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Integrated Report 2011 Integrated Report for the Year Ended 30 September 2011

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Integrated Report 2011 Integrated Report for the Year Ended 30 September 2011 Heritage | Quality | Integrity | Integrity | Quality Heritage Integrated report 2011 Our profile Adcock Ingram is a leading South African manufacturer, marketer and distributor of healthcare products with a market capitalisation of R10 billion. The Company enjoys a 10% share of the private pharmaceutical market in South Africa with a strong presence in over the counter brands. The Company is South Africa’s largest supplier of hospital and critical care products. Its footprint extends to India and other territories in sub-Saharan Africa. The extensive product portfolio includes branded and generic prescription medicines and over the counter/fast moving consumer goods (FMCG) brands, intravenous solutions, blood collection products and renal dialysis systems. Sustainability is core to our business to add value to people’s lives. This includes those of our shareholders, customers, employees, suppliers and the communities in which we operate. We aim to reduce our environmental footprint through continuous improvement. We have achieved meaningful Broad Based Black Economic Empowerment (BBBEE) targets within the business. Our vision To be recognised as a leading world-class branded healthcare company. For more information on our history – visit our website: www.adcock.com Our heritage Adcock Ingram has a proud heritage which spans more than 120 years. The business started as a small Krugersdorp pharmacy. Its founders branched out into new product development, manufacturing, distribution, and sales and marketing. Adcock Ingram was first listed on the Johannesburg Stock Exchange (JSE) in 1950 and enjoyed blue chip status. In the year 2000 Tiger Brands (then the majority shareholder) acquired the minority shares, and Adcock Ingram was delisted and operated as a wholly owned subsidiary of Tiger Brands. On 25 August 2008, Adcock Ingram was unbundled from Tiger Brands and relisted on the JSE. Recognised in our industry 2011 awards and recognition Campbell Belman 2011 survey Adcock Ingram rated as the overall leader in the pharmacy category out of 41 over the counter (OTC)/self-medication companies in South Africa Green Supply Chain Award for the best project in excess of R10 million Awarded for energy savings in the new Midrand Distribution Centre WHO prequalifi cation Research and Development facility Ernst & Young’s Excellence in Corporate Reporting Survey 2011 Annual Report rated “Good” ISO compliance SANS ISO 9001:2008 Critical Care factory Millward Brown award for the most liked advertisement Panado ‘parrot’ TV commercial GRI: 2.10, 4.8, 2.1 Adcock Ingram Integrated report 2011 Integrated report for the year ended 30 September 2011 About this report This year, Adcock Ingram has made changes to the way Adcock Ingram has embarked on a journey towards providing it reports, working towards producing a more integrated a more comprehensive picture of the Group in one document. publication as recommended in the revised King Code on Adcock Ingram regards this process as a valuable opportunity Governance Principles for South Africa (King III). to engage with its stakeholder groups and to respond to issues that have been raised. King III and the Framework for Integrated Reporting discussion paper recommend that companies should report not only on their fi nancial performance, but also on their sustainability by disclosing social, environmental and economic impacts and GRI: 2.6 infl uences, both positive and negative. Scope and boundary of this report Reporting principles Adcock Ingram’s integrated report covers the fi nancial year Adcock Ingram is a company incorporated in South Africa in 1 October 2010 to 30 September 2011. The report is released accordance with the provisions of the Companies Act and at least 15 business days prior to its Annual General Meeting complies with the principles of King III, unless otherwise stated, on 24 January 2012. the Companies Act and the JSE Limited Listings Requirements and other legislative requirements. The Group subscribes to The report provides a general narrative on the performance high ethical standards and principles of corporate governance. of the Group, which includes the holding company and its subsidiaries and joint ventures across all territories, but focuses For more details, and an overview of the Group its detailed commentary on the operational performance of governance structure, please see the corporate governance section on pages 16 and 17 its main business in South Africa as the performance in South Africa has a material impact on the overall sustainability of the Group. Reports are given, where information is available, about In addition to the above, the Group adheres