Adcock Ingram Integrated Report 2018

  14% Gross profit of R2 566 million which is at 39.2% of sales, is 14% higher than the previous year, which was at 37.8%. The improved margin was as a result of: u u an advantageous sales mix with higher sales into the private sector; u u a more favourable exchange rate; u u an improved factory recovery in Wadeville as a result of increased Trivenz production. The cost of our weighted basket of foreign currencies improved by approximately 6.2% in 2018 compared to 2017. 55%  of the FECs taken out by the South African businesses is USD denominated, which improved by 7.1% whilst 44% of FECs were Euro denominated, which improved by 4.9%. 0 500 1000 1500 2000 2500 3000 16 15 17 18 Gross pro t (R’million) GP % 35 40   20% Trading profit of R866 million is R142 million (20%) ahead of the prior year. Depreciation for the year amounts to R158 million of which 75% is included in cost of sales and 25% in fixed and administrative expenses. Amortisation of finite life intangibles amounts to R11 million, and is included in fixed and administrative expenses. 0 200 400 600 800 1000 16 15 17 18 Trading profit (R’million)   26% 0 50 100 150 200 250 300 350 400 16 15 17 18 HEPS 1 (cents) 1 continuing operations Headline earnings for the year from continued operations amounted to R645 million compared to R514 million achieved in the prior year, which translates into headline earnings per share of 387.7 cents (2017: 308.9 cents), 25.5 % ahead of the prior year. 0 250 500 750 1000 1250 1500 1750 2000 16 15 17 18 Operating expenses (R’million) Operating expenses for the year of R1 700 million, which includes Genop, ended 12% above the prior year. Excluding Genop, operating expenses were well controlled and increased by 5% over the prior year.   12% Non-trading expenses of R47 million include: u u share-based expenses of R34 million; u u an impairment of the long-term receivable relating to the Tiger Brands Black Managers Trust of R3 million; u u a partial impairment of a Consumer intangible asset of just under R3 million; and u u corporate activity costs of R7 million. The net finance cost for the year is R8 million, compared to net finance cost in the prior year of approximately R23 million. This reflects the lower debt following the early settlement of the Nedbank long-term loan as well as the improved average net cash position of the business. Dividend income from the Tiger Brands Black Managers Trust is R4 million compared to R6 million in the prior year. Equity-accounted earnings are R79 million, 24% ahead of the prior year and include National Renal Care, our joint venture with Netcare, our joint venture plant in India with Meiji of Japan, as well as our 25.1% shareholding in Ayrton Drug Manufacturing in Ghana. Profit before tax of R895 million, is 24% ahead of the prior year (R725 million). The effective tax rate, adjusted for equity accounted earnings is 31%, with non- deductible expenditure causing the increase over the statutory rate. The profit after tax for the year is R644 million compared to a profit of R520 million in 2017. Discontinued operations reflect the sales of the India and Ghana businesses which were concluded in the first six months of the prior year. Minorities in Novartis Ophthalmics and Menarini amount to R6 million. ADCOCK INGRAM  Integrated Report 2018 19