NOTES TO THE GROUP ANNUAL FINANCIAL ...NOTES TO THE GROUP ANNUAL FINANCIAL STATEMENTS FOR THE YEARS ENDED 30 SEPTEMBER OUR PROFILE 2.1, 2.10, 4.8 For more information on our history

NOTES TO THE GROUP ANNUAL FINANCIAL STATEMENTSFOR THE YEARS ENDED 30 SEPTEMBER

OUR PROFILE

2.1, 2.10, 4.8

For more information

on our history – visit our

website:

www.adcock.com

Adcock Ingram is a leading South African manufacturer, marketer and distributor of healthcare products with a market capitalisation of

R10 billion. The Group 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 other territories in

sub-Saharan Africa and India.

The extensive product portfolio includes branded and generic prescription medicines, over-the-counter (OTC)/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 peoples’ lives. This includes those of our shareholders, customers, employees, suppliers,

partners and the communities in which we operate. We aim to reduce our environmental footprint through continuous improvement.

We have achieved Level 3 Broad Based Black Economic Empowerment (BBBEE) status within the business.

OUR VISION

To be recognised as a leading world-class branded healthcare company.

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 2000 Tiger Brands

(then the majority shareholder) acquired the minority shares, and Adcock Ingram was delisted from the JSE 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.

2011 Annual Report Progressed from ‘Good’ to being rated ‘Excellent” in the

Ernst & Young Excellence in Corporate Reporting Survey

2012 Icon TGI Brand Survey Panado awarded No. 1 position in the ‘Medicine’ category

Sunday Times Panado No. 1 in the ‘Headaches’ category

Campbell Bellman Survey

with pharmacists

Adcock Ingram ranked No. 1 in most categories relating to

trust in company, trust in product and service

2011 Markinor Survey

validates “GP’s choice” claim

for Panado

55% of GP’s prescribe Panado more often than any other

analgesic. 75% of paediatricians in the study prescribe

Panado more often than any other analgesic

Gold Award – National

Productivity Institute of

South Africa 2011

Critical Care factory receives Gold award for innovative

solution to improving throughput without increasing

costs

RECOGNISED IN OUR INDUSTRY

Adcock Ingram

Integrated Report 20

12

1 ADCOCK INGRAM INTEGRATED REPORT 2012

2012 HIGHLIGHTS

Value Volume*

Market shares % %

Total market

Private sector 9,7 29,8

Public sector 3,3 8,3

Prescription 5,7 16,2

Ethical 3,8 16,3

Generics 8,9 16,1

OTC 19,6 34,9

FMCG 16,8 21,2**

Source: IMS TAM-MAT September 2012, Aztec YTD September 2012

* Counting units

** Units

Share statistics 2012 2011

Share price

High for the year (cents) 6 630 6 845

Low for the year (cents) 5 151 5 100

Closing (cents) 5 939 6 014

Shares traded

Number of shares (‘000) 104 517 175 725

Value of shares (R’m) 6 403 10 442

Total deals (‘000) 94 93

Environmental

Energy usage

(KWH)

2012: 36 193 5072011: 30 351 169

Carbon emissions

(Scope 1 and 2) per full

time employee (tonnes)

2012: 22,192011: 20,76

Carbon emissions

(tonnes)

2012: 94 8432011: 106 291

Water usage

(kilolitres)

2012: 404 8462011: 301 484

Financial

• Turnover increased 3% to R4,599 million

• EBITDA decreased 16% to R986 million

• HEPS decreased 9% to 422,4 cents

• Final distribution per share increased 8% to 115 cents

Social

BBBEE Scorecard

Level 3

Training Spend

R20 million

of which 62% spent on previously

disadvantaged employees

Employees

3 172

GRI: 2.8, EN1, EN3 – 8


OUR BUSINESS FOOTPRINT

Office: Midrand in South Africa,

serving as the head office

for the Group

Activities: Manufacturing, distribution,

selling and marketing, and

research and development

Customers: Wholesale, FMCG retail, independent

pharmacy, hospitals and Government

Turnover: R4 436 million (2011: R4 297 million)

Employees: More than 2 200 employees

Southern Africa

Adcock Ingram’s Research and Development (R&D) site is one of

24 Quality Control laboratories in the world (one of two in South

Africa and one of six in Africa) to have received World Health

Organisation (WHO) Pre-Qualification accreditation. This is an

achievement we have attained by maintaining a high standard

in all processes from inception to completion.

In addition, Adcock Ingram’s R&D site was the first stand-alone R&D

site in South Africa to secure Medicines Control Council (MCC)

accreditation for the manufacture and testing of pharmaceutical

products for human consumption. During 2012, the facility

received FDA site acceptance.

Adcock Ingram owns a Phase I clinical research facility which offers

a one-stop clinical research service extending through study design,

writing of protocols, obtaining necessary regulatory approvals,

clinical execution, reports and post-marketing surveillance. It has

a 32-bed bio-equivalence unit.

Research and development

Key information

Rest of AfricaKey information

Offices: Accra (Ghana)

Nairobi (Kenya)

Bulawayo (Zimbabwe)

Activities: Manufacturing in Ghana and Zimbabwe

Distribution from Kenya into East Africa

Distribution from Ghana into West Africa

Distribution from South Africa into Southern Africa

Manufacturing

capabilities and

capacity per

annum:

Tablets and capsules: 1,1 billion

Liquids: 1,8 million litres

Powders: 40 000 kilograms

Creams/Ointments: 686 000 kilograms

Accreditation: Food and Drugs Board in Ghana (FDB)

The Economic Community of West African States (ECOWAS)

Medicines Control Authority of Zimbabwe (MCAZ)

Pharmacy & Poison Board (PPB) – Kenya

Customers: Hospitals, Clinics, Healthcare practitioners, Pharmacy, Wholesalers and Retailers

Turnover: R155 million (2011: R155 million)

Employees: 528 employees in Ghana

23 employees in Kenya

186 employees in Zimbabwe

Performance focusWest Africa

• Improved integration of Adcock Ingram products into Ayrton distribution system

• Diversifying into other therapeutic lines and products that better fit the local disease burden and dermatology

• Good performance of Adcock Ingram products (especially Medi-Keel, Citro-Soda and Myprodol)

• Factory upgrade underway

• Capital expenditure for liquid plant upgrade approved and procurement underway (approximately US$1,5 million)

• Project to explore alternatives for unified manufacturing site underway

• Efforts to open an office in Nigeria almost completed

East Africa

• Geographic footprint expanded – expansion into South Sudan with further expansion planned in Ethiopia

• Supply chain management – improved distribution infrastructure

• Optimising prescription pharmaceutical portfolio by replicating success in pain segment across other therapeutic areas

• Planned re-launch of the new look and feel Dawanol and expansion of OTC portfolio

• Formulating innovative anti-counterfeit packaging initiatives

Southern Africa

• Efforts to gain 100% ownership in Datlabs (Zimbabwe) in completion stage

Kenya

Tanzania

Burundi

Uganda

GhanaSierra Leone

Zimbabwe

Zambia

Malawi

Mozambique

Durban

JohannesburgPretoria

Polokwane

Cape TownPort Elizabeth

KimberleyBloemfontein Maseru

LESOTHO

Mmabatho

South Africa

Swaziland

Namibia

BotswanaWindhoek

Gaborone

Mbabane


GRI: 2.4, 2.5,

2.7, 2.9,

PR 6, EN 12,

India

Where we have

not yet achieved

our goals

Where we have

succeeded in our

objectives

Manufacturing sites

Location Capacity per annum Accreditation Progress 2012 Achieved Targets 2013

Wadeville Liquids: 6 million litres Creams/Ointments: 100 000 kilograms Tablets and capsules: 2 billion

South Africa (MCC), Ghana (FDB), Botswana (DRU), Malawi (PMPB) and Kenya (PPB)

Audited by the FDA, await site acceptance

Insourcing work attracted

Expansion of tablet manufacturing and packing

Improved capacity utilisation

Clayville Effervescent tablets: 28 million Effervescent granules and powders: 400 000 kilograms Liquids: Increased to 12 million litres during 2012, due to the commissioning of the HVL plant. Future expansion can increase the capacity to 18 million litres

South Africa (MCC), Ghana (FDB), Malawi (PMPB) and Kenya (PPB)

New high-volume liquids facility commissioned

Increase utilisation by moving all outsourced liquid manufacture, plus contract manufacturing work, to this facility

Aeroton Large volume parenterals: 28,5 million filled units Small volume parenterals: increased to 25 million filled units Pour bottles: 2,3 million Blood collection bags: 1 million

South Africa (MCC), SANS ISO 9001:2008

The only medical grade plastics manufacturing facility in Africa that allows for primary manufacture of bags for fluids

PIC/S upgrade completed

Interruptions caused some stock shortages

Increase output by implementing efficiencies post the upgrade

Build sufficient safety stock levels

Distribution sites

Location Capacity Accreditation Progress 2012 Achieved Targets 2013

Gauteng Increased to 18 400 pallets South Africa (MCC) Gauteng sites combined into one site

Midrand warehouse upgraded with fine-pick and route sortation capability

Cape Town distribution centre closed and relocated to a new site

Owner-driver scheme implemented

Warehouse management systems upgrades and strikes impacted service delivery

Improving service levels

Attract additional multinational partners

Manage bulk stock closer to factories

Increase direct deliveries and decrease wholesaler intermediaries

Expand owner-driver scheme

Durban 4 400 pallets South Africa (MCC)

Cape Town Increased to 4 800 pallets Awaiting MCC approval, scheduled for December 2012

Port Elizabeth 1 500 pallets Awaiting MCC approval following recent inspection

Bloemfontein 900 pallets South Africa (MCC)

Key information

Office: Bangalore

Activities: Manufacturing, and regulatory and transactional

support for Southern Africa

Manufacturing

capabilities

and capacity

per annum: Tablets and capsules: 3,5 billion

Accreditation: UK, Australia, South Africa, France, Tanzania, Kenya,

Ghana, Namibia and Uganda. During 2012,

accreditation was also received for Romania and Ethiopia

Customers: Wholesale, retail and other multinationals

Turnover: R140 million (2011: R102 million)

Employees: 362 employees

Performance focus • On-boarding of Cosme business

• Supporting the Southern Africa business in effective operations management with

strong and cost-effective back office transactional and regulatory support

• Creating a local business in India for marketing some of Adcock Ingram’s key brands

• Contract manufacturing and formulation development for Adcock Ingram and its

partners in Africa

• Expanding the R&D capabilities and the product pipeline

Bangalore

India

Mumbai

Goa


KEY OPERATING AREAS

Adcock Ingram

has three key

operating areas

in Southern

Africa, each

delivering

essential

products and

services to a

wide customer

base.

Women’s Health

and Urology

• Betadine

• Activelle

• Evista

• Forteo

• Vagifem

• Estradot

• Estalis

• Estro-pause

• Fosamax

• Fosavance

• Adco-Fem 35

#1

ARV’s

• Efavirenz

• Lamivudine

• Zidovudine

• Emtricitabine

• Lamivudine/

Zidovudine

• Tenofovir

• Abacavir

#7

Dermatology

• Dovobet

• Fucidin

• Elidel

• Elocon

• Quadriderm

• Lotriderm

• Dipro range

• Propecia

• Roaccutane

• Acnetane

• Sporazole

#2

CNS

• Stresam

• Cipramil

• Cipralex

#2

Respiratory

• Celestamine

• Singulair

• Nasonex

• Rinelon

• Solphyllex

• Uniphyl

• Prelone

#2

Market trends• Largely dominated by global multinationals

• Highly regulated

• Higher priced, lower volume category

• Caters largely for ‘insured lives’ – medical aid patients

• Funding pressure

• Technology slow-down

• High threat from generic and therapeutic substitution

• Pressure on multinationals

• Increasing intensity of competitive environment leads to coalition

opportunities

Business focus• Targeted therapeutic focus

• Clinical solutions transformed into commercial value

• Build depth in knowledge, skill and competence

• Thought leader development and leading relationships

• Leading technologies

• Capitalise on critical mass in therapeutic class

• Leverage operations to support additional dossiers, acquisitions

and partners

Ophthalmic

• Efemoline

• Fucithalmic

• Zaditen

• Spersadex Comp

• Voltaren Ophtha

#3

Cardiovascular

• Cozaar

• Fortzaar

• Innohep

• Xenical

• Nebilet

• Metforal

#2

Pain

• Maxalt

• Myprodol

• Mypaid Forte

• Macaine

• Tenston SA

• Stopayne

• Xylotox

• Veltex

#1

Renal

• Partnership with

Netcare through

National Rencal Care

(NRC)

Indicates market position

#1

#

1. Specialised healthcare

‘Deals with drugs & treatment used in conjunction with healthcare professionals only

– the drug component reflects medicines prescribed by a registered physician and thereafter

dispensed with a prescription by a licensed professional

– the treatment component relates to invasive and non-invasive technologies supporting

select and potentially dire morbidities’


Source

IMS, TPM, MAT, R value, September 2012, ATC 4

Renal – internal data

2. Generics

Generics

• Adco-Simvastatin

• Adco-Bisocor

• Adco-Atenolol

• Gen-Payne

• Serez

• Adco-Alzam

• Adco-Zolpidem

• Adco-Dapamax

• Adco-Omeprazole

• Adco-Zetomax

Medicine delivery

• Adco Granisetron

• Sabax Ciprofloxacin

• Adco Ceftriaxone

• Sabax Metronidazole

• Sabax Intravenous

solutions

• Sabax Irrigation

solutions

• Sabax Mini-Bags

• Sabax Pour Bottles

Wound care

• Prontosan

• Calgitrol

• Scarban

• Dermanet

• Jetox

• Sofsorb

• Alle

• Draina S

• Askina Sorb

• Flexima

Nutrition

• Oliclinomel N4

• Oliclinomel N6

• Oliclinomel N7

• Oliclinomel N8

• Cernevit

• Potassium Phosphate

• Vitafusal

• TPN filter sets

Transfusion therapies

• Blood packs

• AccuVein

• Leucodepletion filters

• T-Sol

• Blood sets

• Anticoagulant

solution

• Platelet additive

solution

Market trends• Patient access improving through low cost medical aid

• Patient access to newer therapies

• Ageing population increasing demand on chronic medication

• SA disease burden (HIV) significant

• General medical aid membership increasing

New product launches• Migroben

• Co-Migroben

• Serez

• Adco-FEM 35

• Adco-Prednisolone

Business focus• Innovation drives to replace value erosion in the competitive

generics market

– Launched four new product ranges in 2012

– Several new tender items awarded

– Registration for new molecules received late 2012 – points to

exciting new launches in 2013

– New non-regulated hospital lines (wound care and consumables)

• Significant tender awards

– Material awards in the SOD, LVP and Liquids tenders

– Focus on maximising capacity and efficiency and meeting market

demand through upgraded infrastructure

– Supporting Government’s PPPFA framework

– Future focus on new tender categories – SVP, Ointments and

Creams

• Market share improvements in focus brands

– Novel pricing strategies

– Alignment with the funders

‘A chemically equivalent copy designed from a brand-name equivalent drug whose patent has expired

(typically less expensive and sold under the common name).’


KEY OPERATING AREAS (continued)

Pain

Pharmacy Rank #1

FMCG Rank #2

• Panado

• Compral

• Betapyn

• Betagesic

• Lotem

• Spasmend

• Adcodol

• Syndol

• Pynstop

• Mypaid

Pharmacy Rank #1

FMCG Rank #7

Colds and Flu

• Corenza C

• Grippon

• Alcophyllex

• Cepacol

• Medi-Keel

• Dilinct

• Expigen

• LCC

• Adco Sinal

• DPH

• Adco Linctopent

Pharmacy Rank #2

Allergy

• Allergex

• Allergex ND

• Allergex eye drops

• Mepyramal Cream

• Adco-cetirizine

Pharmacy Rank #1

FMCG Rank #2

Digestive Wellbeing

• Citro-Soda

• Freshen

• Scopex

• Pectrolyte

• Inteflora

• ProbiFlora

• LP299V

• Adco-Loperamide

• Medigel

• Mayogel

• Vomifene

Pharmacy Rank #2

FMCG Rank #1

Supplements

• Unique

• ViralGuard

• ArthroGuard

• Bestum

• Bioplus

• Vita-thion

• Gummyvites

• ADDvance

• Spirulina

• Pro-oxiden

• Liviton

3. Over the Counter (OTC)

Health and Hygiene

Pharmacy Rank #6

• TLC

• Topicals

• GynaGuard

• ISDIN

• Ureadin

• Nutratopic

• Betalfatrus

• Iralforis

Market trends• Spending power still lies within higher LSM’s, but

mid-LSM’s growing faster

• More frequent shopping trips, lower average

basket size for total grocery

• Growing penetration of Corporate Pharmacies,

and toiletry basket size increasing

• Consumers/Patients seeking value by increasing

support for affordable medicines

Business focus• Leverage growth in self-care

• Improve access to the consumer

• Leverage core brands

• Growth in adjacent categories

• Reduce reliance on SEP

Adcock Ingram competes in the following three core areas of the OTC self-medication and wellness market:

• Curative (analgesics, colds and flu, and allergy)

• Wellbeing (supplements, digestive wellbeing and energy)

• Personal care (wipes, facial care, hand and body topical creams and ointments and feminine care) with the core

target market *LSM 5 to 10

* LSM – Living Standards Measures

Revenue 2012

Non-SEP47%

SEP53%

FMCG31%

Pharmacy69%

Source: IMS TPM MAT/9/2012

Aztec Sep 2012 MAT


Rest of Africa

Market trendsEconomic

• Relative economic stability

• Middle class growing at a significant pace

• Increasing competition from local companies and MNCs looking

for emerging market growth opportunities

• All the regions are exposed to currency fluctuation risk

• Lack of scale economies due to small size of individual markets

• Regional integration (SADC, EAC, COMESA, ECOWAS, etc.)

Technological

• Sub-optimal infrastructure (transport, communications, power)

adds to cost of operation

• Continuous improvement of existing businesses

Political

• Relative political stability

• Local company preference in Government procurement of

pharmaceuticals

• Potential of African diaspora

Business focusPHARMA PRESCRIPTION (Demand creation/Pull distribution)

Prescription

Private market

• Growing middle class with higher disposable incomes

• Greater health awareness

• Increasing disease burden

• Prescription medication on the rise

• Increasing consumerism

CRITICAL CARE (Tenders and installed base)

Public market

• National Health Insurance schemes

• Multi-lateral funding support for Government pharmaceutical

procurement

• Under-treated chronic disease opportunities (renal, diabetes,

hypertension, etc.)

