Directors' report
The directors have pleasure in submitting their report to shareholders, together with the audited annual financial statements for the year ended 30 June 2016 which is set out on the Directors' responsibility for and approval of the annual financial statements.
PRINCIPAL ACTIVITIES AND BUSINESS REVIEW
The Adcock Ingram Group is a leading South African healthcare Group, operating in three geographical areas, namely Southern Africa, Rest of Africa and India.
The Southern African business consists of four principal divisions:
- A Consumer division selling a range of products mainly through FMCG retailers.
- An Over the Counter (OTC) division selling a range of OTC products that can be purchased without a prescription, mainly through pharmacies.
- A Prescription division selling a range of branded and generic prescription products.
- A Hospital products and services division.
BUSINESS COMBINATIONS
ACQUISITIONS
No material acquisitions were concluded in the current or prior year under review.
DISCONTINUED OPERATIONS
The board decided to dispose of the Group’s Indian operating subsidiary as well as dispose of the controlling stake in the Ghanaian subsidiary. These operations have been treated as held-for-sale and are reflected in the financial statements as discontinued operations.
SHARE CAPITAL
Details of the authorised and issued share capital are set out in note 18 to the annual financial statements and in the statement of changes in equity.
During the year under review, the number of shares in issue increased by 6 700 (2015: 96 600) ordinary shares to meet the obligations of the Adcock Ingram Holdings Employee Share Trust (2008).
Details of ordinary treasury shares held by Group entities are as follows:
| 30 June 2016 |
30 June 2015 |
|||
| Adcock Ingram Limited | 4 285 163 | 4 285 163 | ||
| Mpho ea Bophelo Trust | 5 168 592 | * | 688 000 | |
| Blue Falcon Trading 69 Proprietary Limited | – | 1 883 000 |
| * | Held indirectly |
The change in ordinary treasury shares held by the Mpho ea Bophelo Trust and Blue Falcon Trading 69 Proprietary Limited, is due to the modification of the BEE scheme (refer to Annexure B).
DIVIDENDS TO SHAREHOLDERS
POLICY
The board intends to declare a distribution on at least an annual basis, which it currently envisages will be covered between two to three times by headline earnings.
INTERIM AND FINAL
An interim dividend of 50 cents per share was declared and paid in relation to the six-month period ended 31 December 2015. A final dividend of 54 cents per share was declared following the results of the year ended 30 June 2016.
No interim dividend was declared in relation to the six-month period ended 31 December 2014. A final dividend of 81 cents per share was declared following the results of the year ended 30 June 2015 by the directors.
SHAREHOLDERS
Please refer to the shareholder analysis.
GOING CONCERN
Thee directors’ responsibilities for preparing the consolidated financial statements are set out in the Directors' responsibility for and approval of the annual financial statements . The directors have considered the status of the Company and Group, including the sustainability of their business models, available financial resources at 30 June 2016, the current regulatory environment and potential changes thereto and are satisfied that the Group will be able to continue as a going concern in the foreseeable future.
SUBSIDIARIES AND JOINT VENTURES
Information concerning the names and holdings of subsidiaries and joint ventures of Adcock Ingram Holdings Limited is set out in Annexure H to the annual financial statements.
Details regarding the financial performance of joint ventures are given in Annexure F.
DIRECTORS
The names of the directors who presently hold office are set out in our board. Changes to the composition and directors’ responsibilities are detailed on changes to directors’ responsibilities and status.
No director (or his/her associates) holds 1% or more of the ordinary shares of the Company. The directors beneficially hold, directly and indirectly 20 700 (2015: 20 700) ordinary shares in the Company. There has been no change in the holdings since the end of the financial year and up to the date of approval of the integrated report. Details of the direct directors’ shareholdings are reflected below.
| Number of shares 2016 | Number of shares 2015 | |||
| Director | ||||
| B Joffe | 19 200 | 19 200 | ||
| R Morar | 1 500 | 1 500 |
RETIREMENT FUNDS
Details in respect of the retirement funds of the Group are set out in Annexure C.
DIRECTORS’ AND KEY MANAGEMENT REMUNERATION
Full details regarding non-executive and executive directors’ and key management remuneration are set out in remuneration, as part of the remuneration report.