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Adcock Ingram Group highlights continuing positive trend as year-end results announced - 30 June 2016

Adcock Ingram Group highlights continuing positive trend as year-end results announced - 30 June 2016

Market share gains across all divisions

Healthy cash generation

Midrand - 26 August 2016

Despite the tough trading environment, Adcock Ingram highlighted the continuing positive performance trend and market share gains across all divisions, when the 2016 Group results were announced today. 

“All divisions are benefiting from the divisional autonomy of the new structure, introduced during 2014,” said Andy Hall, Chief Executive Officer.  “The progress is gratifying with the benefits of improved customer service and customer relationship management translating into better financial and operational performance for the business.  Operating costs and assets have been well managed and controlled, with a resultant increase of 16.9% in trading profit to R606 million.”

Turnover, which improved across all business divisions, increased by R387 million to R5,546 million.   Despite the adverse impact of the currency, the gross profit percentage maintained a satisfactory level, marginally improving from 36.3% to 36.6%. A beneficial sales mix, combined with improved factory efficiencies and good inventory management, contributed to this achievement.   

Headline earnings for the year from continuing operations amounted to R376.4 million compared to R335.5 million for the previous year.  This translates into headline earnings per share from continuing operations of 226.1 cents.  Normalised headline earnings per share, after adding back a non-recurring IFRS 2 charge of R20.7 million, arising from the July 2015 B-BBEE scheme, increased by 20.1% to 238.6 cents.

 “Most gratifying is the cash generation in the business which resulted in net debt for total operations over the past two years reducing from R1.1 billion at 30 June 2014 to R217 million at 30 June 2016.  This important indicator shows the positive outcome of the Group’s restructure and focused management control,” Hall continued.

The Group’s interests in both the Ghanaian and Indian operating businesses are reflected as assets held-for-sale at 30 June 2016.  “The sale processes in each case are progressing well and I can confirm that the regulatory approval in relation to the disposal of our Indian sales and marketing operation, was announced by the Foreign Investment Promotion Board on 23 August 2016,” Hall commented.  “The drug regulatory arm of the Indian business will remain as an essential support function to our operations in South Africa and we remain committed to the joint venture manufacturing facility in Bangalore, which is an important part of the local supply chain,” Hall concluded.

A dividend of 54 cents per share was declared by the Board for the year ended 30 June 2016 out of income reserves.  Total dividend distributions for the year amount to 104 cents per share, an increase of 28% over 2015.

Given the healthy cash generation over the past two years, the Group now has significant resources available to focus on expanding the product portfolio, particularly in non-regulated areas, through acquisitions and partnerships.