OTC (PHARMA and FMCG) (Distribution)

Market access

• Affordability – pack formats, economies of scale, price-points

• Supply chain – insufficient high-quality warehousing and

distribution

West Africa

• Citro-Soda

• Myprodol

• Medi-Keel

• Betapyn

• Ferrodex

• Carvo

• Paralex-D

Southern Africa

• Panado

• Adco Linctopent

• Panafort tabs

• Teejel

East Africa

• Dawanol

• Betapyn

• Citro-Soda

Ghana Zimbabwe Kenya

GRI: 2.2

For more information on our operations,

refer to pages 26 to 31

Adcock Ingram

operates into

the Rest of Africa

from three

key areas.


Continuing operations2012

R'000

2011

R'000

Revenue 4 644 406 4 534 235

Turnover 4 599 249 4 453 567

Cost of sales (2 505 167) (2 284 606)

Gross profit 2 094 082 2 168 961

Selling and distribution expenses (571 500) (530 005)

Marketing expenses (208 625) (206 981)

Research and development expenses (81 601) (70 723)

Fixed and administrative expenses (363 535) (292 614)

Operating profit 868 821 1 068 638

Finance income 18 285 63 778

Finance costs (26 637) (30 225)

Dividend income 26 872 16 890

Profit before taxation 887 341 1 119 081

Taxation (168 265) (326 129)

Profit for the year from continuing operations 719 076 792 952

Loss after taxation for the year from a discontinued operation – (28 152)

Profit for the year 719 076 764 800

Other comprehensive income (37 896) 17 591

Exchange differences on translation of foreign operations (26 181) 4 709

Movement in cash flow hedge accounting reserve, net of tax (11 715) 12 882

Total comprehensive income for the year, net of tax 681 180 782 391

Net profit attributable to:

Owners of the parent 705 641 754 205

Non-controlling interests 13 435 10 595

719 076 764 800

Total comprehensive income attributable to:

Owners of the parent 670 434 770 658


681 180 782 391

Continuing operations:

Basic earnings per ordinary share (cents) 417,8 458,5

Diluted basic earnings per ordinary share (cents) 417,2 457,5

Headline earnings per ordinary share (cents) 422,4 465,1

Diluted headline earnings per ordinary share (cents) 421,8 464,2

Consolidated Statements of Comprehensive Income for the years ended 30 September

TurnoverTurnover rose 3,3% and was supported by the inclusion of NutriLida

and ADDvance.

Organic volumes remained relatively flat, primarily due to the reduction in the ARV

tender and the withdrawal of DPP-containing products.

Price decreases across the business averaged 0,7% with no Single Exit Price

increase granted during 2011, and only 2,14% in 2012.

Gross profitGross profit decreased by 3,5%, with the gross profit margin declining from 48,7%

in 2011 to 45,5% in 2012.

Gross margins were adversely impacted by production input inflation, facilities

undergoing upgrades and by the weaker Rand, which affected imported raw

materials and finished products.

Operating expensesOperating expenses increased by 11,4% to R1,2 billion (2011: R1,1 billion),

with new businesses not in the base, including increased amortisation costs

contributing 2,3% to the expense increase.

Selling and distribution costs rose by 7,8%, measured as a percentage of sales as

12,4% (2011: 11,9%), including R5 million of costs in acquired businesses which

were not in the base.

Marketing expenses increased 0,8% and costs from acquisitions not in the base

amounted to R4 million.

The higher fixed and administrative expenses include increased amortisation costs

of R12 million, retrenchment costs of R23 million, IFRS 2 expenses of R27 million

compared to R18 million in 2011 and M&A-related costs increased by R24 million

year-on-year.

Operating profitOperating income decreased by 18,7%, with margins decreasing from 24,0%

in 2011 to 18,9% in 2012.

Dividend incomeDividend income includes distributions received from the Black Managers Share

Trust as well as dividends from preference share investments.

TaxationThe effective tax rate is 19,0% (2011: 29,1%). The tax charge includes the utilisation

of the balance of the s12G Strategic Industrial Project (SIP) allowance for approved

capital projects, of R308 million.

Headline earningsHeadline earnings for the year of R713 million decreased by 10,1% over the

comparable figure for 2011 of R793,9 million and translates into a decrease of 9,2%

in headline earnings per share.

Headline earnings in the current year exclude losses on disposal of property, plant

and equipment of R3,5 million (2011: R0,9 million capital profit), impairment charges

of R1,9 million (2011: R12,2 million) and a tax indemnity charge of R2,4 million.

The weighted average number of ordinary share outstanding: 168,9 million

(2011: 170,7 million).

FINANCIAL SUMMARY


2012

R'000

2011

R'000

AssetsProperty, plant and equipment 1 560 177 1 161 558

Deferred tax 5 097 3 775

Other financial assets 139 751 140 210

Loans receivable 27 060 –

Intangible assets 710 960 728 474

Non-current assets 2 443 045 2 034 017

Inventories 956 164 864 465

Trade and other receivables 1 320 191 1 202 858

Cash and cash equivalents 492 716 1 103 977

Taxation receivable 70 170 30 143

Current assets 2 839 241 3 201 443

Total assets 5 282 286 5 235 460

Equity and liabilitiesCapital and reserves

Issued share capital 16 872 16 888

Share premium 547 400 765 288

Non-distributable reserves 356 229 371 368

Retained income 2 502 510 1 932 212

Total shareholders' funds 3 423 011 3 085 756


Total equity 3 560 695 3 223 380

Long-term borrowings 104 625 346 811

Post-retirement medical liability 15 341 13 987

Deferred tax 101 910 93 884

Non-current liabilities 227 876 454 682

Trade and other payables 983 589 954 076

Short-term borrowings 431 368 496 032

Cash-settled options 39 983 64 036

Provisions 44 775 42 859

Bank overdraft – 395

Current liabilities 1 499 715 1 557 398

Total equity and liabilities 5 282 286 5 235 460

Consolidated Statements of Financial Positionat 30 September

Property, plant and equipmentInvestment in property, plant and equipment amounted to R512 million:

• Critical Care: R99 million, with the upgrade completed in January 2012.

• Clayville: R287 million, with the high-volume liquids facility completed in

the last quarter of the 2012 fiscal year.

• Distribution and other: R126 million (including R38 million on IT).

Intangible assetsIntangibles include the acquisition of the ADDvance trademark, decreased

due to amortisation of intangibles with finite lives over a period of 15 years on

average. The useful lives of intangibles, with indefinite useful lives, were assessed

at year-end to determine whether this assessment continues to be supportable.

All, except one which was accordingly impaired, supported the retention of an

indefinite useful life.

InventoriesInventory levels of R956 million increased by 11% year-on-year. The supply chain

was encouraged to increase levels of certain strategic active pharmaceutical

ingredients so as not to compromise service levels in favour of reduced

working capital.

Trade and other receivablesTrade accounts receivable, net of provisions, are R1,1 billion at September 2012,

R108 million higher than the prior year. Whilst the absolute balance has increased,

the days outstanding in debtors at year-end are 65, consistent with the prior year.

There were no bad debts written off, and some small recoveries were realised in

the Pharmaceutical business.

BorrowingsThe Group is carrying interest-bearing debt of R536 million (2011: R843 million)

which consists mainly of:

i. R318,8 million bearing interest at JIBAR plus 265 basis points. Interest is

payable quarterly in arrears and the capital is being repaid in quarterly

instalments from March 2012 until December 2013.

ii. R181,2 million bearing interest at JIBAR plus 180 basis points. In the current

year, repayment terms of the secured loan, originally bearing interest at

JIBAR plus 230 basis points and due for settlement in November 2011, were

re-negotiated to interest becoming payable quarterly in arrears and the

capital to be repaid in quarterly instalments from March 2012, with the final

instalment due in December 2013.

The short-term portion of all of the loans is R431,4 million.


2012

R'000

2011

R'000

Cash flows from operating activities

Operating profit before working capital changes 1 077 581 1 185 976

Working capital changes (292 138) (157 419)

Cash generated from operations 785 443 1 028 557

Finance income, excluding receivable 19 369 59 116

Finance costs, excluding accrual (22 672) (29 624)

Dividend income, excluding receivable 27 035 14 298

Dividends paid (155 356) (204 809)

Taxation paid (196 158) (341 156)

Net cash inflow from operating activities 457 661 526 382

Cash flows from investing activities

Decrease/(Increase) in other financial assets 457 (6)

Acquisition of businesses, net of cash – (328 775)

Proceeds on disposal of business – 84 989

Purchase of property, plant and equipment – Expansion (276 401) (172 451)

– Replacement (235 392) (260 528)

Purchase of intangible assets (13 109) –

Proceeds on disposal of property, plant and equipment 1 732 4 220

Increase in loans receivable (11 221) –

Net cash outflow from investing activities (533 934) (672 551)

Cash flows from financing activities

Acquisition of non-controlling interests in Ayrton Drug

Manufacturing Limited (11 060) (9 345)

Proceeds from issue of share capital 7 068 3 393

Purchase of treasury shares (45 683) (291 929)

Distribution out of share premium (179 289) (136 943)

Increase in borrowings 16 503 371 536

Repayment of borrowings (321 777) (117 329)

Net cash outflow from financing activities (534 238) (180 617)

Net decrease in cash and cash equivalents (610 511) (326 786)

Net foreign exchange difference on cash and cash equivalents (355) (549)

Cash and cash equivalents at beginning of year 1 103 582 1 430 917

Cash and cash equivalents at end of year 492 716 1 103 582

Consolidated Statements of Cash Flowsfor the years ended 30 September

Cash generated from operationsCash generated from operations was R785 million (2011: R1,029 million) after

working capital increased R292 million (2011: R157 million).

Trade accounts and other receivables contributed R128 million to the working

capital increase but trade accounts receivable days at the end of the year

remained consistent at 65 days and virtually no bad debts were experienced.

Inventory increased by R141 million as stockholdings of some strategic active

ingredients were increased to improve service levels.

Net cash inflow from operationsCash generated from operations was R785 million (2011: R1,029 million) after

working capital increased R292 million (2011: R157 million).

Trade accounts and other receivables contributed R128 million to the working

capital increase but trade accounts receivable days at the end of the year

remained consistent at 65 days and virtually no bad debts were experienced.

Inventory increased by R141 million as stockholdings of some strategic active

ingredients were increased to improve service levels.

Investing activitiesThe significant outflow in investing activities relates to the Group’s capital

expenditure of R512 million, incurred primarily at the Clayville and Aeroton

manufacturing facilities, as well as the Distribution Centre in Midrand.

The additions to property, plant and equipment includes interest capitalised in

accordance with IAS 23 of R44,9 million (2011: R34,7 million).

Financing activitiesFinancing activities accounted for net cash outflows of R534 million after repaying

R300 million on the loan facility for the factory upgrades. The balance of the

movement in borrowings relates to NRC and AIL India.

The outflow as a result of the distribution out of share premium and the purchase

of treasury shares amounted to R179 million and R46 million, respectively.

Cash and cash equivalentsAt the end of September, the Group had a gross cash balance of R493 million, a

net debt position of R43 million, and access to R1 billion of unutilised short-term

facilities.

GRI: ECI

FINANCIAL SUMMARY (continued)

Full annual financial statements can be

found from page 49


STRATEGY

In our journey to achieve our vision to be recognised as a leading world-class branded healthcare company, our strategy is based on two key integrated goals:

To ensure sustainable business growth and provide shareholders

with expected returns on their investment

To balance stakeholder interest through economic, environmental

and social sustainability

Strategic priorities

Acquire and grow in sub-Saharan Africa and India

Progress 2012

• Shareholding in Ayrton Drug Manufacturing Limited increased

to 78%

Challenges

• Counterfeit products

• Upgrade of manufacturing plant impacted on product availability

• Availability of value-adding acquisitions

Focus 2013

• Integration of the Cosme business in India

• Acquisition of businesses and brands

Grow in South Africa

Progress 2012

• New collaboration agreements signed with principals

• Market leader in the OTC business

• Market leader in Vitamins, Minerals and Supplements

category

• Public sector tender awards

• New product launches in generics

Challenges

• No resolution on DPP

• MCC registration delays

Focus 2013

• Focus on innovation in the FMCG and Pharmacy channels

• Expanding presence in the public sector through tender

awards

• Focus on improving service delivery to all customers

• Generic launches

Transformation

Progress 2012

• Level 3 BEE status achieved

• Owner-driver scheme implemented

• BEE options allocated to staff

Challenges

• Maintaining employment equity targets

Outlook 2013

• Maintain Level 3 BBBEE status

• Expand owner-driver scheme

Distribution excellence

Progress 2012

• Distribution centres upgraded

• Direct deliveries increased

• Midrand automation

• Integration of sites

Challenges

• Improving service levels

Outlook 2013

• Improved service levels

People/Processes in place

Progress 2012

• Integration of IT systems across various sites

• DNA formula developed

Challenges

• Shortage of skilled employees in certain areas

• Restructuring impacted morale

Focus 2013

• Performance culture coaching

Low cost producer

Progress 2012

• Completion of South African factory and distribution centre

upgrades to world-class standards

Challenges

• Service delivery and product availability during upgrades

• Rising fuel and utility prices

Focus 2013

• Obtain international accreditations

• Increase volume throughput in factories

• HVL utilisation

Compliance

Progress 2012

• Environmental management plan and audits extended to all

distribution centres

• Integrated speak-up line introduced

• FDA confirmed the R&D facility as acceptable

• WHO pre-qualification for R&D facility

Challenges

• Changing legislative environment

Outlook 2013

• Continually seek to achieve objectives which reflect the Group as

being a responsible corporate citizen

Our strategy is underpinned by our values:

Passion Respect Innovation Development Execution


SUSTAINABILITY OVERVIEW

FOCUS AREA SCOPE ACTIONS

Ethics and

Governance

Commitment to and monitoring of the

core governance principles of transparency,

accountability, fairness and responsibility in

all operations.

• Competition Act training

• Companies Act training for senior staff members

• Staff training on contract management

• Ethics and speak-up line awareness

Employees

Long-term sustainability is dependent

upon meeting and surpassing employee

expectations in terms of transformation,

leadership effectiveness, talent

management, performance management

and career development, industrial relations

and fair employment practices.

• Managing transformation and diversity

• Build the Adcock Ingram culture with the

introduction of the ‘DNA formula’

• Leadership effectiveness

• Align total reward strategy

• Integrated talent management system

• Human Capital governance

Health and

Safety

Implement best practices to ensure

the health and safety of our employees

and compliance with safety, health and

environmental regulations at all facilities.

• Health and safety audits at all South African sites

• Employee Wellness programme

• Mpilo-Nhle employee confidential counseling

service

Education and

Training

Develop a robust talent pipeline through

recruitment, education, training, coaching,

mentoring and international assignments to

build expertise in the workplace.

Provide continuing professional education

to health professionals.

• Comprehensive leadership programme

• Expand disabled learning and development

• Extend Wellness offering in Africa

• Continuing Professional Education (CPE)

programmes for health professionals

Environment

Constructive contribution to reduce our

carbon footprint through a programme of

continuous improvement.

• Environmental management plan and audit to

be extended to all South African distribution

centres

• Monitor continuous improvement progress in

environmental management

• Staff awareness campaigns

• Participation in workshops about climate

change

• Compile Environmental Policy

Communities

Invest in disadvantaged communities

through active involvement in projects

aimed at community upliftment and

healthcare.

• Beds of Hope

• Smile Foundation

• Operation Smile

• Mercy Ships

• Post-natal Depression Society of SA

• Bloemfontein TB Association

• National Kidney Foundation

• Community Upliftment Programme (CUPS)

projects

HIV/AIDS

Contribute to the fight against AIDS through

in-house and community activities.• Education and counselling for employees

diagnosed with HIV

• Seek opportunities to support AIDS initiatives

in the community that meet the criteria of the

CSI programme.

Transformation

Adcock Ingram embraces BBBEE as a key

transformation initiative.• Owner-driver Enterprise Development initiative

• Achieve Employment Equity targets


REFERENCE 2012 ACTION STATUS 2013 FOCUS

www.adcock.com/AboutUs_

GovernanceValuesAndEthics.aspx

Ethics & Values page 19

• Compliance training was conducted

• Introduction and training on newly

introduced “Speak-Up” line, including ethics

awareness

• Training on anti-bribery policy

• Expand “Speak-Up” line to India, Ghana and

Kenya

• Implement OECD recommendations regarding

prevention of corruption

• Refine Social, Ethics and Transformation

Committee’s terms of reference

People on pages 29 and 33 • Did not achieve employment equity goals

due to restructuring

• Participation rate in quarterly surveys

indicates active support for the

development of the Adcock Ingram culture

• 360 degree evaluation done for all senior

managers

• IT-based Talent Growth system launched

• Human Capital governance based on a

process of continuous improvement

• Entrench culture based on the Adcock Ingram

DNA

• Succession management development

programme

• Streamline Human Capital processes via

information technology

• Build employee morale through workforce

engagement

• Complete user-training for IT-based Talent

Growth system

www.adcock.com/HealthWellness_

OptimiseYourHealth.aspx

People on page 34

• Health and safety audit achieved 95%

(2011: 95%)• Address issues identified in 2012 audit

www.adcock.com/AboutUs_GPSummit.aspx

www.adcock.com/AboutUs_OTCAcademy.aspx

www.adcock.com/AboutUs_Marketing

Academy.aspx

People on page 33

• R20 million spent on training with 62% of

expenditure for previously disadvantaged

employees

• Performance management system fully

embedded on-line

• 12 disabled people attended learnership

programmes

• 20 employees enrolled on the Pharmacist

Assistant programme

• Ongoing CPE development programmes

for nurses, doctors and pharmacists

included Pharmacists Summit attended by

350 pharmacists

• Expand the performance management

programme to all businesses

• Tailor specific training programmes for

succession candidates

• Focus on training and development at all levels

• Extend Wellness programme in Africa

• Continue with CPE programmes for health

professionals

Environment on page 32 • Partnered with the City of Johannesburg

to initiate dialogue on the impact of

climate change on human health

• Established task team to focus on reducing

carbon footprint

• Introduced new technologies at the

Clayville factory to provide greener

production methods

• Environmental task team to develop and

monitor quantifiable objectives

www.adcock.com/Community_

PassionForOurCommunity.aspx

Communities on pages 34 and 35

• R2,5 million spent on social upliftment

programmes

• R14,8 million spend on an owner-driver

scheme

• Continued investment in community projects

www.adcock.com/Community_

OurLatestInitiatives.aspx

People on page 33

• Comprehensive HIV management

programme in place• Extend activities in the fight against AIDS both

within the Company and community support

activities

www.adcock.com/AboutUs_Diversity.aspx

People on page 29

• Initiative implemented with 25 owner-

drivers country-wide

• Restructuring programme impacted our

ability to meet employee equity targets

• Improved to Level 3 BBBEE rating

• Maintain Level 3 BBBEE rating

GRI: S01, S06,

EN3 – 7, EN10


Dr Jonathan Louw

Chief Executive Officer

• See page 16 for abridged CV

Ashley Pearce

Dip. Pharm, BComm

Customer Relationship Executive

• Joined Adcock Ingram in October 2012

• Previously CEO of M.S.D in South Africa

• Over 28 years’ experience within the

pharmaceutical industry, in Production, R&D,

Business Development, and Sales

and Marketing

• Has led both the Pharmaceutical Industry

Association of South Africa (PIASA) and the

Pharmaceutical Task Group (PTG)

