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Integrated Report 2015 Integrated Report for the Year Ended 30 June 2015

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Integrated Report 2015 Integrated Report for the Year Ended 30 June 2015 INTEGRATED REPORT 2015 INTEGRATED REPORT FOR THE YEAR ENDED 30 JUNE 2015 About this report Scope and boundary of this report Adcock Ingram regards this report, the first consecutive Adcock Ingram’s integrated report covers the financial year 12-month period to be reported on, since the general business 1 July 2014 to 30 June 2015. The report is released at least restructure commenced in 2014, as a valuable opportunity to 15 business days prior to its Annual General Meeting to be engage with its stakeholders and to respond to issues raised held on 19 November 2015. Comparatives are for the period by them. The matters reported on in the integrated report are 1 October 2013 to 30 June 2014, unless otherwise indicated. considered by leadership throughout the year as being vital to the sustainability of the Group and include all material aspects The report provides a general narrative on the performance up to the date of issue of this report. of the Group which includes the holding company, and its subsidiaries and joint ventures across all territories. For a better appreciation of the Group’s relative performance The business in South Africa has a material impact on the against a more meaningful comparable period, in addition overall sustainability of the Group. The Group’s presence in to the statutory disclosure of the last reported period of Kenya, Ghana and Zimbabwe individually and collectively nine months to 30 June 2014, a reviewed set of comparative constitutes a small percentage of the Group’s operations figures has been provided for the twelve months ended and together with India, the investment in which the Board 30 June 2014, in the summary of financial highlights of directors (Board) has resolved to seek to realise at the presented on pages 2 to 5. A full set of annual financial earliest convenience, are for that reason excluded from the statements is included with the integrated report. operational review. Data are given, where relevant, about our businesses in Kenya, Ghana, Zimbabwe and India. Adcock Ingram has continued the journey towards Comparatives are included where available. providing a more comprehensive picture of the Group in one document, working towards producing a more Assurance integrated report as recommended in the revised King Code on Governance Principles for South Africa (King III). In line with its responsibility, the Board ensures the integrity of the integrated report. The Board has accordingly applied its Reporting principles mind to the integrated report and, in its opinion, the report presents fairly the integrated performance of the Group. Adcock Ingram is a public company incorporated in South Africa in accordance with the provisions of the Companies ANNUAL FINANCIAL STATEMENTS 2015 Act 71 of 2008 (Companies Act) and complies with the The annual financial statements for the year ended 30 June principles of King III unless otherwise stated, the Companies 2015 were approved by the Board on 25 August 2015. Ernst & Act, the JSE Limited Listings Requirements and other Young Inc., the independent auditors, have audited the annual legislative requirements. The Group subscribes to high financial statements as disclosed in their unqualified report. ethical standards and principles of corporate governance. For more details, and an overview of the Group governance SUSTAINABILITY INFORMATION and structure, please see the corporate governance section The sustainability information has not been assured in 2015. on pages 10 to 13. B-BBEE STATUS In addition to the above, the Group adheres to International The Group’s B-BBEE status has been verified by Empowerlogic, Financial Reporting Standards (IFRS) in compiling its annual an independent verification agency, for the 2014 financial financial statements. year. Through the external verification process conducted by the agency, the Group has been assessed as a Level 3 contributor in terms of the B-BBEE Act. This rating is valid until 9 November 2015, after which the status will be measured in terms of the revised scorecard. CONTENTS GROUP OVERVIEW 1. Financial summary 2 Executive Committee 6 Board and governance structure 8 Corporate governance 10 Leadership statement 14 Operational overview – Southern Africa 16 OTC 18 Prescription 20 Hospital 22 Consumer 24 Sustainability 26 Stakeholder engagement 32 Remuneration report 34 Risk management 44 ANNUAL FINANCIAL STATEMENTS 2. Directors’ responsibility for and approval of the annual financial statements 46 Certificate by Company Secretary 47 Independent auditor’s report to the shareholders of Adcock Ingram Holdings Limited 48 OUR MISSION Audit Committee report 49 Directors’ report 50 Consolidated