to International our businesses in East Africa, Ghana and India. Comparatives Financial Reporting Standards (IFRS) in compiling its annual are included where possible. fi nancial statements. The Group’s consolidated annual fi nancial statements For reporting on sustainability issues it also complies with are included in this report and include details regarding Global Reporting Initiative (GRI) standards to facilitate all subsidiaries and joint ventures as detailed on page 102 comparability with the reports of other organisations. Adcock Ingram has assessed its reporting to be Application Level B. Assurance Sustainability information The sustainability information has not been assured in 2011. The board of directors acknowledges its responsibility to ensure the integrity of the integrated report. The board has accordingly applied its mind to the integrated report and in its GRI: 3.1 – 3.3, 3.5 – 3.11, 3.13 opinion, the report presents fairly the integrated performance of the Group and its impacts. The sustainability overview can be found on pages 10 and 11 Annual fi nancial statements 2011 The annual fi nancial statements for the year ended 30 September 2011 were approved by the board of directors BBBEE status on 21 November 2011. Ernst & Young Inc., the independent Our BBBEE status has been assured by Empowerlogic, an auditors, have audited the annual fi nancial statements as independent verifi cation agency, for the 2011 fi nancial year. disclosed in their unqualifi ed audit report. Through the external assurance received from the agency, we have been assessed as a level 4 contributor in terms of the BBBEE Act. Contents Group overview Annual fi nancial statements 1 2011 Highlights 44 Directors’ responsibility for and approval of the annual 2 Our business footprint fi nancial statements 4 Key operating areas 44 Certifi cate by Company Secretary 6 Financial summary 45 Audit Committee report 9 Strategy 47 Independent auditors’ report to the members of Adcock Ingram Holdings Limited 10 Sustainability overview 48 Directors’ report 12 Board and governance structure 50 Consolidated statements of comprehensive income 16 Corporate governance 51 Consolidated statement of changes in equity 18 Leadership statement 52 Consolidated statements of fi nancial position 22 Operational overview – South Africa 53 Consolidated statements of cash fl ows 26 Operational overview – International 54 Accounting policy elections 28 Sustainability report 55 Notes to the Group annual fi nancial statements 32 Stakeholder engagement 81 Company statements of comprehensive income 34 Remuneration report 82 Company statements of changes in equity 39 Risk management 83 Company statements of fi nancial position 42 GRI reference table 84 Company statements of cash fl ows 85 Notes to the Company annual fi nancial statements 91 Annexure A: Segment report 93 Annexure B: Share-based payment plans 96 Annexure C: Defi ned benefi t plan 97 Annexure D: Post-retirement medical aid obligations 98 Annexure E: Financial instruments 102 Annexure F: Interest in subsidiary companies, joint ventures and associates 103 Annexure G: Accounting policies 117 Annexure H: Segment report (pro forma) Shareholder information 118 Shareholder analysis 121 Notice of Annual General Meeting 124 Annual General Meeting – explanatory notes Form of proxy – Attached Other 126 Glossary Contact details – Inside back cover ! Easy referencing and usability features Have we succeeded in our 2010/11 Where we have succeeded in our objectives strategic objective? Where we have not yet achieved our goals This icon indicates more information Get more information online available online at www.adcock.com This icon indicates more information can be Cross-reference information cross-referenced on pages within report sections This icon indicates the information adjacent Information contains contains GRI compliance elements GRI compliant information 2011 highlights Financial Turnover from continuing operations increased 8% to R4,454 billion EBITDA from continuing operations decreased 7% to R1,170 billion HEPS increased 31% to 465,1 cents (2010: 354,8 cents) Normalised HEPS decreased 9% to 465,1 cents (2010: 509,6 cents) 2,5% ordinary shares bought back Environmental Social 2011** 2010* 2011 Energy – usage (KWH) 30 351 169 28 499 353 BBBEE Scorecard Level 4 Water – usage (kilolitres) 301 484 286 209 Training spend* R6 million Carbon emissions (tonnes) 106 291 102 375 Employees 3 310 Carbon emissions per employee (tonnes) 19,01 28,37 *Of R6 million, 60% was spent on previously disadvantaged individuals. * 2010 includes South Africa and India. ** 2011 includes South Africa, India, Kenya and Ghana. Clinical trials performed on products containing Dextropropoxyphene (for more please refer to: www.adcock.com) Share statistics Market share 2011 2010 Value Counting units Share price (cents) Total pharmacy market
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