Responsibilities

• Stakeholder Engagement, including

Government, industry, major commercial

customers

• Corporate Affairs

• Responsible for internal and external

communications

Kofi Amegashie

BSc (Hons) Chemical Engineering,

MSc Management (UK)

Commercial Executive – Rest of Africa

• Appointed on 1 October 2011

• Previously CEO of Alexander Forbes business on

the African continent outside of South Africa

• Joined Coca-Cola in Nigeria in 2006 as Director

Consumer Marketing, Strategy and Business

Planning for Nigeria and Equatorial Africa

• 20 years’ broad business experience in

emerging and first-world markets

Responsibilities

• Business growth in sub-Saharan Africa

• Drive regional exports in Africa

Viral Desai

BPharm, BCom

Commercial Executive

• Joined Adcock Ingram in 1999

• Served in various senior commercial and

technical roles including corporate and

business strategy development

Responsibilities

• Pharmacy and Hospital Generics

• Tender businesses

Andy Hall

Deputy Chief Executive and Financial Director

• See page 16 for abridged CV

Pravin Iyer

BCom AICWA, CMA

Commercial Executive – India

• Joined Adcock Ingram in June 2011

• Director of Adcock Ingram Healthcare Private

Limited, India

• Previously CEO of the Medreich Group, Adcock

Ingram’s joint venture partner in India

• CFO of Medreich for five years

• 21 years’ experience in the pharmaceutical

industry

Responsibilities

• Manage transactional and regulatory support

team for back office support to South Africa

• Identify sales and marketing opportunities

in India

• Business growth in India

Siobhan O’Sullivan

BCom, BusEcon (Hons), MBA


• Joined Adcock Ingram in April 2008

• Previously spent 7 years at Tiger Brands in the

culinary and cereal divisions

• Other experience includes marketing

positions at Rainbow Farms and Tetra Pak

Responsibilities

• OTC – non-prescription pharmaceuticals

• CAMs (complementary alternative medicine)

products

• Personal care products

Colin Sheen

MBA, PDBA, BTech, N. Dip. Marketing


• Joined Adcock Ingram in June 2008

• Previously held various roles at Schering-

Plough including Divisional Director,

Marketing Director and Head of the South

African Primary Care business

• Spent 10 years at 3M Corporation in various

commercial roles

Responsibilities

• Prescription pharmaceuticals

• Specialised therapies

• Strategic alliances

EXECUTIVE COMMITTEE

Full CVs available on the

website: www.adcock.com


Mahendra Chibabhai

B. Pharm, Management Advancement Programme

Manufacturing Executive

• Joined Adcock Ingram in January 1979

• Started his career as a production pharmacist

• Experienced in manufacturing most dosage

forms

• Intimately involved in the recapitalisation of

the manufacturing facilities

Responsibilities

• Manufacturing function

• Group procurement

Tobie Krige

BEng. (Industrial Engineering), MBA

Logistics Executive

• Joined Adcock Ingram in January 2012

• Has over 15 years’ experience in supply chain

and logistics

• Worked in extended geographical areas in

Europe, Middle East and Africa

• Worked for various other organisations,

including Nampak and DHL

Responsibilities

• Logistics

• Planning

• Third party procurement

Abofele Khoele

MB ChB, MBA

Medical Executive


• Previously Medical Director and Chief Scientific

Officer at Novartis South Africa for two years

• Held various positions in medical affairs and

clinical operations at Novartis

• Prior to joining the industry he was a clinician

in the field of general surgery

Responsibilities

• Medical affairs

• Regulatory affairs

• Group quality assurance

• Research and development

Dorette Neethling

CA (SA), MCom (Taxation)

Group Finance Executive

• Joined Adcock Ingram in August 2007

• Previously Financial Director at Quintiles

South Africa

• Financial Manager in FMCG environment

in Namibia

• Completed articles at PWC

Responsibilities

• Financial reporting

• Taxation

• Treasury

• Payroll

Mohamed Mangel

CA (SA)

Operational Finance Executive

• Joined Adcock Ingram as a project accountant

in 1992

• Held various roles in finance over 20 years at

Adcock Ingram

• Completed articles at Leveton Bonner

Responsibilities

• South Africa

• East Africa

• Ghana

• India

Russell McMaster

CA (SA)

Business Development Executive

• Joined Adcock Ingram in July 2009 as Corporate

Finance Manager

• Previously Commercial Finance Executive

for a local niche corporate and asset finance

business

• Head of Finance – Southern Africa in a

multinational chemical logistics company

• Completed his articles with PKF Accountants

and Business advisors

Responsibilities

• Mergers and acquisitions

Frans Cronje

BSc, N. Dip. Ind. Eng.

Information Technology Executive

• Joined Adcock Ingram in December 2007

• Previously held a variety of IT executive roles at

Tiger Brands over a period of 10 years

• Worked for an IT company as an

Implementation and Project Manager

• Started his career as an Industrial Engineer

Responsibilities

• Information technology

Basadi Letsoalo

Hons Psych, CLDP, MPsych, MLPC

Human Capital Executive


• Previously head of Transformation at Standard

Bank SA

• Head of HR information management at ABSA

• Elected as a member of the University of

KwaZulu-Natal Council in 2012

Responsibilities

• Transformation

• Talent acquisition and management

• Learning and development

• Remuneration

Ntando Simelane

B. Juris, LLB

Company Secretary

• Joined Adcock Ingram in 2009 as the Group’s

Legal and Compliance Manager

• Appointed as Company Secretary on 1 April 2011

• Spent nine years at the SABC in various legal roles

• Spent four years at the Advertising Standards

Authority of SA (ASA) as a dispute resolution

consultant

Responsibilities

• Company Secretariat

• Legal affairs

• Legal/Risk compliance

• Risk control

GRI 2.3, 41 – 43,

4.9


BOARD AND GOVERNANCE STRUCTURE

Board of directors

Full CVs available

on the website:

www.adcock.com

Chancellor of the University of the Free State.

Chairman of Impala Platinum Holdings Limited

Serves on the boards of Tiger Brands Limited,

Zimplats Holdings Limited and African Oxygen

Limited.

Previous experience

• Founder President of the National

Research Foundation

• Founder President of the Academy

of Science of South Africa

• Served as Chairperson of the National Skills

Authority and of the Premier’s Economic

Advisory Council for the Free State Province

• Served on the Executive Board of the United

Nations Education, Science and Culture

Organisation (UNESCO)

Oversees Group Finance, Business Development,

Information Technology, Corporate Affairs,

Investor Relations and the Company Secretariat

Joined Adcock Ingram in 2007 as Chief Financial

Officer.

Previous experience

• Partner in charge of health sciences

at Ernst & Young

• CFO of a listed pharmaceutical company

in South Africa

• Sales and marketing at Pfizer, and retail

pharmacy

Jonathan J Louw (43)

MB ChB, MBA


Appointed:

15 July 2008

Appointed in 2008, overseeing the relisting

of the Company on the JSE. Prior to this was

head of pharmaceutical business since 2002.

Joined Adcock Ingram in 2001 as New Business

Development Executive.

Previous experience

• Joined Astra Zeneca in South Africa in 1999

• Practiced as an anaesthetist at St. Mary’s

Hospital in London in the 1990s

Khotso DK Mokhele (57)

PhD Microbiology, MSc Food

Science, BSc Agriculture

Independent Chairman

Appointed:

15 July 2008

Andrew G Hall (50)

Qualifications: CA (SA),

BPharm

Deputy Chief Executive and

Financial Director

Appointed:

15 July 2008

P Mpho Makwana (42)

BAdmin (Honours), Post-Grad

Dip (Retailing Management)

Independent non-executive

director

Appointed:

1 February 2012

Non-executive director of Nedbank and

Biotherm Energy (Pty) Limited. Chairman of

the Board of trustees at The New LoveLife

Trust. Trustee of The Business Trust, the

Transaction Advisory Fund and World Wildlife

Fund South Africa. Chairman of ITNA, a newly

established IT company.

Previous experience

• Chairman of Eskom Holdings

• Member of the group executive of Edcon

Adjunct Professor in Medicine , University of

Cape Town. Extraordinary Professor in Medicine,

University of Pretoria. Registered Specialist

Allergologist (Health Professions Council of

South Africa). Trustee of the Colleges of Medicine

of South Africa. Partner at Gateways Business

Consulting Group.

Previous experience

• Executive Vice President, AstraZeneca

(sub-Saharan Africa)

• Executive Vice President, AstraZeneca (China)

• Non-Executive Chairman, Professional

Provident Society of South Africa

• Senator, Colleges of Medicine of South Africa

Matthias Haus (63)

MB ChB, M.D., D.C.H., F.C.F.P.,

F.F.P.M, Dip. Mid. COG


director

Appointed:

1 June 2012

Board composition, meeting attendance and remuneration

Board

Board

meeting

attendance

Special

board meeting

attendance

Audit

Risk and

Sustainability

Committee

Meeting

attendance Committee

Meeting

attendance

Executive

JJ Louw(1) Member 6/6 1/1 Invitee 3/3 Invitee 3/3

AG Hall(1) Member 6/6 1/1 Invitee 3/3 Invitee 3/3

Non-executive

KDK Mokhele Chairman(2) 6/6 1/1

EK Diack Member 6/6 1/1 Chairman 3/3 Member 3/3

M Haus Member 2/2 Member 1/1

PM Makwana Member 2/3 Member 2/2

T Lesoli Member 5/6 1/1

CD Raphiri Member 3/6 1/1

LE Shönknecht Member 5/6 1/1 Member 3/3

RI Stewart Member 6/6 1/1 Member 3/3 Chairman 3/3

AM Thompson Member 6/6 1/1 Member 3/3

(1) For more details on the executive directors’ remuneration, please refer to page 41

(2) The Chairman only receives Board attendance fees and does not get paid for Board committee membership and attendance thereof

Changes during the year:

Mr Makwana was

appointed to the Board

effective from

1 February 2012

Prof Haus was appointed

to the Board effective

from 1 June 2012


For more details regarding

changes in directors’

responsibilities, please

refer to page 21

Leon E Schönknecht (59)

BCompt (Hons), CA (SA)


director

Appointed:

15 July 2008

Chairman of New Teltron (Pty) Limited.

Previous experience

• CEO of United Pharmaceutical Distributors

(UPD)

• Non-executive Chairman of UPD and director

of the Premier Group

• Qualified as CA with Deloitte & Touche

Lead partner in a business consulting practice.

Previous experience

• Associate professor of Physiology at the

University of Stellenbosch

• Fellow of the American College

of Chest Physicians

• Group executive at the South African

Medical Research Council

Roger I Stewart (60)

MB ChB, PhD (Med), Grad Dip.

Comp Dir.

F Inst Directors


director

Appointed:

15 July 2008

Experienced industrial executive. Serves as

a non-executive director of MPact Limited

(previously Mondi Packaging).

Previous experience

• CEO of Mondi South Africa

• Non-executive director of

Tongaat Hulett Group

Andrew M Thompson (55)

BSc (Civil Engineering), MBA


director

Appointed:

15 July 2008

Eric K Diack (55)

Qualifications: BAcc, CA (SA),

AMP (Harvard), AMP (UCT)


director

Appointed:

15 July 2008

Non-executive director of The Bidvest

Group Limited.

Previous experience

• CEO of Anglo Industries, and Anglo American

Ferrous and Industries Division

• Served on various boards, including Dorbyl,

AMIC, AECI, ArcelorMittal, Highveld Steel, LTA,

McCarthy and Tongaat Hulett

Qualified medical doctor at the University

of London. Registered practitioner with the

Health Professions Council of South Africa as

well as the British General Medical Council.

Previous experience

• Co-founded and managed Mother Earth

Distributors and Nature Plan

• Non-executive director of Woman

Investment Africa Network and

Global Africa Resources

• Research in Neonatal Paediatrics at

John Radcliffe Hospital Oxford UK

• Medical Director for Transmed Medical Aid

Tlalane Lesoli (62)

MB BS, Dip of Child Health


director

Appointed:

15 July 2008

Manufacturing and Technical Director

of SA Breweries. Serves on the boards of various

SA Breweries Limited subsidiaries.

Previous experience

• Design mechanical consulting engineer

at BKS Inc.

• Project Engineer at Metal Box

• Consulting engineer at Andersen Consulting

Clifford D Raphiri (49)

BSc Mechanical Engineering,

Grad Dip. Engineering, MBA


director

Appointed:

15 July 2008

Transformation

Social, Ethics and

Transformation

Human Resources, Remuneration

and Nominations Remuneration

Committee

Meeting


Meeting


Meeting

attendance

2012

R’000

2011

R’000

Executive

JJ Louw Member 1/1 Member 2/2 Invitee 3/3

AG Hall Member 1/1 Member 1/2

Non-executive

KDK Mokhele Member 1/1 Member 1/2 Member 3/3 967 904

EK Diack 542 501

M Haus 109 –

PM Makwana Member/

Chairman (3)

2/2 261 –

T Lesoli Chairman 1/1 Chairman/

Member (3)

2/2 298 283

CD Raphiri Chairman 3/3 316 278

LE Shönknecht 334 331

RI Stewart 542 501

AM Thompson Member 1/1 Member 2/2 Member 3/3 432 381

3 801 3 179

(3) Dr Lesoli was the Chairman of the Transformation Committee until it was disbanded in January 2012. Mr Makwana was appointed Chairman

of the Social, Ethics and Transformation Committee effective from 1 June 2012


BOARD AND GOVERNANCE STRUCTURE (continued)

Details Audit Committee

Human Resources, Remuneration and Nominations Committee

Social, Ethics and Transformation Committee

Risk and Sustainability Committee

Composition Three independent non-

executive directors

Three independent non-

executive directors

Four independent non-

executive directors

Two executive directors

Five independent non-

executive directors

Members EK Diack (Chairman)

RI Stewart

AM Thompson

CD Raphiri (Chairman)

AM Thompson

KDK Mokhele

PM Makwana (Chairman)

T Lesoli

KDK Mokhele

AM Thompson

JJ Louw

AG Hall

RI Stewart (Chairman)

LE Schönknecht

EK Diack

PM Makwana

M Haus

Responsibilities Review annual financial

statements and

recommend their approval

to the Board

Review accounting policies

Nominate for appointment

independent auditor

in accordance with the

Companies Act

Determine the fees

to be paid to auditor

and engagement

terms and ensure that

the appointment of the

auditor complies with

the provisions of the

Companies Act and other

relevant legislation

Provide assurances to the

Board as to the integrity

and appropriateness of

the financial management

systems

Assist the Board in

determining remuneration

and performance measures

of executive and senior

management

Determine remuneration

philosophy and

appropriate human capital

management policies

Review terms and

conditions of key executive

service agreements at least

annually

Oversee annual

performance evaluation

of the Board

Assist the Board to ensure

that the Board is

appropriately constituted

for it to execute its role

and duties effectively

and that directors are

appointed through

a formal, transparent

process, and that induction

and on-going training and

development of directors

takes place

Monitor the Company’s

activities having regard to

relevant legislation and

codes of best practice

Draw matters within its

mandate to the attention

of the Board and report

to the shareholders at the

Annual General Meeting

Ensure Adcock Ingram’s

equity ownership and

the demographic profile

of its employees is

representative in the South

African context

Establish, implement and

monitor the framework

for the Company’s

transformation plan

Ensure an appropriate

and effective control

environment and clear

parameters within which

risk is managed

Oversee issues relating

to sustainability

Oversee the conducting

of a business risk

assessment to identify

the most significant

commercial, financial,

compliance and

sustainability risks and

implement processes

to mitigate these risks

Assist the Board in setting

the risk strategy and

policies in determining

the Company’s tolerance

for risk

Attendance by

invitation

Executive directors,

Finance executives, internal

and external auditors

CEO and Human Capital

executive

Human Capital executive

Group Finance executive

Executive directors, internal

and external auditors,

insurance and risk advisers

and relevant members of

management

Board of directors (continued)

Human Resources, Remuneration and Nominations Committee

Board


Executive Committee

Audit Committee

Risk and SustainabilityCommittee

Governance structure

Social, Ethics and Transformation

Committee


CORPORATE GOVERNANCE

Corporate governance includes the structures, processes and

practices that the Board uses to direct and manage the operations

of Adcock Ingram Holdings Limited and subsidiaries within the

Adcock Group. These structures, processes and practices help to

ensure that authority is exercised and decisions are taken, within

an ethical framework that promotes the responsible consideration

of all stakeholders and ensures that decision-makers are held

appropriately accountable.

Adcock Ingram Holdings Limited is committed to the principles

of good corporate governance as set out in the King III Report

on Corporate Governance for South Africa (King III Report), the

JSE Listings Requirements and the Companies Act 71 of 2008

(Companies Act).

EthicsEthics are the cornerstone of Adcock Ingram’s business and an

unequivocal commitment to fairness, transparency and integrity

underlies all facets of the Group’s operations. Adcock Ingram’s

Board, assisted by its various committees, is responsible for setting

the ethical tone “at the top” and monitors its implementation,

including training of employees regarding the Code of Ethics, to

help ensure that business is conducted in a manner that is beyond

reproach at all levels in the Group. Adcock Ingram is committed to:

• Achieving the highest standards of transparency, accountability

and integrity in all aspects of its operations and in its dealings

with stakeholders and the community at large;

• Providing stakeholders and the investor community with clear,

meaningful and timely information about Adcock Ingram’s

operations and results;

• Conducting its business on the basis of fair commercial and

competitive practice;

• Building business relationships with suppliers and customers

who endorse ethical business practices and who comply with

the laws of the jurisdictions where they operate;

• Actively pursuing transformation and ensuring employment

practices which are non-discriminatory and which seek to

maximise the potential of all its employees through training

and skills development; and

• Proactively accepting responsibility for and managing the

environmental and sustainability issues associated with

its business.

