Adcock Ingram Integrated Report 2018

Risk Management (continued) HUMAN CAPITAL KEY RISKS CONTROLS IN PLACE TO MITIGATE THE RISKS Human Capital Critical skills shortages and difficulty in recruiting top talent in certain areas of the business, are a reality in the current economic environment. The need to attract and retain top talent, is intensified by our transformation strategy. Appropriate incentive schemes, competitive remuneration packages and investment in skills development of employees are used to provide a sustainable pipeline of talent for the future. Labour environment Trade unions represent a significant number of employees. Labour disputes and work stoppages may disrupt business operations. Contingency plans are in place at all sites to ensure continuity of supply. Occupational health and safety Occupational injury of employees who are key to the performance of the Group may occur. Stringent policies and procedures, aligned to best practice, as well as robust training and awareness programs have resulted in the continuous improvement of safety practices in the work place. STRATEGIC PILLAR IMPACTED Transformation FINANCIAL CAPITAL KEY RISKS CONTROLS IN PLACE TO MITIGATE THE RISKS Market share The actions of our competitors may erode our market share and potentially jeopardise our growth. The autonomous business units through robust sales and marketing efforts, customer relationship management and customer service delivery, assist the Company in combatting competitor actions. Foreign exchange The uncontrollable currency volatility and Rand weakness impacts the purchase price of active pharmaceutical ingredients (API’s), specialised machinery and finished goods sourced internationally, in turn putting margins under pressure. Forward cover is taken out for all firm import orders. Supply and cost pressure There are a limited number of suppliers of API’s and finished goods, and many of these supplies are acquired in a foreign-denominated currency. Where available, multiple suppliers of API’s and finished goods are sourced. Safe levels of stockholding of strategic rawmaterials and finished goods are maintained. Cost-push versus pricing power SEP increases generally do not keep pace with the level of cost-push. Various continuous improvement programmes and procurement initiatives are in place to improve throughput and efficiencies throughout the Group. Economic environment Economic data indicates very little, if any, growth in the South African economy resulting in the trading environment remaining difficult with the potential for further deterioration. The Group has a well-diversified product portfolio which trades across many price-points and therapeutic categories. New geographies, through exports and distributorships, are continually being sought. STRATEGIC PILLAR IMPACTED Build on foundation (Operational Excellence) Growth and expansion ADCOCK INGRAM  Integrated Report 2018 48 OUR GOVERNANCE