statements of comprehensive income 52 We are committed to Consolidated statement of changes in equity 53 providing quality products Consolidated statements of financial position 54 Consolidated statements of cash flows 55 that improve the health and Accounting policy elections 56 Notes to the Group annual financial statements 57 lives of people in the markets Company statements of comprehensive income 78 we serve. Company statement of changes in equity 79 Company statements of financial position 80 Company statements of cash flows 81 OUR VALUES Notes to the Company annual financial statements 82 Annexure A: Segment report 87 We: Annexure B: Share-based payment plans 90 Are committed to providing Quality products and Annexure C: Defined contribution and defined services benefit plan 94 Annexure D: Post-retirement medical liability 96 Act with Integrity at all times Annexure E: Financial instruments 97 Believe in Transparency and open Communication Annexure F: Interest in joint ventures 103 Annexure G: Impairments 105 Believe in Empowerment of our people, thus Annexure H: Interest in subsidiary companies encouraging entrepreneurship, innovation and and joint ventures 108 accountability Annexure I: Accounting policies 110 Practise non-discrimination and offer equal SHAREHOLDER INFORMATION opportunity Shareholder analysis 126 3. Have Respect for people, society and the Notice of Annual General Meeting 128 environment Annual General Meeting – explanatory notes 132 Form of proxy 135 OTHER OUR PROFILE Glossary 139 4. Adcock Ingram manufactures, markets and Company details 140 distributes a wide range of healthcare products. The Company is a leading supplier to both the private and public sectors of the South African market. OUR HERITAGE PRODUCT RANGES Some milestones in the history of Adcock Ingram include: Consumer competes in the Fast Moving Consumer Goods (FMCG) 1890 EJ Adcock Pharmacy opened its doors in Krugersdorp. space and includes market-leading brands such as Panado and 1937 Ingram’s Camphor Cream was launched. Bioplus. 1948 Relationship established with Baxter Healthcare. Over the Counter focuses primarily on brands sold predominantly 1950 Adcock Ingram, first pharmaceutical company, listed on the in the pharmacy market, where the pharmacist plays a role in the Johannesburg Stock Exchange (JSE). product choice and includes brands like Corenza and Citro-Soda. 1978 Tiger Oats Limited acquired 74% shareholding in Adcock Ingram. The Prescription portfolio comprises products prescribed by 1979 The Critical Care division commissioned South Africa’s first medical practitioners and includes a range of quality and affordable medical grade plastics facility. generic medicines which includes a comprehensive portfolio of anti- 1987 Adcock Ingram acquired the Mer-National Division from Dow retroviral medicines (ARVs). Chemicals Africa and Sterling Winthrop. These acquisitions strengthened the Group’s range in the Over the Counter The Hospital portfolio has a long history in the Group based on an (OTC) market with brands such as Panado. agreement with Baxter which positions Adcock Ingram as a leading Adcock Ingram also launched Myprodol, a locally developed supplier of critical care products, including intravenous solutions, and patented analgesic and anti-inflammatory. blood collection products and renal dialysis systems, to the private 1994 Adcock Ingram acquired Leppin, Laser, Pharmatec, Zurich and public sectors. Pharmaceuticals, Covan Pharmaceuticals and Salters, and leading OTC brands in Zimbabwe. 1996 The merger with Premier Pharmaceuticals created South FACILITIES Africa’s leading supplier of healthcare products. 1999 Construction of a R25 million research and development The high-volume liquids facility situated in Clayville is a state-of- centre at Aeroton. the-art and highly automated factory primarily producing liquids and 2000 Adcock Ingram became a wholly-owned subsidiary of Tiger effervescent formulations. Brands and was delisted from the JSE. 2003 Acquisition of Citro-Soda. Bought cardiovascular and The tablet and capsule facility located in Wadeville is focused, central nervous system portfolio (Parke-Med) from Pfizer amongst others, on the manufacturing of anti-retroviral medicines, Laboratories. which are supplied to the public sector through the tender system. 2007 Adcock Ingram launches its range of generic ARV products. The Critical Care facility situated in Aeroton produces intravenous 2008 Adcock Ingram unbundled from Tiger Brands and relisted on the JSE. fluids, blood bags, renal dialysis products and small-volume parenterals. 2008 Joint venture with an Indian partner Ieads to formation of Adcock Ingram in Bangalore. Adcock Ingram has a state-of-the-art distribution system, designed to 2010 Concluded BEE equity transaction which raised Adcock distribute the Company’s products, as well as those of
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