Adcock Ingram Integrated Report 2018

The operating expenditure moved in line with the sales growth and included additional marketing investment on new products. Trading profit of R95 million ended a very impressive 63% or R37 million ahead of the comparative year. 0 200 400 600 800 1000 1200 1400 16 15 17 18 Turnover (R’million)   7.0% 0 10 20 30 40 50 60 70 80 90 100 16 15 17 18 Trading pro t (R’million)  63.0% HOSPITAL Turnover of R1 348million increased by 7% over the prior year, driven by volume improvement of 3%, a mix benefit of 2% due to the inclusion of the Pharma-Q range and an average price increase of 2%. The gross margin ended higher than the prior year benefitting from the positive exchange rate impact on imported inventory and an improved sales mix with more sales into the private market. REST OF AFRICA Sales in the Group’s enterprises in Zimbabwe and Kenya both ended ahead of the prior year and collectively achieved a trading profit of R18 million. The positive performance in Zimbabwe is attributable to a significant improvement in stock availability, whilst the improvement in the Kenyan operation is due to the OTC Division diligently fulfilling its management responsibility to grow the business. 0 100 200 300 400 500 600 700 16 15 17 18 Turnover (R’million) Gross margin improved as a result of the positive exchange rate benefit on imported inventory purchases. The operating expenditure increased by below inflationary levels, resulting in trading profit of R112 million, 2% higher than the comparative year.   0.3% 0 20 40 60 80 100 120 16 15 17 18 Trading pro t (R’million)   2.0% CONSUMER Turnover of R687million declined by 0.3% over last year, impacted by a decline in volumes due to the difficult trading conditions as a result of the continued pressure on the average consumer’s disposal income. This was partially mitigated by an average realised price increase of 2% and a full year’s inclusion of the Island Tribe sunscreen range launched at the end of the prior financial year. marginal decline BALANCE SHEET NON-CURRENT ASSETS Intangible assets, including goodwill, have a carrying value of R626 million and comprise of Generic, Consumer and OTC trademarks and licence agreements. Intangibles of R285 million (R164 million goodwill; R121 million other intangibles) were recognised on the acquisition of Genop. Other financial assets of R34 million are primarily the capital contribution made to the Tiger Brands Black Managers Trust which has reduced as options were exercised since June 2017. CURRENT ASSETS Inventory of R1.6 billion (2017: R1.2 billion) is stated at the lower of cost and net realisable value. Days in inventory are 136 days compared to 115 days at June 2017. The increase results from the acquisition of Genop, the take-on of new product portfolios including Astellas,Takeda, Pharma-Q and Abbott, and a planned increase in raw materials for the production of Trivenz. 86 14 Receivables split (%) Private Government Days in receivables are 65 days, an excellent improvement on the 70 days reported in June 2017. The book remains well- controlled and 91% of receivables are due within 60 days or less. The state is currently complying with an agreed payment plan, which allows for the settlement of arrears over two years. BORROWINGS Both long-term and short-termborrowings have been eliminated following the early settlement of the Nedbank term loan and the repayment of a loan by the Zimbabwean operation. The Group is in a net cash position of R156million, following the acquisition of Genop and is comfortably able to service its obligations in the short-term with a working capital facility of R850 million and a term facility of R250 million, the latter available until December 2018. ADCOCK INGRAM  Integrated Report 2018 21