The King III Report provides clear guidance on acceptable

business practices and ethical standards by which Adcock

Ingram employees, suppliers and business partners are expected

to conduct themselves in their business relationships. Training

initiatives relating to ethics include training of employees on ethics

by one of the Ethics Officers employed by the Group. Adcock

Ingram proudly employs three of South Africa’s 124 Certified

Ethics Officers and one of these managers is also a certified fraud

examiner. Employees are encouraged to report any suspected

inappropriate, unethical, illegal activity or misconduct through an

independently operated Speak Up line (Tip-Offs Anonymous). This

whistle-blowing facility is available 24 hours per day, 365 days per

year. All complaints lodged through this service are investigated

and are reported to the Board of directors.

Analysis of 2012 reports received:

Number of reports Reasons for calls

Reports received 48 Unethical behaviour in the workplace or unethical/dishonest

conduct.

Number of calls under investigation 19

Unfounded 13

Insufficient evidence 7

Proven allegations 9 1 resulted in a disciplinary enquiry with a finding of guilty

(final written warning);

7 resulted in improvement of controls; and

1 led to the recovery of a debt.

ValuesOur corporate values are aimed at building and maintaining a

culture which promotes teamwork, achieving financial results,

respect, learning and development, commitment, professionalism,

integrity, and a focus on business ethics, creative thinking and

open and honest communication.

Information Technology (IT)Adcock Ingram subscribes to the King III statement that IT

governance can be considered as a framework that supports

effective and efficient management of IT resources to facilitate the

achievement of the Group’s strategic objectives.

Adcock Ingram has implemented a number of projects with a

view to improve its business processes and continues to improve

their processes to achieve compliance. The implemented

processes include:

• Business driven IT strategy;

• Standardisation of systems and processes to improve business

operations and reporting;

• Replacement of outdated and obsolete systems with the

Oracle ERP suite of products running on modern energy

efficient servers;

• Centralisation of IT facilities and upgrades to the IT infrastructure.

In the process, environmental benefits will be realised through

reduced electricity consumption;

• Information security systems; and

• Disaster recovery systems and procedures.

Internal auditThe internal audit function forms an integral part of the

governance structure of the Group and its key responsibility is

to evaluate the Group’s governance processes and associated

controls amongst others as set out in the King III Report.


CORPORATE GOVERNANCE (continued)

In performing its functions the internal audit function provides

reasonable assurance to the Board regarding the effectiveness of

the Group’s network of governance, risk management and internal

control processes and systems.

The internal audit function is outsourced to an independent

audit firm and the responsibility to oversee, manage, inform and

take accountability for the effective operation of this function

lies with the Company’s Deputy Chief Executive and Financial

Director. The internal audit function has adopted a risk-based

methodology to ensure appropriate coverage of governance,

risk and control processes which are crucial to the realisation of

strategic goals. The internal audit plan is therefore informed by

strategic plans, key risks, input from management, the Board and

external audit, compliance requirements and a comprehensive

assessment of the risk universe as it applies to the Group.

The internal audit function has a formally defined charter which

is approved by the Board.

There has been extensive co-ordination and sharing of

information with the Group’s external auditor, who continues to

place substantial reliance on the work of internal audit.

The Board of directorsAppointment and retirement

Adcock Ingram is led by a diverse board of 11 directors, nine

of whom are independent non-executives. Adcock Ingram’s

Memorandum of Incorporation (MOI) sets out a formal process

for the appointment of directors to the Board. Criteria used in

the selection of the directors of the Company include leadership

qualities, depth of experience, skills, independence, business

acumen, and personal integrity beyond reproach. The directors

collectively bring to the Group a wide range of skills and

experience which include industry-specific knowledge as well

as broader business flair. The Board is led by a Chairman who is

an independent non-executive director. A clear separation of

power exists between the Chairman of the Board and the Chief

Executive Officer.

As required by the Company’s MOI, an Annual General Meeting

is held each year. In accordance with the Company’s MOI, one-

third of the independent non-executive directors retires by

rotation every year and, if eligible, may offer themselves for

re-election by shareholders. Thus, each independent non-

executive director is rotated at least once every three years in

accordance with the MOI. Retiring independent non-executive

directors who offer themselves for re-election are evaluated by

fellow directors before a recommendation on their re-election is

made by the Board to shareholders. There is no term or age limit

imposed in respect of a director’s appointment; however, tenure

is informed by a regular, formal evaluation of the suitability,

contribution and independence of each of the directors.

The terms and conditions applicable to the appointment of

independent non-executive directors are contained in a letter

of appointment which, together with the Board Charter, forms

the basis of the director’s appointment. The Human Resources,

Remuneration and Nominations Committee plays an important

role in the identification and removal of under-performing or

unsuitable directors.

Brief curricula vitae of each of the directors appear on pages 16

and 17 of this report.

Responsibilities and processes

The Board is ultimately responsible to shareholders for the

performance of the Group. The Board broadly gives strategic

direction to the Group; approves and regularly reviews business

plans, budgets and policies; appoints the Chief Executive

Officer and ensures that power and authorities delegated to

management are clearly and comprehensively documented

and regularly reviewed, and that the governance framework and

strategic direction of the Group remain appropriate and relevant.

The Board retains control over the Group, monitors risk and

oversees the implementation of approved strategies through a

structured approach to reporting and accountability. The Board,

through the Risk and Sustainability Committee, monitors the

Group’s risk tolerance and appetite. The Group is currently

reviewing its enterprise risk management, to ensure that it

provides the Board with a perspective on its robustness as required

in the King III Report on Governance for South Africa 2009 (King III).

The high-level review by internal auditors of the enterprise risk

management processes and practices as implemented at Adcock

Ingram confirms a credible process of risk governance. The risk

management process as a whole within Adcock Ingram has been

rated as satisfactory, which recognises that, whilst deficiencies

within the risk management process exist, these can be addressed

through the recommended interventions. Adcock Ingram is in the

process of addressing the identified deficiencies.

Board Charter

The Board is governed by a Board Charter which sets out,

inter alia, the principles and process in terms of which directors

are appointed, the duties and responsibilities of the Board and

how issues such as dealing in the Company’s securities are to be

dealt with. Issues of conflicts of interest are regulated and dealt

with regularly in terms of the Board Charter and section 75 of the

Companies Act. The directors’ register of interests is circulated at

the scheduled meetings of the Board for directors to confirm its

contents and the subject matter is a standing item on the Board

agenda. In line with the Board’s commitment to implementing

the highest practicable standards of corporate governance within

the Company, the Board Charter incorporates the principles of the

King III Report wherever appropriate.

The meetings of the Board and Board committees are scheduled

annually in advance. In addition to regular consideration of the

Group’s operational and financial performance at each of its

meetings, the Board’s annual work-plan aims to ensure that the

Board deals with each of the matters reserved for its consideration

during the course of its annual meetings. The number of meetings

held during the year under review (including meetings of Board-

appointed committees) and the attendance of each director

appear on pages 16 and 17 of this report. The Board strives to

ensure that non-attendance by directors at scheduled Board

meetings is an exception rather than the norm, and directors who

are unable to attend meetings are required to communicate their

reasons for non-attendance in advance to the Company Secretary

for formal notification to the Board.

Board papers are provided to directors in a timely manner,

in advance of meetings, and directors are afforded ample

opportunity to study the material presented and to request

For more details regarding

attendance of meetings

refer to pages 16 and 17


additional information from management where necessary.

All directors may propose further matters for inclusion on the

agenda of Board meetings. The Board is given unrestricted access

to all Group information, records, documents and facilities through

the office of the Company Secretary. The Company Secretary

is the secretary to all committees of the Board and ensures that

the committees operate within the limits of their respective

mandates and in terms of an agreed annual work plan. There is

a formal reporting procedure to enable the Board to stay abreast

of the activities of each committee. In terms of the Board Charter,

the directors may obtain independent professional advice, at the

Group’s expense, should they deem it necessary for the proper

execution of their directorial role.

Directors are kept appropriately informed of key developments

affecting the Group between Board meetings.

Non-executive directors have full access to management and

may meet separately with management, without the attendance

of executive directors, where necessary. Arrangements for such

meetings are facilitated through the office of the Company

Secretary. At least twice annually, the non-executive directors

meet without the executive directors or other members of

management being present to discuss issues relevant to the Board

and the Group.

The Company Secretary attends all Board and committees’

meetings and provides the Board and the directors,

collectively and individually, with guidance on the execution

of their governance role and compliance with the required

statutory procedures.

Changes to directors’ responsibilities and status

There were changes to the Board of directors during the

period under review. Mr Paul Mpho Makwana and Professor

Matthias Haus were appointed as non-executive directors

of Adcock Ingram with effect from 1 February 2012 and

1 June 2012, respectively. Both Mr Makwana and Professor

Haus were appointed as members of the Risk and Sustainability

Committee. Following the establishment of the Social, Ethics and

Transformation Committee, Mr Makwana was appointed as its

Chairman with effect from 1 June 2012 and all the functions and

responsibilities of the disbanded Transformation Committee will

be performed by this newly formed committee. Dr Tlalane Lesoli,

former Chairman of the Transformation Committee, is now a

member of the Social, Ethics and Transformation Committee.

Board education and training

All directors are required to attend a formal annual governance

training session, which is formally scheduled in the Board’s annual

calendar, to ensure their knowledge of governance remains

relevant. In addition, all directors are provided with an induction

file containing important legislation and the Group’s governance

framework (including the Board committee governance structure,

the Board Charter, terms of reference of all Board committees

and key Company policies). On-going director training sessions

are held where changes in the legislative, regulatory or business

environment of the Group warrant specific focus. Finally, all

directors are encouraged to attend external director development

and training programmes, at the cost of the Group. In the year

under review all directors attended a half-day training session

on the relevant sections of the Companies Act 71 of 2008

and its Regulations (2011), both of which came into effect on

1 May 2011. Dr Stewart attended a one-day seminar on Growth

and Sustainability.

The Board of directors also received training on the Memorandum

of Incorporation and on the role and duties of the Social and

Ethics Committee.

Board evaluation

A formal process to evaluate the performance of the Board, its

committees, the Chairman, and three retiring Board members

was instituted. The Board and its Chairman as well as three retiring

directors were evaluated in 2011. In the year under review, the

performance of the committees and their respective chairmen;

the retiring directors; the CEO and the Company Secretary

were evaluated. The evaluation criteria included the following

areas: composition, authority and functionality, effectiveness of

meetings, relationship between the independent non-executive

directors and management, risk management and control.

The evaluation forms completed by directors were submitted

to an independent assessor for evaluation and compilation of a

report. The results of the evaluation were discussed at the meeting

of the Board in November 2012.

Board meetings

Six scheduled Board meetings were held during the year. In

addition there was one special Board meeting, which lasted

more than three hours and Board governance training session.

See pages 16 and 17 for the table which sets out attendance by

directors at all Board meetings.

Company Secretary

Mr Ntando Simelane is the Company Secretary of the Group.

All directors have unlimited access to the Company Secretary for

advice to enable them to properly discharge their responsibilities

and duties in the best interests of Adcock Ingram, with particular

emphasis on supporting the independent non-executive directors

and the Chairman. The Company Secretary works closely with

the Chairman and executive directors, to ensure the proper and

effective functioning of the Board and the integrity of the Board

governance processes.

The Board of directors can confirm that it has considered and

satisfied itself with regard to the competence, qualifications

and experience of the Company Secretary. The Company

Secretary was evaluated by all the directors and some invitees to

the Board committees, including internal and external auditors.

The evaluation questionnaires were collated and analysed by

independent advisors and the results thereof shared with the

Board of directors. Based on the results of the evaluation, the Board

of directors can confirm that the Company Secretary is competent

and has relevant experience to discharge his duties. Furthermore,

the Company Secretary is suitably qualified for this role, maintains

an arm’s length relationship with the Board of directors and is not

a director.

GRI 4.4, 4.6,

4.7, 4.10


LEADERSHIP STATEMENT

Khotso Mokhele –

Chairman

Jonathan Louw –


Andy Hall –


Financial Director

Where we have not yet

achieved our goals

• Financial performance

• Resolution of the

DPP issue

• Expansion into the

Rest of Africa

• Service delivery during

upgrades

Where we have succeeded

in our objectives

• No. 1 position in the

OTC and hospital

markets in South Africa

• New collaborative

agreements with

multinationals

• Completion of South

African factory and

distribution centre

upgrades to world-class

standards

• Acquisition of Cosme

Farma Laboratories in

India

• Public sector tender

awards Dear Stakeholder,2012 has been both challenging and exciting. In South

Africa, key factors that affected our financial performance

were the disappointing results of the previous Anti-Retroviral

(ARV) tender, the suspension of products containing DPP

(Dextropropoxyphene), disruption of supply as a result of

factory upgrades, and significant cost increases, including

Rand weakness.

These factors were partially offset by the benefits of the NutriLida

acquisition late last year. Internationally, Adcock Ingram

extended its business model in India with the acquisition of the

brands of Cosme Farma Laboratories, thus establishing sales and

marketing presence in this burgeoning market, from January

2013 onwards.

Economic overviewGlobal economic activity weakened further, influenced by the

Eurozone debt crisis and the slow recovery of the USA economy.

The International Monetary Fund (IMF) lowered its global growth

projections to 3,3% in 2012 and 3,9% in 2013.

Prospects for emerging market economies are more positive:

growths of 5,3% in 2012 and 5,6% in 2013 are projected in the

sub-Saharan Africa region. The IMF notes that Africa will be

the fastest growing economy over the next five years.

However, the IMF forecasts a slower growth rate for South Africa of

3,4% in 2013. The implementation of major infrastructure projects

and job creation initiatives could result in a better performance

next year.

The National Development Plan provides a solid strategic

framework that augurs well for South Africa’s long-term

development.

Financial overviewAn overview of the financial results is presented on pages 8 to 10.

RestructuringFinancial performance necessitated a cost-cutting exercise

which regrettably included a headcount reduction in the South

African operation.

All South African employees were offered the opportunity to

apply for voluntary retrenchment; 79 applications were accepted.

Thereafter an involuntary retrenchment exercise was embarked

upon which resulted in a further reduction in headcount of 24.

The downsizing initiative will result in annual savings of

approximately R40 million from 2013 onwards.

Healthcare regulatory issues The Company welcomes the planned launch of the South

African Health Products Regulatory Authority planned for

April 2013 (which will replace the Medicines Control Council).

The Company trusts that this new Authority, boosted by a

larger staff complement, will streamline regulatory procedures,

especially the new product registration process. The Company

also welcomes the establishment of the Marketing Code Authority

which has been approved with guidelines to assist with the

interpretation thereof.

Other regulatory issues in progress include registration of

complementary and alternative medicines and harmonisation

of regulatory procedures, guidelines and processes for SADC

countries. The latter would accelerate new product registration

applications in these countries when implemented.

The full impact of international benchmarking, the proposed

capping of the logistics fee and the National Health Insurance

system are not yet quantifiable, but we expect the effects of the

former two initiatives to be manageable. Industry associations are

addressing these and other issues with the Department of Health.


2012 MilestonesSouth Africa

The NutriLida acquisition contributed to the improved

performance in the OTC division.

The acquisition of the ADDvance brand further enhances the

Company’s franchise in the growing vitamins and minerals

supplement (VMS) market, in which category Adcock Ingram is

the market leader.

The strategic collaborative agreement concluded with Novo

Nordisk grants Adcock Ingram the rights to market, promote

and distribute the Novo Nordisk Hormone Replacement Therapy

(HRT) portfolio which has also provided the Company with market

leadership status in this category.

New products, including Serez and Adco-Prednisolone, were

launched in the generics category and line extensions in Corenza

and Allergex in the OTC segment.

Implementation of the Preferential Procurement Policy

Framework Act (PPPFA), through which locally manufactured

products receive preference in certain State tenders, further

justified the Company’s investment in its South African factories.

Products within those tenders must meet the requirement

of 70% of volume being manufactured in South Africa. In

addition to the positive impact on employment creation, capital

utilisation and Government revenue, this Act will also enhance

access to medicine. The Company has already realised the

benefits of this Act in terms of recent tender awards which are

effective from 2013 for two years.

The investment in the factory upgrades at the Aeroton, Wadeville

and Clayville facilities and upgrades to the distribution centres in

Durban, Midrand and Cape Town were completed at a total cost of

R1,5 billion. These upgrades place the Company on a world-class

footing and facilitate improved efficiencies, increased capacity and

an effective reduction in our carbon footprint.

Adcock Ingram gained a significant share of the Oral Solid Dosage

tender issued by the South African Department of Health. The

share is valued at R237 million over a two-year period which

represents a four-fold increase over the previous tender two

years’ ago. This equates to over 1,5 billion tablets per annum. The

Company also received a R288 million share of the Large Volume

Parenteral tender (11% increase on the previous tender award)

and a R20 million allocation of the Oral Liquids tender over two

years. The Supply Chain is now well geared to cope with the

additional demand.

International

The acquisition of the marketing and sales operations of Cosme

Farma Laboratories in India is in line with the Company’s growth

strategy. Cosme Farma is well respected and has established a

track record of over 40 years in the Indian pharmaceutical market.

India is an attractive market underpinned by a pharmaceutical

spend of US$16 billion and a population of 1,2 billion people, an

emerging middle class and an expanding medical infrastructure.

Following regulatory approvals obtained in November 2012, we

expect to integrate Cosme from January 2013 onwards.

Rest of Africa

The shareholding in Ayrton Drug Manufacturing Limited in Ghana

was increased to 78%. The water treatment facility at that factory

has been upgraded with the benefits of enhanced quality and

increased capacity.

2012 ChallengesSouth Africa

The DPP issue has not yet been resolved. Adcock Ingram

launched an appeal and has been in on-going discussions with

the Medicines Control Council (MCC) since the MCC withdrawal

of DPP-containing products. The discussions, which are taking

place within the context or parameters of the appeal, culminated

in a meeting between the scientific experts supporting

Adcock Ingram and the MCC.

The experts succeeded in narrowing down the disputed issues,

with two remaining issues outstanding. Adcock Ingram made a

commitment to provide the MCC with all clinical data for review

before the Appeal Committee can adjudicate on the outstanding

issues. The appeal process continues in parallel and the Appeal

Committee will adjudicate on the outstanding matters.

Rising fuel and electricity prices and the negative exchange

rate fluctuations have increased input inflation and impacted

negatively on costs and consumer spending. The pharmaceutical

industry was further affected by the freeze on the Single Exit Price

in 2011. A 2,14% increase in the SEP was however granted in 2012.

The shortage of regulatory pharmacists coupled with delays in the

new products registration process at the MCC has impacted on

the Company’s ability to introduce new products to the market.

Improvements are expected as a result of the new South African

Health Products Regulatory Authority and the support service

to our Drug Management and Development division which has

been established in India.

Corporate governance and ethicsThe directors are committed to maintaining the highest standards

of corporate governance. These standards are integral to the aim

of building and maintaining a corporate culture that promotes

ethical behaviour supported by open and honest communication

with all stakeholders.

