ghana) - 51 695
- 118 901
Trading and operating profit
Continuing operations
Southern Africa 845 540 719 103
OTC 399 640 342 322
Prescription 239 435 207 787
Hospital 95 312 58 475
Consumer 112 181 110 038
Other - shared services (1 028) 481
Rest of Africa 18 330 2 712
Research and development services in India 2 507 2 608
Trading profit 866 377 724 423
Less: Non-trading expenses (46 895) (47 128)
Operating profit 819 482 677 295
Discontinued operations
India - 6 300
Rest of Africa (Ghana) - 8 949
Trading profit - 15 249
Less: Non-trading expenses - (6 833)
- 8 416
Total assets
Southern Africa 5 844 806 5 161 098
OTC 1 761 603 1 667 220
Prescription 1 987 006 1 239 248
Hospital 1 236 482 1 125 158
Consumer 315 425 354 965
Other - shared services 544 290 774 507
Rest of Africa 163 141 146 661
India 262 778 255 214
6 270 725 5 562 973
7 INVENTORY
Audited Audited
2018 2017
R'000 R'000
Inventories written down and recognised as an expense in profit or loss in
cost of sales 94 854 66 215
8 CAPITAL COMMITMENTS
- Contracted for 32 932 72 202
- Approved but not contracted 63 258 128 281
96 190 200 483
9 HEADLINE EARNINGS
Headline earnings is determined as follows:
Continuing operations
Earnings attributable to owners of Adcock Ingram from total operations 637 943 553 534
Adjusted for:
Profit attributable to Adcock Ingram from discontinued operations (note 5.1) - (39 903)
Earnings attributable to owners of Adcock Ingram from continuing operations 637 943 513 631
Adjusted for:
Impairment of intangible assets 2 700 -
Profit on disposal/scrapping of property, plant and equipment (1 968) (194)
Tax effect on profit on disposal of property, plant and equipment (42) 76
Adjustments relating to equity accounted joint ventures
Impairment of goodwill 5 312 -
Loss on disposal of long term receivable 828 -
(Profit)/Loss on disposal of property, plant and equipment (24) 199
Headline earnings from continuing operations 644 749 513 712
Discontinued operations
Profit attributable to owners of Adcock Ingram from discontinued operations 39 903
Adjusted for:
Profit on sale of discontinued operations (note 5.1) (34 758)
Loss on disposal/scrapping of property, plant and equipment 975
Headline earnings from discontinued operations 6 120
Headline earnings from total operations 644 749 519 832
'000 '000
10 SHARE CAPITAL
Number of shares in issue 175 748 175 748
Number of ordinary shares held by the Group companies (4 292) (4 285)
Net shares in issue 171 456 171 463
Headline earnings and basic earnings per share are based on:
Weighted average number of ordinary shares outstanding 166 293 166 294
Diluted weighted average number of shares outstanding 166 295 166 295
11 FAIR VALUE HIERARCHY
The Group classifies all financial instruments and its fair value hierarchy as follows:
Audited Audited
Statement of financial position 2018 2017
Financial instruments Classification per IAS 39 line item R'000 R'000
Investment(1) Available for sale Other financial assets 1 937 1 906
Black Managers Share Trust(3) Loans and receivables Other financial assets 32 073 39 840
Trade and sundry receivables(3) Loans and receivables Trade and other receivables 1 535 369 1 485 705
Foreign exchange contracts -
derivative asset(2) Cash flow hedge Trade and other receivables 21 838 8 957
Cash and cash equivalents(3) Loans and receivables Cash and cash equivalents 404 629 592 070
Long-term borrowings(3) Loans and borrowings Long-term borrowings - 251 492
Trade and other payables(3) Loans and borrowings Trade and other payables 1 830 652 1 622 899
Foreign exchange contracts -
derivative liability(2) Cash flow hedge Trade and other payables - 752
Short-term borrowings(3) Loans and borrowings Short-term borrowings - 416
Bank overdraft(3) Loans and borrowings Bank overdraft 248 877 5 619
(1) Level 3. The value of the investment in Group Risk Holdings Proprietary Limited is based on Adcock Ingram's proportionate share of the net
asset value of the Company.
(2) Level 2. Fair value based on the ruling market rate at year-end. The fair value of the forward exchange contract is calculated as the difference
in the forward exchange rate as per the contract and the forward exchange rate of a similar contract with similar terms and maturities concluded
as at the valuation date multiplied by the foreign currency monetary units as per the FEC contract.
(3) The carrying value approximates fair value.
CORPORATE INFORMATION
DIRECTORS
Ms L Boyce (Independent Non-executive Director)
Mr A Hall (Chief Executive Officer)
Prof M Haus (Independent Non-executive Director)
Ms J John (Independent Non-executive Director)
Dr T Lesoli (Independent Non-executive Director)
Ms B Letsoalo (Executive Director)
Ms N Madisa (Non-executive Director)
Mr M Makwana (Independent Non-executive Director)
Dr C Manning (Non-executive Director)
Dr A Mokgokong (Non-executive Director)
Ms D Neethling (Chief Financial Officer)
Mr L Ralphs (Non-executive Director)
Mr C Raphiri (Independent Non-executive Chairman)
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
Rosebank Towers, 15 Biermann Avenue, Rosebank
Johannesburg, 2196
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
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