The Company expects all its employees to adhere to by the

Adcock Ingram Code of Ethics and the policies and procedures

which are the cornerstone of its values. This aims to ensure that

business at all levels is conducted transparently and in a manner

that is beyond reproach.

The Company’s employees are constantly reminded of the ethics

culture through a dedicated column in all newsletters, notice

boards and ethics training. Staff and suppliers are encouraged

to make use of an independently operated “Ethics/Speak

Up” hot line to report bad practices. They have the option of

remaining anonymous.

SustainabilityEconomic

The Company is committed to the development and growth of

the business supported by sustainable revenues. This will provide

investment for future growth, employment opportunities and a

contribution to the economic growth of South Africa, India and

other countries in which the Company operates.GRI 1.1, 4.8


LEADERSHIP STATEMENT (continued)

Environmental

The Company did not meet all its environmental objectives in

2012, mainly due to the restructuring and factory upgrades. A task

team has been established to re-focus on environmental factors

with the objective of reducing the carbon footprint through a

process of continuous improvement.

Adcock Ingram and the City of Johannesburg joined forces to host

a discussion on the impact of climate change on human health,

the first of its kind in South Africa. The initiative aimed to stimulate

dialogue between various stakeholders, including the media,

academia, NGO’s, civil society, the business sector and the national

and provincial Governments.

Social

The Company intends to maintain a Level 3 BBBEE status in

2013 despite changes to the scorecard and an increase in

compliance targets.

The actual BBBEE rating progressed to Level 3, from Level 4, as a

result of our Employee Share Option Scheme – Mpho ea Bophelo

– and the launch of our owner-driver scheme, which contributed

to our Enterprise Development score.

Company Name

Registration Number

VAT Number

Address

BBBEE Status Level Level 3

Level Qualification %

26.58% Black Ownership; 6.95% Black Women Ownership 1 � 100 Points 135%

Yes 2 � 85 but < 100 125%

138% 3 � 75 but < 85 110%

Issue Date 01/11/2012 4 � 65 but < 75 100%

Expiry Date 31/10/2013 5 � 55 but < 65 80%

Certificate Number ELC3356GENBB 6 � 45 but < 55 60%

Version Final 7 � 40 but < 45 50%

Applicable Scorecard Codes - Generic 8 � 30 but < 40 10%

Applicable BBBEE Codes Generic Codes Gazetted on 9 February 2007 0%

EmpowerLogic (Pty) LtdReg. No. : 1995/000523/07

BBBEE Verification Agency

Per T Lombard

Member - Verification Committee

SANAS Accredited

BVA018

BEE Status

Enquiries

Tel:

EO: 19.63 points; MC: 4.64 points; EE: 6.69 points; SD: 10.81 points; PP: 16.21 points; ED: 15 points; SED: 5 points

Element Points Obtained

Black Ownership

Value Adding Vendor

BEE Procurement Recognition

BEE Procurement Recognition Levels

086 111 4003

Non-Compliant <30

Broad Based Black Economic Empowerment Verification Certificate

A Consolidated Verification Certificate Issued to

Adcock Ingram Holdings Limited and Subsidiaries

Measured Entity (Full List of Entities Listed on Page 2 of Certificate)

2007/016236/07

See Page 2

1 New Road

Fax:086 505 7284

[email protected]

www.empowerlogic.co.za

This certificate is the result of an independent and impartial verification of the BBBEE status of the measured entity measured against the Codes of GoodPractice on Broad Based Black Economic Empowerment. The objective of our verification is to verify the validity and accuracy of the BBBEE statusrepresented by the measured entity. EmpowerLogic is not responsible for ensuring completeness of information provided to support the BBBEE status.

Midrand

1685

Adcock Ingram Holdings Limited and Subsidiaries

Level 3 Contributor

��Your Logical Empo we r men t Solu tion��Your Logical Empo we r men t Solu tion

The Company continues to support socio-economic development

programmes, some of which are part of our marketing efforts.

Progress is also being made in terms of skills development and

literacy programmes.

Integrated annual reportThe Company is now in the second year of a journey to present

an integrated annual report characterised by an emphasis on

sustainability and improved disclosure in line with legislative

requirements and international standards. The 2012 report

has been drafted taking into account valuable feedback from

certain stakeholders.

The 2011 Integrated Annual Report was rated as “Excellent” in

Ernst & Young’s Excellence in Integrated Reporting survey.

The BoardThe Company welcomes Mr Mpho Makwana and Prof Matthias Haus

to the Board as independent non-executive directors and looks

forward to their contribution to the growth of the Company. There

were no other changes to the Board.

Succession planningPotential successors to key and strategic positions have been

identified to ensure continuity. Development needs are being

addressed and relevant activities to address these needs are being

designed for implementation in 2013.

Risk managementThe Board is satisfied that the executive management team is

constantly aware of risk factors and actively seeks ways in which to

overcome controllable risks and those that can be influenced, and

to minimise the impact of uncontrollable risks.

A comprehensive overview of Risk Management is featured on

pages 45 to 47.

InnovationThe Centre for Drug Evaluation and Research (CDER) of the FDA

confirmed the classification of the Company’s R&D facility as

acceptable. The facility was again awarded WHO pre-qualification.

There was a slight decline in the number of innovation projects

compared to the previous year. This was due to the unit’s

involvement with the factory upgrades.

New Product Development Pipeline

2012 2011

Number of products under

in-house development 62 70

Number of dossiers submitted

for registration 23 48

Number of new products

approved by the MCC 14 12

Information TechnologyA robust, modern IT platform is in place to facilitate growth locally

and expansion into international markets, optimisation of business

processes to reduce transaction costs, validation for compliance to

various regulatory authority requirements, reduced risk in terms

of business continuity, internal and external integration, and a

reduction in the carbon footprint.

Upgrades and an integrated IT platform for operations in Africa

and India, together with improvements to processes and systems,

are scheduled for completion within the 2013/2014 time frame.

AppreciationSincere appreciation to all stakeholders, in particular the

shareholders, employees, customers, partners and suppliers,

without whom the Company would not exist.

Many thanks to the non-executive directors who play a

meaningful role in securing the future of Adcock Ingram based on

a foundation of sustainability, ethics and strategic thinking.


The Company is most appreciative to the Executive Committee

and the management team for their positive approach in meeting

the challenges of a difficult year and their commitment to

sustainable growth.

2013 and beyondSouth Africa

The focus remains on maximising growth in all the categories and

markets in which the Company operates, through:

• Organic growth;

• Extending the portfolio of collaborative arrangements with

multinationals;

• Acquisition of businesses and brands;

• A focus on innovation and consolidation in the FMCG and

Pharmacy channels based on a core umbrella brands strategy

to improve return on investment;

• Expanding the Company’s presence in the public sector

through tender awards; and

• Priority attention to customer-driven strategies, with a

particular emphasis on improving service delivery to all

customers.

The Company is well placed to regain its path of growth in

South Africa.

Rest of Africa

The Company has set ambitious targets and is committed to

building organisational capability in terms of people, processes

and culture. These factors will provide Adcock Ingram with a

competitive edge in the respective markets.

India

The Cosme Farma acquisition is expected to yield turnover in

excess of R200 million in 2013 and this vehicle will also provide

a conduit to launch certain South African brands into this major

market.

It is also expected that the Transactional support office established

in India to support the South African Drug Management and

Development function will hasten the preparation of dossiers for

new product applications in all the markets in which operations

are conducted.

Jonathan Louw


Khotso Mokhele

Chairman

Andy Hall


Financial Director

Production at new high-volume liquids plant


OPERATIONAL OVERVIEW – Southern Africa


in our objectives

• Integration of the

NutriLida acquisition

• Market leadership of the

vitamins, minerals and

supplements market

• Novo Nordisk

agreement extends

multinational partners

of choice programme

• Agreement signed in

November 2012 with

Lundbeck

• Public sector tender

awards


achieved our goals

• Financial performance

• Stock availability due to

factory upgrades

• Service delivery during

upgrades

• New quality and

laboratory standards

Areas of Risk

• Capping of logistics fees

• Economic climate

effects on consumer

spending

• Drive to reduce

medicine prices

• Increasing competition

• Reliance on certain

licensors

• Impact of the

weakening Rand on

gross margins

• Quantum of annual SEP

price increases

• International

benchmarking

Financial performanceTurnover R4,436 million

Contribution after marketing expenses R1,246 million

Adcock Ingram aims to be the market leading supplier of

affordable branded and generic prescription and OTC medicines,

and hospital products.

Market overviewThe South African pharmaceutical market, as measured by IMS,

is worth R31 billion with 7,2% growth (September 2012 MAT).

The private sector accounts for 86% of this with 10,4% growth in

value terms and 65,7% in volume (6,7% growth). Adcock Ingram’s

share is 9,7% in value terms (14,8% growth) and 29,8% in volume

(5,9% growth).

Adcock Ingram enjoys a 19,6% share of the R7,9 billion OTC

market, with Adcock Ingram’s 22,5% growth exceeding that of the

market (16,8%).

OTCFinancial overview

The inclusion of NutriLida supported turnover growth of 11,4%

to R1,792 million and resulted in Adcock Ingram becoming the

market leader in the vitamins, minerals and supplements (VMS)

category. This was achieved in a challenging year when measured

against operational constraints due to factory upgrades, tough

trading conditions, the effects of the economic slow-down on

consumer spending, a late cold and flu season and the nation-

wide transport strike during September.

Profitability was impacted by increasing costs and the weak Rand.

The division posted a strong performance in the total OTC market

holding the leadership position with a 19,6% share.

Wellbeing categoryThe NutriLida acquisition contributed R205 million to turnover and

placed the Company as market leader in the VMS market.

The acquisition of the ADDvance brand further enhances the

Company’s franchise in the growing VMS market. This range

of products for children and adults is designed to improve

concentration, memory and brain functioning.

Curative categoryCorenza C maintained market leadership with a 16,4% share and

continues to perform well in the cold preparations market. Line

extensions within the umbrella branding strategy include Corenza

Syrup and Corenza Para C.

Allergex is another example of the umbrella branding strategy.

This brand has proven its position in the antihistamine market.

Recent innovation has included eye drops, mepyramine cream

and a loratadine variant under Allergex Non-Drowsy.

Strong competitor activity in the Allergy, Schedule 2 Analgesics

and the Colds and Flu categories resulted in an average

performance in Pharmacy.

Renewed focus is being placed on Panado in the Pharmacy

channel. Panado Plus (for relief of tension headache) an anti-

pyretic, anti-inflammatory and analgesic combination was

launched in the second half of the year.

Health and hygiene GynaGuard (for intimate feminine care), acquired through

NutriLida, has triggered entry to a new growth segment in the

OTC market.

Opportunities

The Digesticare campaign resulted in increased consumer and

healthcare practitioner education on the digestive portfolio with

specific focus on the probiotics category. The campaign resulted

in growth in excess of 20% on the Digesticare portfolio for the year.

The acquisition of ProbiFlora (probiotic) provided entry and market

leadership in a broader high growth category. New information

will facilitate the entry of probiotics to many other therapeutic

classes but will require investment in clinical and laboratory work.

The new product pipeline, umbrella branding strategies and a

focus on stock availability and in-store visibility will assist in driving

market share gains in the future.

Challenges and trends

In the FMCG channel, there is a switch to the strong brands that

drive innovation or house brands that offer value for money with

trusted quality.

Prices remain under pressure and there is a trend towards smaller

pack sizes.

The Schedule 2 analgesics portfolio is under pressure from

economy brands but is enjoying growth in the non-codeine

brands. Overall, Adcock Ingram has maintained its market

leadership position with a market share of 58,4% but is posting

growth behind the market growth.

The trend towards preventative care and more natural self-

care solutions has seen an increase in CAMS (Complementary

Alternative Medicines) entering new categories, for example, the

Cough, Cold and Allergy categories.

Branded prescriptionFinancial overview

The Prescription business did not meet expectations. Several

factors impacted on the performance including an overhang from

the loss of DPP business (R85 million), the disappointing allocation

of the ARV tender in 2011 and the repatriation of the Organon

brands (R33 million) to a principal. In addition, service levels were

disrupted during the factory upgrades as well as the requirement

of more stringent quality assurance testing methodologies.

These negatives were partially offset by the inclusion of additional

strategic collaborations including Watson, Novartis, MSD and more

recently Novo Nordisk for the range of Hormone Replacement

Therapies (HRT) and Lundbeck which specialises in brain disorders

such as depression, anxiety and psychotic disorders amongst

others. The alliance with Novo Nordisk has placed Adcock Ingram

in a market leadership position with an increased market share

from 8% to 41% within the select women’s health category. The

alliance with Novo Nordisk has also enhanced this franchise in

the broader women’s health market. The combination of Novo

Nordisk’s technologies in the HRT field and Adcock Ingram’s critical

mass and equity in the market will increase patient and prescriber

access to these products throughout South Africa.

Myprodol remains an important cornerstone and contributor to

performance, based on a branded strategy with a generic defence

strategy adopted by its internal generic – Gen-Payne. The two


products combined continue to generate significant demand

and have achieved a market leading share in the combination

analgesic market.

In the public sector, buy-outs of ARV products have provided

incremental turnover when companies that received the tender

were unable to meet their supply commitments. Buy-outs

over the period have seen a consistent and steady increase as

Government became increasingly confident in service levels

provided by Adcock Ingram.

Opportunities

Capabilities that distinguish Adcock Ingram include breadth in

terms of therapeutic areas where the Company has chosen to

compete, range of product offering, depth and expertise in and

knowledge of the markets in which the Company operates, critical

mass in key therapeutic areas and cross-functional synergy.

These capabilities all support and assist in attracting multinational

partners. The relationships with these partners are uniquely

tailored to support and meet the specific requirements of each

multinational – including both internal mechanisms of reporting

as well as adoption of best in class executional practice.

The investment in a world-class supply chain, combined

with competitive pricing and the benefits of the Preferential

Procurement Policy Framework Act (PPPFA), which provides

incentives for local manufacturing, augurs well for continued

growth in the public sector. Adcock Ingram has positioned itself

well in this area.

These factors have resulted in three major tender awards that will

be beneficial to growth over the next two years: Adcock Ingram

received a R237 million share of the Oral Solid Dosage tender

(1,5 billion tablets per annum) and a R288 million share of the

Large Volume Parenterals tender – 36,5 million units across various

product ranges (an 11% increase on the previous LVP tender) as

well as a R20 million allocation of the Oral Liquids tender. Adcock

Ingram was allocated 14% by value and 25% by volume of the ARV

tender announced on 29 November 2012.

Challenges and trends

Funders remain focused on the cost of medicines, including an

attempt at curbing the use of originator medicines in favour of

generic alternatives.

Regulatory issues and more so delays in registrations impact the

extent to which companies are able to bring new products to

market. Key challenges for the business remain management

of cost creep, particularly with Rand weakness and increased

regulatory requirements.

The Government appears to be committed to ‘lowest price

in the basket’ in the international benchmarking proposals.

This application may lead to marginal and low volume products

being discontinued with negative implications for patient access.

Responses to these challenges include a multi-faceted approach

of cost-effectiveness, capitalising on economies of scale, quality

through world-class production facilities and focused commercial

strategies through investment in marketing and promotion.

GenericsThe Generics business has been placed under one leadership

team spanning a customer base of the private and public sector

hospitals, dispensing and prescribing doctors, and retail pharmacy.

The product offering extends across life-saving hospital products

including intravenous fluids, blood products, wound care

products and an extensive range of generics in injectable, liquid

and tablet/capsule forms.

The team focuses on supply, price, access, range and promotion

with the aim of increasing volumes through market share gains

and the introduction of new generics as innovator products lose

their patents.

Performance

The Generics business is reflecting growth ahead of the market in

volume, although value growth was impacted by price reductions.

Adcock Ingram is not participating in certain high value classes.

The continued launch of new products will assist in improving

value growth.

Serez (quetiapine generic) was launched six months after the

first generic entrant and achieved market leadership in the

generics market. Adco Prednisolone (Prelone clone) was launched

successfully as a generic defence strategy and contributed

to performance.

Adco Simvastatin continues to perform well and maintained its

strong position in the market. The recent launch of Atorvastatin is

expected to obtain substantial market share.

Margins were tight due to price erosion in the intensely

competitive environment while factory upgrades disrupted

supplies.

HospitalLarge volume intravenous fluidsTender business overall performed in line with expectations.

Awards in the Large Volume Intravenous Solutions tender will add

approximately R30 million turnover over the next two years.

Blood productsThe Blood division benefitted from the introduction of new

automated blood transfusion technology, but was impacted by a

lower number of blood donations. The business works closely with

SANBS to increase the number of units collected. A double red cell

collection technology, called Alyx, was launched during the year

which is being piloted at four units. Based on the success of the

pilot programme, this technology will be used in outlying areas

where blood collection is difficult and costly.

Renal dialysisAdcock Ingram is the largest supplier of dialysis fluids and

consumables in South Africa. The Renal Therapies division

achieved sales growth of 16%. There is significant long-term

growth potential in the renal market, both in terms of treatment

in hospitals and at home. Plans are in place to extend Adcock

Ingram’s renal dedicated home delivery service to new areas.

The division stays abreast of technological advances in the renal

therapy arena.

National Renal Care (a joint venture with Netcare) is the largest

private service provider with 62 units nationally. Adcock

Ingram, through this partnership, is committed to assisting in

the education and training of patients, early identification of

kidney disease through the Healthy Start Clinics and assisting

renal patients to live their lives to the fullest. A nocturnal dialysis

programme was launched at three units.


OPERATIONAL OVERVIEW – Southern Africa (continued)

Generic injectablesCompetence in the development of generic injectables is being

pursued with the aim of expanding this business in the Rest

of Africa and contract manufacturing for other PIC/S approved

countries. The focus is on further innovation in this product range,

with new generics and pre-mixed products to service existing

and new markets. This business has tremendous opportunity as

innovators lose patents and the usage increases in the hospitals.

Opportunities

The Generics business is developing a competence to operate

in a low cost/high volume single purchaser environment in

preparation for central procurement as indicated by Government

in its various communications relating to the implementation of

the National Health Insurance programme.

Increased volumes, particularly as a result of the recent tender

awards, will play an important role in optimising capacity in the

high-volume manufacturing facilities.

Challenges

Generic substitution, direct entry of low cost suppliers from the

East and vertical integration by customers are eroding prices in an

intensively competitive market.

The new chemical entity (NCE) pipeline has lost some momentum

with a knock-on effect for generic producers. Consequently, there

are many competitors chasing the same molecule. Access to the

pipelines of leading multinationals through ongoing interaction

with multinational partners and prospective partners is facilitating

the flow of new products, albeit at a lower margin.

International benchmarking and capping of logistics fees may

place further pressure on margins.

Stock shortages during the first quarter and the impact of the

weakening Rand on gross margins in respect of imported products

were key challenges faced by the Hospital products division.

Supply chain Manufacturing

Following the completion of the factory upgrade programme and

approval of these upgrades by the MCC, the Company now has

sufficient capacity to meet market demand in the future.

Focus has turned to streamlining efficiencies and best practices to

achieve the goal of operational excellence.

The Department of Trade and Industry Workplace Challenge

initiative has been introduced at the Aeroton, Clayville and

Wadeville factories. This 2,5-year programme is based on

continuous improvement. The Company expects to start reaping

its benefits during the next two years and thereafter.

Wadeville

This facility was audited by the US FDA and acceptance is awaited.

Capital expenditure of R86 million has been approved to

further extend tablet capacity to take advantage of the local

manufacturing preferences in tender awards.

Clayville

The new high-volume liquids facility was completed towards

year-end at a cost of R550 million (including equipment).

This facility features a fully automated, advanced manufacturing

capability with high-speed mechanised lines and high levels of

computerisation to ensure consistent product quality. The facility

has added 12 million litres per annum to the existing capacity.

The design allows for significant expansion (to 18 million litres per

annum). Eighty-seven new jobs have been created as a result of

this new facility.

The upgrade boasts numerous environmentally friendly

technologies to minimise use of valuable resources, thus leading

to a greener production method and a reduction in the overall

carbon footprint.

Aeroton

The upgrade was completed in January 2012 at a cost of

R300 million. The factory is fully capable of meeting demand from

both the public and private sectors.

LogisticsUpgrades to the Durban, Cape Town and Midrand warehouses

were completed. This included the consolidation of two Midrand

sites whilst gaining increased capacity. The Cape Town warehouse

was upgraded and relocated to gain increased capacity. The total

investment of R85 million in logistics will help to improve

service to customers, control costs and meet the ever-increasing

pharmaceutical standards. These world-class facilities will also

position Adcock Ingram to extend its Multinational Partner of

Choice strategy and support organic growth.

Cost-savings initiatives helped to contain warehousing and

distribution costs, thereby reducing the distribution cost per

unit. Efforts were focused on synergies, improving service levels,

and efficiencies to offset rising costs, particularly in terms of the

rising fuel price which is estimated to account for 30% of the total

distribution cost.

Increasing fuel prices, capacity constraints and the impact of

factory upgrades on stock availability were major challenges

during 2012 and impacted on ability to deliver superior service to

all customers.

Long-term environmental solutions are being sought to reduce

the carbon footprint.

Midrand warehouse

For more details on the

various distribution sites

refer to page 3


Drug Management and Development (DMD)This division’s responsibilities extend from research and

development (R&D) and regulatory affairs through to medical

affairs and information and group quality assurance. The division

is also responsible for on-site quality control and distribution

compliance and cross-divisional project management. The

division participates in industry association dialogue with the

authorities through the Industry Task Group (ITG).

The R&D facility at Aeroton attained WHO-accreditation for pre-

qualification for the second time. This was followed by FDA

acceptance subsequent to an audit undertaken by the Centre for

Drug Evaluation and Research (CDER) of the FDA. This acceptance

is part of the approval of the locally developed Adco-Efavirenz

600 mg tablet Abbreviated New Drug Application (ANDA) that

was submitted to the FDA as part of the President’s Emergency

Plan for AIDS Relief (PEPFAR) pre-approval programme.

The R&D team completed 32 projects during the year and made

an important contribution to the factory upgrade programme.

The Medical Affairs department is staffed by four doctors who

are responsible for pharmacovigilance and medical information.

Initiatives this year included support for the marketing teams with

scientific information and on-line pharmacovigilance training.

This training reached over 1 000 employees during the year.

Challenges

Major challenges that impact on service delivery are the ever-

increasing regulatory requirements and the shortage of skilled

pharmacists in South Africa. A proactive approach has been

adopted to recruit pharmacists, including interaction with tertiary

institutions and an internship programme which is yielding

positive results.

In addition, a satellite department has been established in India to

assist the South African team with all aspects of DMD.

New software will improve efficiencies, information management

and tracking systems in Regulatory Affairs and help to prepare for

an on-line registration process in the future.

International quality guidelines are continually evolving and

investment in facilities, equipment and people is required to keep

up to date with new standards.

Phase I clinical research

AddClin, the wholly-owned Phase I clinical research unit, moved

to new state-of-the-art premises in Centurion and continues to

execute clinical Phase I studies, including bio-equivalence and bio-

availability studies, for Adcock Ingram and other pharmaceutical

companies.

PeopleTransformation

BEE compliance targets were increased in February 2012 by 23%,

with the target for procurement and employment equity being

increased by almost 26%. This poses some challenges for the

maintenance of a Level 3 BBBEE rating.

In addition, the scorecard is expected to reduce from seven to

five elements: the employment equity and management control

elements will be consolidated, and the elements of preferential

procurement and Enterprise Development will be merged into a

supplier development element.

The retrenchments during the year impacted on employee

morale. These factors are being addressed through various

programmes including a morale upliftment strategy.

Industrial relations

There was an improvement in the industrial relations climate

between the Company and recognised unions. Collective

processes such as wage negotiations took place under the

auspices of the Bargaining Council and were finalised without

strike action.

Enterprise Development

The owner-driver scheme was launched successfully with a

training programme to empower drivers in various standard

operating procedures, new logistics technologies and other

business management skills to ensure that they succeed in their

business venture. Income is linked to performance and asset

ownership will vest with the drivers.

Twenty-five vehicles are being made available to owner-drivers

country-wide. Participants in the scheme are current and former

service providers and employees of Adcock Ingram.

This Enterprise Development initiative will further enhance our

direct to customer distribution capability. It has also benefited our

BBBEE status.

2013 and beyondThe OTC business offers strong growth potential. The Company

has a competitive advantage in its balanced portfolio of strong

brands in both the premium and economy sectors of the market.

This portfolio extends across a broad spectrum of therapeutic

classes with multiple offerings in each therapeutic class catering

for different consumer needs.

In the Prescription market, there are a number of strategic

partnerships on the horizon that will assist in building market

share in a number of additional therapeutic markets.

The Hospital business will benefit from tender awards, growth in

the renal business and collaborative efforts with the transfusion

services to increase the number of blood donors.

The PPPFA that favours local manufacture offers opportunities for

growth in the public sector market.

The factory upgrade programme has been completed and

provides sufficient capacity to supply market requirements.

In 2013, efforts will be directed towards contract manufacturing to

fill excess capacity in some factories and extension of the strategic

partnerships with multinational partners into the manufacturing

arena.

The Logistics team will focus on streamlining inter-depot

replenishment, automation to improve throughput and accuracy.

The upgraded facilities have been designed with the need to

reduce the carbon footprint and it is believed that the benefits of

this will start to be seen in 2013.

Accreditation will be sought from WHO and regulatory authorities

in the USA to facilitate access to donor funds. The latter will be

beneficial to the export drive into Africa.

Despite challenges in terms of transformation, the Company

is working towards maintaining a Level 3 BBBEE rating in the

years ahead.


OPERATIONAL OVERVIEW – International (Rest of Africa)

Financial performanceTurnover R155 million

Contribution after marketing expenses R27 million

Africa overview

Africa offers significant business growth opportunities as

illustrated in GDP average growth of 4,5%. Seven of the ten fastest

growing economies are in sub-Saharan Africa, namely Ethiopia,

Mozambique, Tanzania, Congo, Ghana, Zambia and Nigeria, with

expected growth rates in excess of 6% until 2015.

There is increasing evidence of a growing middle class, improved

education and the beginnings of a reduction in extreme poverty.

Pan-African markets offer significant opportunities for growth,

fostered by long-term consumer spending prospects and

improved political stability.

Healthcare in Africa

The continent continues to operate in an environment of

limited public resources, relative to the needs of the population.

Governments have difficulty in fully funding healthcare needs due

to pressing priorities in areas such as infrastructure development

and balance of payment challenges. Bi-lateral and multi-lateral

agencies and NGO’s are filling the gap in healthcare, particularly

in the areas of HIV/AIDS, tuberculosis and malaria. There are

opportunities to leverage the world-class supply chain expertise in

support of governments and donor agencies.

The private sector holds promise as the growing middle class is

driving demand for private healthcare, with over 50% of total

healthcare spending on the continent being out-of-pocket.

The demand for high quality, affordable pharmaceuticals to

address the increasing disease burden of diabetes, hypertension

and other chronic illnesses needs to be met through a combination

of branded generics and appropriate packaging formats.

The existing established bases in each of the regional economic

communities – Ghana (ECOWAS), Kenya (COMESA) and Zimbabwe

(SADC) – places the Company in a strong position to capitalise on

growth in each of these trading blocks.

FinancialRevenue was relatively flat year-on-year despite the challenges

encountered in this region. Media advertising and promotions

supported growth in Ghana and in the core pharmaceutical

export business.

Ghana

The upgrade to the water treatment facility at the Ghana factory

has been completed, providing increased capacity.

Kenya

The success of the Dawanol and Betapyn brands attracted

counterfeit copies. Security features have been implemented on

all packaging while permanent solutions are sought to resolve the

problem of counterfeit medicines on the continent.

Zimbabwe

Market demand remains robust despite the political impasse.

Pharmaceutical spend per capita is higher than in Kenya. The

Company is in a final stage in obtaining full ownership of Datlabs

– a full service operation with manufacturing, sales, marketing and

distribution. These capabilities can leverage growth in the region.

2013 and beyondThe new financial year is a crucial one in terms of establishing a

firm foundation in the Rest of Africa business. Aspects that will

contribute to growth next year and into the future include:

• Improved customer service levels in terms of supply, following

completion of the factory upgrades in South Africa;

• Harmonisation of regulatory requirements in East Africa is

setting the benchmark for the continent and will significantly

improve speed to market for new product introductions.

Liaison offices are to be established in satellite markets

to manage in-market registrations and enhance demand

creation activities;

• The Company’s pan-African footprint will be expanded with a

broader therapeutic offering, building on the strong base that

has been established in Kenya and Ghana;

• Acquisition opportunities are being explored in Nigeria

with a view to establishing a base and entering the market

during 2013; and

• The Datlabs’ infrastructure in Zimbabwe will be an important

lever into other SADC countries outside of South Africa.

The business fundamentals are in place for this business to meet

ambitious targets for turnover and income growth in 2013.

Operational excellence and organisational capability, together

with new product introductions, will facilitate achievement of

these objectives.


in our objectives

Ghana:

• Increased shareholding

in Ayrton Drug

Manufacturing Limited

to 78%

• Upgraded water

treatment facility at

Ayrton to increase

capacity and enhance

quality

Kenya:

• Appointment of East

Africa Regional General

Manager

• Re-introduction of

Dawanol with security

features

• Direct marketing of

Adcock Ingram Pharma

business


achieved our goals

Ghana:

• Upgrade to water

treatment facility

hampered liquid

production in the first

half of the year

Kenya:

• Curb overreliance on

the Kenya market

• Product portfolio

expansion

Areas of Risk

• Increasing competition

• Counterfeit medicines

• Exchange rate

fluctuations

• Possible political

instability pre-elections

Kofi Amegashie –

Commercial Executive –

Rest of Africa


OPERATIONAL OVERVIEW – International (India)

2012 MilestonesAdcock Ingram will be establishing a marketing and sales presence

in India through the planned acquisition of the pharmaceutical

brands of Cosme Farma Laboratories (Cosme).

The acquisition is expected to be effective at the end of

January 2013.

Cosme is a mid-sized business based in Goa and Mumbai.

The company is ranked 55th out of 5 000 registered pharmaceutical

companies in India. A sales force of 1 000 provides nation-wide

coverage to an estimated 150 000 physicians. The product portfolio

comprises 55 products in various therapeutic classes including

the gynaecology, gastro-intestinal, dermatology and orthopaedic

categories. Cosme has distribution capabilities in 27 states in India.

A Transactional Support Office was set up in December 2011

to support the South African DMD function with particular

attention to the submission of regulatory dossiers for new product

registrations.

The office has recruited a skilled team with expertise and

experience in the international regulatory environment.

Their input supports the regulatory process in South Africa and

helps to speed up new product registrations. The team played an

important role in the acquisition of Cosme, helping to guide the

transaction through an intricate legal process.

The team is also involved in reformulation and product

improvement of existing brands which will help to clear the

backlog of work in South Africa and stimulate new product

introductions in the markets in which the Company operates.

ManufacturingThere were no supply issues at the state-of-the-art facility in

Bangalore. The facility has gained increased volumes as a result

of tender awards and a further investment in equipment is being

made to meet increased demand.

2012 ChallengesThere are challenges attached to any business transaction, not

least the importance of introducing new products and meeting

regulatory requirements.

The transactional support office faced the challenge of recruiting

qualified professionals who would be able to adapt to the

Adcock Ingram performance-driven culture. Further, Government

approval for funding the office took more than three months.

The development of a front-end business required the right

acquisition. This proved a major challenge, given the high

expectations of the valuation multiples prevailing in the Indian

pharmaceutical market. Completion of a transaction with

compliance to the myriad of laws resulted in a very complex and

lengthy process.

Major risksCurrency depreciation and access to capital coupled with ever-

changing rules and regulations require sharp working capital

management, international access to capital at a reasonable cost

and limited exposure to foreign currency.

The availability of trained and skilled people in all functions will be

managed by offering a better working environment based on a

more open management system.

2013 and beyondIn its first year of operation under the Adcock Ingram banner,

Cosme is targeting turnover growth and is expected to contribute

in excess of R200 million to turnover. In addition, processes and

systems will be implemented to ensure the smooth integration of

the company into existing operations.

Particular attention will be given to Human Capital in terms of

recruiting an appropriate, skilled team to embed the Adcock

Ingram culture, deal with labour relations and the management

and development of all employees in India.

Pravin Iyer –

Commercial

Executive – India


SUSTAINABILITY


in our objectives

• Clayville high-volume

liquids facility provides

for greener production

methods

• Waste management

site established at

Midrand

• Climate change

awareness event for

stakeholders

• Owner-driver scheme

implemented

• On-line talent

management system

launched

OverviewAdcock Ingram aims to drive growth in the markets in which it

operates, thus contributing to the economies of those countries.

Key objectives within the Group’s business model are focused

on stimulating growth and social development, underpinned

by robust corporate governance and ethics, together with the

efficient management and use of scarce natural resources.

During 2012, progress in reducing the Group’s carbon footprint

was impeded by the factory upgrades. A task team has been

established to drive the reduction of the Group’s carbon footprint,

based on quantifiable goals across all operations.

EnvironmentEnergy and water

The new high-volume liquids facility at Clayville has employed

several environmentally friendly technologies that will save energy

and water. These include:

• Geothermal air-conditioning;

• Heat exchangers on all air-handling units;

• Recovery of reverse osmosis water for domestic use;

• Effluent treatment; and

• Energy-efficient lighting.

An energy survey is planned at Midrand to assess energy costs

of machinery and then to seek alternatives or improvements to

reduce reactive energy costs. Air-conditioners and lighting will

be replaced with more energy-efficient units as they become

obsolete. All motors are being replaced with variable speed

drive motors.

At the Clayville site, a building management system is being

installed for the pre-existing manufacturing area to reduce energy

usage by switching off equipment and machinery when not in

use. In addition, current fixed drive compressors will be replaced

with variable speed compressors which are more energy efficient.

The Group is also seeking to reduce electricity usage in offices

with energy-efficient technology and lighting and to reduce our

carbon footprint through server virtualisation, with related savings

in energy and cooling requirements.

Waste management

In addition to the well developed waste management

and recycling process in place at Aeroton, a second waste

management site has been established at Midrand. Staff are also

encouraged to utilise this facility to recycle glass, plastic and paper

from their homes.

Water

Borehole and grey water are used for irrigation. Recycled water is

used in lavatories.

Environmental audit

The Group undertakes an independent environmental audit as

part of its risk management audit. Factors that are measured

in the environmental audit are administration and records, the

management of water quality, waste material, hazardous materials,

air quality and land quality.

Despite the disruption caused by factory upgrades, results of

the 2012 environmental audit found that the South African

manufacturing facilities maintained an average site rating of 95%.

This included the R&D facility which achieved an overall rating

of 97%.

The Bangalore facility recorded an overall site rating of 67%. More

work needs to be done particularly in the areas of administration

and record keeping, and waste management.

The South African distribution sites recorded an improved overall

rating of 96% compared to 92% in 2011.

Financial

year ended

30 September

2012

Financial

year ended

30 September

2011

Carbon footprint Tonnes Tonnes

Scope 1

Company-owned/

controlled vehicles 1 289 5 227

Stationary fuels 10 823 10 049

Fugitive emissions (Kyoto) 84 57

Scope 2

Electricity 34 934 32 456

Total Scope 1 and 2 47 130 47 789

Scope 3

Business travel 1 761 7 340

Employee commute 6 349 4 687

Outsourced distribution

(import and export) 10 552 10 109

Packaging materials 26 143 26 183

Paper use 83 28

Waste 620 8 134

Water (embedded CO2e) 357 277

Total Scope 3 45 865 56 758

Total Scope 1, 2 and 3 92 995 104 547

Non-Kyotogas 1 848 1 743

Grand total 94 843 106 290

Climate change

“The Impact of Climate Change on Human Health” was the

subject of an initiative hosted by the City of Johannesburg and

Adcock Ingram to heighten awareness of this issue between

various stakeholders. These included the media, academia, NGO’s,

civil society, the business sector, and national and provincial

Government. The forum addressed issues that may exacerbate

climate change, such as poor air quality and the anticipated

increase in heat-related water-borne diseases as a result of

flooding that could lead to contamination of water supplies.

Where we have

not yet achieved

our goals

• Reduction of our

carbon footprint

• Employee equity goals


PeopleAdcock Ingram’s headcount details are as follows:

2012 2011

Total headcount 3 172 3 310

Permanent 2 124 2 302

Temporary 615 554

Contracts 109 158

Graduates 324 296

Staff composition 3 172 3 310

White – Male 136 159

White – Female 206 253

Black – Male 934 930

Black – Female 986 1 031

International 910 937

Building a culture

The Adcock Ingram culture development programme was

launched towards the end of last year. This programme

empowered all employees to be involved in the action planning

process to bring about positive change in organisational culture.

Measurement surveys were conducted to determine the status of

the organisation in terms of a DNA formula.

Results of the survey, which are communicated to all staff, are

indicative of continuous improvement towards building a positive

Adcock Ingram culture.

Training and development

Investment in people is reflected in the Group’s industry-leading

skills development score of 14 points. A total investment of

R14,8 million was spent during 2012.

The Workplace Skills Plan and Annual Training Report were

submitted to the Chemical Industries Education and Training

Authority (CHIETA) for which the Group received a grant of

R2,7 million. An additional R1,8 million grant was received for

the implementation of critical programmes including Adult

Basic Education and Training (ABET), learnerships, graduate

development and apprentice training.

A Learnership programme was implemented for learners with

disabilities. Two of the 12 learners were offered permanent

positions.

Twenty employees were enrolled on the Pharmacist Assistant

programme.

An on-line Talent Growth system was launched to monitor

performance management, succession management and

development. It will be available Group-wide over the next two

years. End user training will build capability amongst the senior

and middle management teams who will be using the system in

the new financial year.

Succession planning

A total of 10 critical positions in the Group have been profiled, of

which at least seven have potential successors within the Group.

A list of possible external candidates has also been developed.

The issue of transformation remains a challenge and a concerted

effort is required in the development of employment equity

candidates for senior positions.

Development plans for internal candidates are under review.

This process includes the exploration of other measures to

ensure that the Group retains internal candidates, for example job

rotation and formal training.

Total reward strategy

We aim to ensure that the Group maintains a competitive edge

in the markets in which it operates and earns the reputation as an

employer of choice. Every effort is made to ensure that our reward

strategy is equitable, fair and transparent and that it meets best

practice standards. We adhere to all legal and internal governance

requirements while providing a flexible package structure to

attract and retain the best people.

Our total reward approach is integrated with people management

processes, including transformation, performance management,

employee wellness, talent management and succession planning.

Performance criteria are designed to align with business strategy

and to maximise shareholder value.

Remuneration policies are based on recruiting and retaining

the best people and ensuring sustained high performance levels.

Employee wellness

The employee wellness programme is outsourced to specialists

in this area. Core services offered include a 24-hour call centre

which operates 365 days of the year. A team of 42 registered

professionals in various disciplines provide a multilingual service.

This is in addition to counseling services offered at our sites to deal

with wide-ranging issues from substance abuse to marital and

financial difficulties.

Trauma management and life management services are

also available. The latter includes legal, financial and family

care advice. The executive wellness programme provides

comprehensive medical assessments, nutrition, and executive

burnout review.

Wellness awareness days are held annually at all sites in South

Africa to inform staff about the services available.

The HIV/AIDS Disease Management programme offers HIV

education and awareness, including counseling for both pre-

and post-screening and HIV tests at workplace sites. Employees


SUSTAINABILITY (continued)

diagnosed with HIV are encouraged to enroll on this programme

which assists them to manage their condition optimally.

The Group commemorated World AIDS Day to further raise

employee awareness about the pandemic. Banners, printed

t-shirts and red ribbons were handed out at all sites and white

candles were lit in the reception areas in memory of those who

have lost their lives through AIDS.

Safety and health

The 2012 Group Risk Control audit conducted by Alexander Forbes

covered risk control, fire defence, security, emergency planning,

and safety and health. The South African manufacturing facilities

achieved an overall site rating of 96%. The Bangalore factory site

improved to 95% (2011: 93%) and the Bulawayo manufacturing

site improved to 97% (2011: 90%). The South African distribution

sites maintained an average rating of 98%.

Enterprise DevelopmentThe owner-driver scheme was launched successfully. Tailored

training programmes empower drivers in various standard

operating procedures, new logistics technologies and other

business management skills to ensure success in their

business ventures.

Preferential purchasingIt is Group policy to purchase local goods from BEE-recognised

suppliers and small business enterprises wherever possible, on the

basis of such purchases meeting the required quality standards

and being competitively priced. A significant amount of raw

materials are not available in South Africa and must be imported.

During 2012, 90% of purchases in South Africa (by value) were

acquired from suppliers holding a BBBEE certificate, of which

13,5% was spent with qualifying small enterprises and 6% with

black-owned companies.

CommunitiesThe partnership between Adcock Ingram and the Smile

Foundation commenced three years ago. During this time,

60 children aged from three months to 18 years have benefitted

from life-changing plastic and reconstructive surgery. During

Adcock Ingram Smile Week at the Red Cross Memorial Children’s

Hospital in June 2012, 23 children received this life-changing

surgery.

Beds of Hope, Mercy Ships, the Post-natal Depression Society of

South Africa and the Bloemfontein TB Association are amongst the

recipients of Adcock Ingram grants.

Launch of owner-driver scheme.


Adcock Ingram Generics administers the Community Upliftment

Programme (CUPS) which is undertaken in partnership with

customers who propose projects in their specific communities.

Expenditure in this programme totaled R0,5 million for the year.

The CUPS programme included an upgrade to the Thabang

School near Sasolburg with renovations to the school building

and the provision of various educational needs such as a small

library, educational toys and posters. New uniforms were also

sponsored for each learner at the school.

The Renal Therapies division provides educational grants to the

National Kidney Foundation and has a working relationship with

the Organ Donor Foundation.

2013 focusSustainable development is integral to the achievement of the

Group’s vision and ‘must win’ battles.

Business growth is dependent upon best practice, motivated,

skilled people and quality products underpinned by impeccable

ethics and transparency. It is also dependent on a process of

continuous improvement, especially in the areas of transformation

and the reduction of the Group’s carbon footprint. These areas will

continue to receive priority attention in 2013 and beyond.

CUPS programme at Thabang School


NOTES TO THE GROUP ANNUAL FINANCIAL STATEMENTSFOR THE YEARS ENDED 30 SEPTEMBER

STAKEHOLDER ENGAGEMENT

Communication with our stakeholders is integral to the way we do business. Understanding and being responsive to our stakeholders’ expectations is critical to our ability to create value. Building and maintaining trust and respect with stakeholders impacts positively on our reputation, and is essential to proactively address risks and opportunities.

Adcock Ingram

is committed

to engaging its

stakeholders to

build effective

relationships that

will also ensure

that the Group

retains a high

profile and ethical

reputation within

the countries in

which it operates.

Stakeholder

group How we engage with our stakeholders

What concerns our

stakeholders Reasons for engagement

Shareholders

and investor

community

Media releases, Stock Exchange News

Service (SENS) and published results in

newspapers in South Africa

Presentations subsequent to the interim

and annual results publications

Meetings with investment analysts,

institutional investors and journalists in

South Africa, North America and Europe

Corporate website

Delivering sustainable and

market-related returns

We keep shareholders and the investor

community updated on our financial

results, Group performance, strategy,

risks and opportunities in a transparent

manner

Customers/

Consumers

Adcock Ingram interacts daily with many of

its customers through personal visits by our

sales teams, managers and executives

Annual Healthcare and Pharmacist

Summits

OTC Academy of Learning

The AdConnect publication

Customer surveys

Advertising

Consumer focus groups

Consumer education campaigns

Corporate website

Quality of products

Long-term security

of supply

Effective product

stewardship

To solicit feedback on our products and

services, promote and provide education

on our products, ensure effective product

stewardship and obtain feedback on

customer and consumer needs

To provide continuing professional

education

Multinational

partners

Personal contact via annual roadshows

Ad hoc meetings

Sustainable and cost-

effective marketing, sales,

regulatory and distribution

capabilities

To ensure that the Group retains a high

profile with existing and prospective

business partners

Local

communities

and NGO’s

Generics division’s community upliftment

projects

Corporate social investment programme

Building partnerships

Addressing social needs

in South Africa, such as

healthcare and education

To provide upliftment and improve

access to healthcare

To develop a positive relationship with

NGO’s in the communities


NOTES TO THE GROUP ANNUAL FINANCIAL STATEMENTSfor the years ended 30 September

Key stakeholders were identified based on their influence on the Group and vice versa as it is our philosophy to foster and influence a positive business environment that enables growth, whilst building the Group’s image and brand.

GRI: 4.13 – 4.17, PR5, SO5,

EC9

Stakeholder

group How we engage with our stakeholders

What concerns our

stakeholders Reasons for engagement

Regulatory

authorities

and

Government

Regular contact with regulatory bodies,

particularly the MCC and through

our membership of various industry

associations

Overall Government relations engagement

strategy, involving high-level contact with

key Government departments through our

executives

Accessibility to and

affordability of medicines

Product registrations

Resolution of the

Dextropropoxyphene

matter

Empowerment,

transformation and

adherence to the revised

BEE codes

To ensure that legislation does not

impinge on our ability to provide South

Africans with quality, affordable medicine

To facilitate registration of our products in

all countries in which we operate

To maintain a viable and sustainable local

pharmaceutical manufacturing industry

Employees

and unions

Intranet, newsletters, presentations and

briefings, performance reviews, internal

staff surveys

Performance Management system

Training and development initiatives

Site management/Shopsteward meetings

National Transformation Forum/Site

Transformation Forums

Provision of competitive

remuneration and benefits

Job security

On-going training and

education

Centralised bargaining

Workforce transformation

To communicate effectively on Group

strategy and developments

To develop a positive relationship

To facilitate negotiations on conditions of

employment for the industry with direct

influence on the workplace

To discuss, monitor and drive

Employment Equity and

skills development objectives and

initiatives

To drive relationships and address

monthly operational issues affecting

production and employees

Suppliers

and service

providers

Personal contact at executive and

management levels

Sustainable demand To understand and address supplier and

service providers’ concerns and ensure

they adopt and adhere to our standards

Media Distribution of press releases

Personal interviews with key executives

Understanding of strategy

Engagement on topical

issues of industry

To build positive relationships with the

media

To maintain a high and positive profile in

the media

Industry

groups

Participation on various committees

of PIASA

Member of PTG, SMASA and SAMED

International

benchmarking

Single Exit Price

Capping of logistics fees

To present an industry viewpoint of

regulatory topics to Government,

the media, health professionals and

the consumers of our products


REMUNERATION REPORT

Remuneration philosophy and policyWe recognise that we operate in a global environment and that

our performance depends on the quality of our people. Adcock

Ingram seeks to provide a level of remuneration that attracts,

retains and motivates employees of the highest calibre. In order

to attract, retain and motivate top level skills, it is necessary to

acknowledge that such talent is in high demand, and that the

cost of this is dependent on the supply and demand of these skills.

Thus, to stay competitive, monetary benefits must be in line with

those offered in the market place.

Through the reward strategy, Adcock Ingram strives to provide

employees with a remuneration package that is in line with

our strategy and values, through a combination of benefits.

The principle of “performance-based remuneration” is one of

the cornerstones of our reward philosophy. Adcock Ingram’s

reward philosophy is underpinned by sound remuneration

management and governance principles that are promoted

throughout the business to ensure consistent application.

Fixed remunerationPermanent employees

The levels of basic remuneration are reviewed and revised

annually. The criteria that have been adopted for determining pay

increases are as follows:

• Experience and skills related to the position;

• Strategic impact of the position on the business;

• CPI (inflation);

• Market comparison/salary survey;

• Other market influences affecting our employees;

• Individual Performance Agreement (IPA) scores;

• Affordability based on budget; and

• Company performance.

Across the Group, employment positions are assessed

using recognised evaluation systems in order to ensure the

remuneration of a job is aligned to the relative value as compared

to other jobs. Salary scales are determined using a unified pay

structure which identifies a minimum and maximum range for

each position and are reviewed annually. Movement along the

salary scale within a job grade is driven by individual performance.

Summary of key reward philosophies

Performance conditions are designed to:

• Align with the business strategy to maximise

shareholder value;

• Ensure remuneration arrangements are equitable;

• Be consistent across the Group;

• Be fair and transparent ; and

• Encourage long-term performance and sustainability

Our total reward approach is integrated into our people

management processes such as transformation, performance

management, recognition, employee wellness and talent

management rewards are set at levels that are relevant and

competitive within the market.

Adcock Ingram promotes a total remuneration philosophy, where

employees are rewarded through a mix of financial rewards,

comprising elements such as remuneration (fixed and variable),

benefits, employee wellness programmes, performance and

recognition, development, and career opportunity.

Bargaining unit employees

Remuneration for employees forming part of the bargaining unit is

based on annual negotiations between the Company and unions.

Salary increments are in accordance with the relevant settlement

agreements for the given period. Bargaining unit staff members

were allocated a 7,5% increase with effect from 1 July 2012.

45% of employees in South Africa belong to bargaining units.

Fixed term contract remuneration

Employees who join the Company on a fixed term contract

are remunerated at a total remuneration package (TRP) value

equivalent to a permanent employee of the same grade and job

title, based on the premise that such employment will be on the

same terms as a permanent employee (with reference to working

hours per month/shift).

Temporary worker remuneration

The Company is making use of temporary workers to provide

flexibility to its work force capacity as a result of fluctuations

in demand, upgrades to facilities, tender awards and market

volatility. Employees who join the Company on a temporary basis

are remunerated on an hourly basis.

Basic salary and benefits (compulsory and non-compulsory)

Fixed remuneration

Components of total remuneration for permanent employees

Total remuneration

Incentives are based on Group and individual performance criteria

(paid if targets are met)

Long-term incentives are aimed at retention of critical employees and

empowerment

Basic salaries are aligned to roles/performance

Short-term incentive plan Long-term incentive plan

Variable remuneration


Remuneration consists of the following guaranteed components and is applicable to permanent employees at all levels in the

organisation:

Component Methodology Objective

Basic salary Individual salary increases for the

forthcoming financial year (2013) will range

from 0% to 9,5%

Management is given discretion to apply

increases within the stipulated range to

staff members dependent on individual

performance. The salary cost increase for

2013 was 6%

To align salaries with roles/performance.

For comparative roles, ensure internal pay

equity. Salaries are benchmarked against

the market

Annual salary increases are ratified by the

Remuneration Committee

Provident fund (compulsory benefit) Provident fund benefits are provided on

the same basis for employees at all levels

It is a defined contribution arrangement

administrated by Alexander Forbes

Contributions are currently 18% of the

retirement fund income, which is set

at 75% of the total remuneration package

Aim to ensure financial security and dignity

to employees and their beneficiaries. The

fund covers group life, disability cover and

funeral benefits

Medical aid fund (optional benefit) Adcock Ingram forms part of the

Tiger Brands group medical aid

The medical aid fund membership

is optional. However employees are

encouraged to belong to a medical

aid fund

To cater for ill-health and hospitalisation

Variable remunerationThe purpose of variable remuneration is to maximise the

performance of people, promote a culture of excellence and

provide rewards that attract and retain staff. This includes:

• Short-term incentives

• Commissions

• Recognition programme

• Long-term incentives

Short-term incentives

Annual incentive bonuses are paid if key performance targets,

including but not limited to financial targets, are met. These

targets are directly linked to the achievement of the Group’s

targets and the goals of individual employees.

All employees, excluding those in the bargaining units and

sales staff, participate in the Group’s incentive bonus scheme.

Bonuses are conditional and are paid annually, subject to the

achievement of Group and divisional targets combined with

key performance indicators agreed to between the CEO and the

Remuneration Committee.

For the year ended 30 September 2012, no short-term incentive

will be paid in December 2012, as the Group did not meet the

financial targets set. This was also the case in the previous year.

Commissions

Employees in sales are incentivised through sales target

arrangements and receive incentives if certain sales targets are

achieved during the year.

Recognition programme

Adcock Ingram encourages excellent performance and

achievement through the use of recognition and rewards that are

creative, flexible and meaningful. These include once-off cash or

non-cash awards for significant and outstanding performance to

reward employees who actively transform the Company towards

being a great company with a clear purpose of being a leader in

the industry.


3rd Tranche grant

2/5 1st Tranche vest

1/4 2nd Tranche vest

4th Tranche grant



1/3 3rd Tranche vest

5th Tranche grant



2/3 3rd Tranche vest

1/2 4th Tranche vest

Exercise date2nd Tranche

grant1/5 Tranche vest

All options vest1st Tranche

grant

31 March 2011 31 March 2012 31 March 2013 31 March 2014 31 March 2015 31 March 2016 31 March 2018

REMUNERATION REPORT (continued)

previous 30 trading days. The cash settlement amount of an

option is equal to the difference between the closing price of

Adcock Ingram’s shares on the date upon which an option is

exercised and the offer price. The participants receive the amount

due as a cash payment, net of taxation.

The Remuneration Committee recommends the granting of

options for critical or key talent in January of each year, for

approval by the Board of Adcock Ingram, based on individual

performance.

Long-term incentives

Share option schemeAdcock Ingram has a share option scheme in place for executives,

key management and other critical employees in the Group.

It was introduced in 2008. Long-term share incentive participation

ensures alignment between the interest of management and

shareholders.

In terms of the rules of the scheme, the grant price of an option

is determined using the weighted average closing price of the

Retention agreementsAs part of the Group’s strategy to retain highly mobile and

talented employees, the Group selectively, under exceptional

circumstances, enters into agreements in terms of which

retention payments are made. Retention payments must be

repaid if the individual concerned leaves within the stipulated

period. None of the executive directors are currently subject to a

retention agreement.

Service contractsThe Company policy is to employ each executive director,

senior manager and employee in a critical position under

a service contract which is subject to a one or two months’

notice period. The contract provides for salary to be paid for any

unexpired period of notice. All other employees are on a 30-day

notice period.

Black Managers Share TrustIn terms of the Tiger Brands Limited BEE transaction implemented

in 2005, vested rights were issued to black managers of the

Tiger Brands Group (including the Adcock Ingram Group).

The allocation of vested rights entitles beneficiaries to receive

shares after making capital contributions to the Trust at any time

after the defined lock-in period, i.e. from 1 January 2015. These

vested rights are non-transferable.

Mpho ea Bophelo Trust

Adcock Ingram implemented its Black Economic Empowerment

staff scheme during 2011. Initial share option allocations totaling

5 159 000 were made to staff in March 2011, in accordance

with the scheme rules and the respective trust deed. Additional

allocations (403 200) were made during March 2012 to qualifying

employees. For the next three years, additional tranches will be

issued to employees on the anniversary date.

This scheme is “equity settled” and although some share option

allocations vested on 31 March 2012, they can only be exercised

from 31 March 2018 onwards. For more details on the share

schemes, refer to Annexure B.

Award Vesting date 1/3 Vesting date 2/3 Vesting date 3/3 Options expire

January 2013 January 2016 January 2017 January 2018 2019

This scheme is “cash settled” with one-third of the options becoming vested on each of the third, fourth and fifth anniversaries of the

relevant grant date. The options expire six years from the grant date if not exercised. For example:


Top three earnersThe following resolution has been taking by the Board:

“The Company will comply with the requirement of

section 30(4) to disclose remuneration of directors (non-

executive and executive) in its annual financial statements

and in the manner set out in sections 30(4)(b) to (e) of the Act

and with King III to the extent that it requires disclosure of the

remuneration for the three most highly paid employees, who

are not directors of the Company.”

In light of the individual remuneration information that is

reported and risk of revealing competitive information, the

Board has resolved that it will report on the remuneration of

the three highest earning persons collectively, rather than

individually.

Salary

R’000

Contributions

to defined

contribution

plan

R’000

Gross

remuneration

R’000

Total 2012 5 502 917 6 419

Total 2011 4 880 935 5 824

Executive and key management remunerationThe executive and key management’s remuneration is structured

to include guaranteed remuneration, and short-term and long-

term incentives to drive performance. The level of guaranteed

remuneration aims to competitively attract high calibre

leadership.

The short-term incentive component rewards employees

for achieving key performance targets, based on Group and

individual performance criteria, as agreed upon at the start of each

financial year.

The long-term share incentive scheme is a retention mechanism

for key employees only, as well as linking executive reward with

the Group’s performance.

Executive directors’ remunerationThe Group aims to adhere to the broad guidelines of executive

remuneration set out in King III. The overall principles

applied comprise:

• Establishment of an appropriate and competitive balance

between fixed and variable remuneration structure to achieve

performance excellence;

• Establishment of a performance oriented culture with a

pay-for-performance approach that aligns with sustainable

shareholder value;

• Appropriate use of market and industry benchmarks to

ensure competitive remuneration aligned to the market

median; and

• Drive sustainable business results through short-term and

long-term performance-based incentives.

Fixed remuneration

Salary

Contributions

to defined

contribution

plan

Gross

remuneration

R’000 R’000 R’000

2012

JJ Louw 3 297 652 3 949

AG Hall 2 758 430 3 188

6 055 1 082 7 137

2011

JJ Louw 3 115 611 3 726

AG Hall 2 607 401 3 008

5 722 1 012 6 734

AG Hall received a long service award in the amount of R19 926

in 2012. JJ Louw received a long service award in the amount of

R58 216 in 2011. These awards are excluded from the table.

The executive directors are currently regarded as the only

prescribed officers of the Group.

Variable remunerationShort-term incentives

For the 2012 financial year, executive directors could earn up

to 115% of their total annual guaranteed remuneration. For

the 2013 financial year, the maximum short-term incentive

an executive director can receive is 115% of their total annual

guaranteed remuneration.

In respect of the year under review no short-term incentive will

be paid to the executive directors in December 2012 as financial

targets set at the start of the year have not been met. Similarly no

incentives were paid in December 2011.




Details of share options in Adcock Ingram granted to executive directors are as follows:

Offer date Offer price

R

Balance

at the

beginning

of the year

Exercised

during

the year

Issued

during

the year

Balance

at the end

of the year

JJ Louw

Equity-settled options 29/01/2004 13,62 7 700 – – 7 700

25/01/2005 19,96 11 400 – – 11 400

19 100 – – 19 100

Cash-settled phantom options 26/01/2006 31,38 64 323 (64 323) – –

22/01/2007 35,43 70 994 (70 994) – –

22/01/2008 34,69 77 188 (51 459) – 25 729

01/04/2008 28,27 94 817 (31 605) – 63 212

01/10/2008 34,78 152 599 (50 800) – 101 799

02/01/2009 33,38 158 999 (52 900) – 106 099

01/01/2010 51,21 134 969 – – 134 969

03/01/2011 62,29 119 627 – – 119 627

03/01/2012 60,15 – – 131 316 131 316

873 516 (322 081) 131 316 682 751

AG Hall

Cash-settled phantom options 22/01/2008 34,69 32 400 (16 200) – 16 200

01/10/2008 34,78 100 714 (33 571) – 67 143

02/01/2009 33,38 104 938 (34 979) – 69 959

04/01/2010 51,21 76 744 – – 76 744

03/01/2011 62,29 72 429 – – 72 429

03/01/2012 60,15 – – 79 207 79 507

01/05/2012 60,70 – – 78 786 78 786

Total 387 225 (84 750) 158 293 460 768

Options exercised

Details of options exercised by executive directors are as follows:

Offer

date

Offer

price

Exercise

price

Number

of options

Gain realised

on exercising

of options(1)

R R

2012

JJ Louw 26/01/2006 31,38 61,98 64 323 1 968 361

22/01/2007 35,43 62,39 70 994 1 913 657

22/01/2008 34,69 62,59 51 459 1 435 783

01/04/2008 28,27 61,98 31 605 1 065 322

01/10/2008 34,78 61,98 50 800 1 381 760

02/01/2009 33,38 63,20 52 900 1 577 478

9 342 362

AG Hall 22/01/2008 34,69 60,15 16 200 412 476

01/10/2008 34,78 61,50 33 571 897 017

02/01/2009 33,38 60,15 34 979 936 388

2 245 881

2011

JJ Louw 01/09/2001 10,47 58,02 33 1 569

AG Hall 22/01/2008 34,69 58,02 16 200 377 946

(1) Amounts are shown before taxation.


Charge in respect of long-term incentive scheme awards

The following charges were expensed in the statement of

comprehensive income in terms of IFRS 2:

2012 2011

R’000 R’000

JJ Louw 1 164 765

AG Hall 708 842

1 872 1 607

The value of options granted is the annual expense in accordance

with IFRS 2, and is presented for information purposes only, as it is

not regarded as constituting remuneration, given that the value

is neither received by nor accrued to the directors. Please refer to

the table above detailing the gain before taxation realised on the

exercise of options.

Other fees

No fees for services as directors, consulting or other fees were paid

to the executive directors in the current or prior year. Directors

do not participate in any commission, gain or profit-sharing

arrangements.

Shareholdings by executive directors

Details of the directors’ shareholdings (direct and indirect) are

reflected below:

2012 2011

Number of

shares

Number of

shares

JJ Louw 39 300 39 300

AG Hall 8 050 100

47 350 39 400

All shares held by JJ Louw are subject to loans.

Non-executive directors’ remunerationThe level of fees paid to non-executive directors is based on a

market survey conducted by management and is reviewed by

the Remuneration Committee on an annual basis. For details

regarding fees paid during the current and prior year, refer to

page 17.

The recommendations of the Remuneration Committee are

submitted to the Board for consideration and the fees are

approved by shareholders at the Annual General Meeting in

January of each year, effective from 1 February. Various market

surveys are utilised to determine the remuneration levels

and reference is made to the fees paid by comparable listed

companies as well as years of experience.

Non-executive directors do not participate in the Group’s

incentive bonus plan or share option scheme. There were no

direct or indirect beneficial holdings in the current or prior year.

Current annual fees paid, as well as proposed fees to be tabled at

the Annual General Meeting in January 2013 are as follows:

From

1 February

2012

Proposed

from

1 February

2013

R R

Board: Chairman 973 875 1 042 000

Board: Member 222 823 238 400

Audit Committee: Chairman 211 470 226 300

Audit Committee: Member 105 735 113 100

Risk Committee: Chairman 211 470 226 300

Risk Committee: Member 105 735 113 100

Remuneration Committee:

Chairman 86 814 92 900

Remuneration Committee:

Member 55 094 59 000


Committee: Chairman 81 472 87 200


Committee: Member 44 075 47 200

Key managementKey management comprises the Executive Committee of the

Group including the executive directors. As the executive directors’

details have been disclosed separately, they are excluded from

the figures below. The Executive Committee has been expanded

during August 2012 and now reflects the salaries of 15 executives,

compared to six executives in the preceding year.

The details below show the annual remuneration of key

management for the period the incumbents held the position

during the year and might therefore not be comparable.

Fixed remuneration

Salary

R’000

Contributions

to defined

contribution

plan

R’000

Gross

remuneration

R’000

Total 2012 12 209 1 733 13 942

Total 2011 8 820 1 643 10 463

Variable remunerationShort-term incentives

For the 2012 financial year, key management could earn up to

80% of their total annual guaranteed remuneration as a short-

term incentive. For the 2013 financial year, the maximum short-

term incentive key management can receive is 74% of their total

annual guaranteed remuneration if exceptional performance can

be demonstrated.

In respect of the year under review, as with the 2011 financial

year, no short-term incentive will be paid to key management as

financial targets set at the start of these years were not met.




Details of share options in Adcock Ingram granted to key management are set out below. Key management does not have any equity

settled options outstanding.

Offer date Offer price

R

Balance at

beginning

of the year

Issued

during

the year

Exercised

during

the year

Forfeited

during

the year

Change in

Executive

Committee

Balance

at end of

the year

Cash-settled

options 22/01/2007 35,43 10 641 – (10 641) –

22/01/2008 34,69 22 870 – (11 435) 11 435

01/10/2008 34,78 95 917 – 931 894) 106 687 170 710

01/01/2009 33,38 99 940 – (33 282) (19 584) 131 989 179 063

04/01/2010 51,21 81 348 – – (27 874) 144 022 197 496

03/01/2011 62,29 97 849 – – (36 717) 149 514 210 646

03/01/2012 60,15 – 192 963 – (41 065) 177 851 329 749

01/05/2012 60,70 – 67 546 – – 14 827 82 373

408 565 260 509 (87 252) (125 240) 724 890 1 181 472

Options exercised by key management are as follows:

Offer date Offer price Exercise price

Number

of options

Gain realised

on exercising

of options(1)

R R R

2012

Cash-settled options 22/01/2007 35,43 62,12 10 641 284 950

22/01/2008 34,69 62,21 11 435 314 708

01/10/2008 34,78 61,26 31 894 844 463

02/01/2009 33,38 62,74 33 282 930 596

87 252 2 374 717

2011

Cash-settled options 26/01/2006 31,38 61,14 68 611 2 041 614

22/01/2007 35,43 60,81 42 404 1 075 986

22/01/2008 34,69 59,30 19 377 476 949

130 392 3 594 549

Equity-settled options 29/01/2004 13,62 58,99 1 000 45 367

25/01/2005 19,96 58,99 2 000 78 066

3 000 123 433

(1) Amounts are shown before taxation.

Charge in respect of long-term incentive scheme awards

The following charges were expensed in the statement of

comprehensive income during the year under review, in terms

of IFRS 2:

2012 2011

R’000 R’000

Key management 853 1 925


RISK MANAGEMENT

The Group’s key risks are classified based on impact and probability, and categorised as being uncontrollable, able to influence

or controllable.

An overview of the Group’s key risks and mitigating activities is presented below:

Risk Management or control

Commercial

Trading/Consumer

Data indicates that South African consumers are still heavily

indebted and trading remains slow

Regular meetings with advisors to assess changes in markets

Contract manufacturing for multinationals

Retrenchments implemented during the year

Sales and marketing investment continued behind major brands

Industry consolidation

Local and overseas industry consolidation can put pressure

on the business at a customer, principal and entity level

Regular monitoring of international and local corporate activity,

and geographical diversification in emerging markets continues,

primarily Africa and India

Portfolio/Product management

Investment in productive and innovative pipelines through

in-house development, partnering and acquisition strategies

to ensure sustainability

Reliance on licensors and agencies for a significant portion

of revenue

Ageing formulations

Long lead times for MCC approval of new product registrations

Stringent regulatory environment

Adcock Ingram continues to interact with multinationals to gain

partnership, co-promotion and distribution agreements

Extending our footprint into new markets, e.g. Rest of Africa

and India

Diversification in over the counter products, e.g. well-being and

personal care

Reformulation programme in place for older formulations

Identifying and assessing international acquisition and partnering

opportunities

Innovation is a critical outcome for our research and

development facilities, now extended to India

Analysis of risks

Pro

ba

bil

ity

High

Medium

Low

Low Medium High

Impact

Trading/Consumer

Portfolio/Product management

Foreign Exchange

Supply and cost pressure

Medicine – regulatory

Pace of transformation

Safety and security

IT

Liquidity and trading risk

Industry consolidation

Facilities

Competing for talent

Environmental issues

Product contamination

Legislative environment


RISK MANAGEMENT (continued)


Sustainability

Competing for talent

Skills shortages and ability to recruit top talent in certain areas

of the business, exacerbated by the drive to employ suitably

qualified employment equity candidates

Retention strategies have been implemented, including

mentorship programmes and comprehensive wellness

programmes, performance reviews and implementation of the

DNA formula for success

Graduate Development programme implemented to fast-track

and enhance depth of managerial talent

Pace of transformation

Participation in the meaningful transformation of our society

is critical for the sustainability of our business

Customer pressure to do business with transformed entities

is increasing in the private sector

Further staff share allocations made during the year relating to

the BEE schemes

Level 3 BEE status obtained

The Transformation Committee of the Board monitors all

elements of the scorecard on a quarterly basis

Central procurement monitors suppliers’ BEE ratings

Employment Equity targets in place

Owner-driver scheme successfully implemented in August 2012

Safety and security

Criminal activity involves monetary risk and the safety

of employees and products

On-going liaison with SAPS, Ethics hotline, ongoing review and

monitoring of safety and security measures

Environmental issues

The need to reduce water and energy use, and carbon emissions

Waste management

Energy audits conducted

Impact on bio-diversity being explored

Environmental policy and management system introduced

Facilities

Potential disruption in supply due to upgrade of facilities

Continuous supply from third party manufacturers

Significant plant upgrade and build programme now completed

Annual review of insurance strategy and portfolio

Increased focus on validation and quality control

IT

Adequacy and effectiveness of IT governance and integration

of IT systems

Formal disaster recovery plans and back-up strategies are in place

IT structures are in place to provide support to all operations

Compliance

Medicine regulatory

The pharmaceutical industry remains a highly regulated

environment and Adcock Ingram must adhere to all relevant

quality standards

All facilities have been or are in the process of being upgraded

to PIC/S standards

All South African facilities will seek international accreditations

Rigorous quality standards are applied

External audits conducted on regulatory compliance

Legislative environment

Price controls, including potential international benchmarking,

the capping of logistics fees, change in State procurement

methodology and National Health Insurance

Adcock Ingram is an active participant in industry organisations

and proactively engages with Government

The Group actively communicates legislative requirements

across the business, conducting training for directors and staff on

legislative issues



Product contamination, recall and liability

Consequences of adverse drug effects, including monetary

loss and reputational damage

Product liability insurance is in place

Crisis management plans developed

Increased focus on quality assurance

Manufacturing complexity reduced at South African sites

Financial

Supply and cost pressure

There are a limited number of suppliers of active

pharmaceutical ingredients, and most of these supply in a

foreign-denominated currency

Product sales mix evolving with reduction in margins

Regulated price increases not keeping pace with input

cost increases

Stockholding of strategic active ingredients increased

Forward cover in place on all imports

Cost reduction and continuous improvement programmes

in place

Integration of Critical Care service functions,

including distribution

Central procurement function negotiates all significant

cost inputs

Staff reduction programme implemented in 2012

Foreign exchange

Currency volatility and the recent Rand weakness impact

on purchase of active ingredients and finished goods sourced

internationally

Forward cover taken on all imports

Management performs weekly reviews of the Group’s foreign

exchange exposure

Inventory holdings of fast-moving items are evaluated and

strategic holdings purchased when the Rand is considered to be

trading favourably

Liquidity and trading risk

Markets continue to be under liquidity pressure which could

become a risk to the business in the event of a need for gearing

Investment grade status with major South African institutions

and unutilised short-term bank facilities of R1 billion in place


GRI REFERENCE TABLE

GRI element Description Reference in Adcock Ingram reports and website

Strategy and analysis

1.1 Statement from executive Leadership statement

1.2 Key impacts, risks and opportunities Leadership statement, Risk management

Organisational profile

2.1 – 2.10 General organisational details About this report, Our profile, Recognition in our industry, 2012 highlights,

Our business footprint, Key operating areas, Financial summary, Executive

committee, Board and governance structure, Annual financial statements

Report parameters

3.1 – 3.11 Report scope Scope and boundary of this report, Reporting principles

GRI content index

3.12 Profile of the report – including

implementation of GRI principles

GRI reference table

Assurance

3.13 External assurance Assurance

Governance

4.1 – 4.3 Adcock structure and governance Executive committee, Board and governance structure

4.4 – 4.10 Overarching policies and

management systems

Our vision, Leadership statement, Corporate governance, Sustainability,

Stakeholder engagement, Remuneration report, Risk management

Commitments to external initiatives

4.11 – 4.13 Memberships and associations Stakeholder engagement, Risk management

Stakeholder engagement

4.14 – 4.17 Identification, type and frequency of

stakeholder engagement

Stakeholder engagement

Environmental performance indicators

EN1 – 2 Material use(1) 2012 highlights

EN3 – 10 Energy use, Water use 2012 highlights, Operational overview, Sustainability

EN11 – 15 Biodiversity Our business footprint

EN16 – 25 Emissions, effluents and waste Sustainability, Website

EN26 – 27 Products and services(2)

EN28 – 30 Compliance, transport, overall(3) Sustainability

Social performance indicators

Human Rights

HR1 – 11 Stakeholder engagement, Operational overview, Sustainability

Labour practices and decent work conditions

LA1 – 3 Employment Sustainability, Remuneration report

LA4 – 5 Labour/Management relations Stakeholder engagement, Sustainability, Remuneration report

LA6 – 9 Occupational health and safety Sustainability, Website

LA10 – 12 Training and education Sustainability, Website

LA13 Diversity and equal opportunity Sustainability, Website

LA14 Equal remuneration for women and

men

Sustainability, Website

Society

SO1;

SO9 – 10

Local community Sustainability overview, Risk management

SO2 – 4 Corruption(2)

SO5 – 6 Public policy Website (list of policies), Sustainability overview, Stakeholder engagement,

Sustainability

SO7 Anti-competitive behaviour(4) Corporate governance, Code of Ethics

SO8 Compliance Corporate governance

Product responsibility

PR1 – 2 Customer health and safety Sustainability, Website (Health and wellness)

PR3 – 5 Product and service labelling Operational overview, Website (Health and wellness)

PR6 – 9 Marketing communications,

Customer privacy, Compliance

Operations overview, Our business footprint, Website (Health and wellness),

Website (Brands)

Economic performance indicators

EC1 – 4 Economic performance 2012 highlights, Financial summary, Remuneration report, Risk management,

Annual financial statements

EC5 – 7 Market presence Our business footprint, Procurement, Website (Human Capital statistics)

EC8 – 9 Indirect economic impacts Operational overview, Stakeholder engagement, Sustainability,

Risk management

(1) Not all elements are made public(2) Data currently not available

(3) No fines have been received or paid(4) Adcock Ingram has not engaged in anti-competitive behaviour

Documents

NOTES TO THE GROUP ANNUAL FINANCIAL ...NOTES TO THE GROUP ANNUAL FINANCIAL STATEMENTS FOR THE YEARS ENDED 30 SEPTEMBER OUR PROFILE 2.1, 2.10, 4.8 For more information on our history