Adcock Ingram : Integrated Report 2021 (including the Notice of the AGM 2021)

2021 Integrated Report

for the year ended 30 June

Contents

Adcock Ingram at a glance

About this report	01
Organisational overview	02
Integrated thinking in our business model	04
Operating environment	06
Regulatory environment	08

Grounded in good corporate governance

Board of Directors	11
Executive committee	12
Material matters	14
Governance	15
Risk management	22
Executing on our strategy	32
Stakeholder engagement	34

Feedback

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Our performance

Leadership review from our Chairperson and CEO	39
Financial review	44
Consumer	48
OTC	54
Prescription	60
Hospital	66

Sustainability	72
Human Capital	76
Social and Relationship Capital	86
Intellectual Capital	90
Natural Capital	94
Remuneration	96
Summarised financial results	112
Notice of Annual General Meeting	123
Corporate information	135

At a glance	Corporate governance	Our performance	Sustainability	Remuneration	Financial results	Notice of AGM

About this report

Adcock Ingram regards the presentation of this report as a valuable opportunity to engage with its stakeholders and to respond to issues raised by them.

The matters reported in the Integrated Report are considered by leadership throughout the year as being vital to the sustainability of the Group and include all material aspects up to the date of issue of this report.

The report also contains a summarised set of the annual financial statements.

Reporting principles

During the period under review, Adcock Ingram was compliant in all material respects with the requirements of King IVTM (unless otherwise stated), the Companies Act, the Johannesburg Stock Exchange Limited Listings Requirements and acted in terms of its Memorandum of Incorporation (MOI). The Group subscribes to best practice governance. For more details, and an overview of the Group governance and structures, please see the corporate governance section from page 10 onwards.

The Group adheres to International Financial Reporting Standards (IFRS) in compiling its annual financial statements.

Scope and boundary

Adcock Ingram's Integrated Report covers the financial year 1 July 2020 to 30 June 2021. Comparatives are for the year

1 July 2019 to 30 June 2020 and included where available.

The report is released at least 15 business days prior to its Annual General Meeting to be held on 23 November 2021.

The report provides a general narrative on the performance of the Group which includes the holding company and its subsidiaries and joint Ventures. The business in South Africa has a material impact on the overall sustainability of the Group. The Group's presence in India constitutes a small percentage of the Group's operations and is for that reason excluded from the operational review.

The B-BBEE assessment, as well as the employment equity statistics, exclude all non-South African companies and operations.

Assurance

Adcock Ingram's Board of Directors subscribes to compliance with applicable laws and regulations in all jursidictions in which the Group operates. It acknowledges its responsibility to ensure the integrity of the Integrated Report. The Board has accordingly applied its mind to the Integrated Report and, in its opinion, the report fairly presents the integrated performance of the Group.

Annual financial statements 2021

The annual financial statements for the year ended 30 June 2021 were approved by the Board on 24 August 2021.

An independent audit of the Group's annual financial statements was performed by PricwaterhouseCoopers Inc. The full set of annual financial statements is available as a separate report on the Company's website www.adcock.com

B-BBEE scorecard

The Group's B-BBEE status has been verified by Empowerlogic, an independent verification agency, for the codes of the B-BBEE Act. The B-BBEE level 3 rating is valid until 23 November 2021.

Carbon footprint

The Group's carbon footprint in South Africa, has been determined by "Carbon Calculated" for the 2021 financial year.

Other information

The rest of the Integrated Report has not been subjected to independent review or audit, and is derived from the Group's own internal records.

Document navigation

Capitals

Strategic focus areas

Divisions

FC	Financial Capital	SR
MC	Manufactured	IC
	Capital
NC	Natural Capital	HC

Social and			Build on the foundation		Over the counter	Hospital
Relationship Capital
	Growth and expansion
Intellectual Capital			Prescription	Consumer
Human Capital		Transformation

Material matters

Scheduling status of codeine		COVID-19		Growth
Regulatory environment		Technology and information		Relationships

INTEGRATED REPORT 2021 1

Organisational overview

Who we are

Adcock Ingram is a leading South African pharmaceutical manufacturer, listed on the Johannesburg Stock Exchange. The Group manufactures, markets, and distributes a wide range of consumer and healthcare products and is a leading supplier to the private and public sectors of the market.

Adcock Ingram started as a small pharmacy in Krugersdorp more than 130 years ago and now ranks as the second-largest manufacturer in the private pharmaceutical market and third-largest supplier to the public sector in South Africa. Beyond the borders of our own country, we serve markets in other African countries and also conduct operations out of India.

Our operational footprint

The Group's head office is located in Midrand, South Africa.

Operations are concentrated in Southern Africa and manufacturing facilities are based in South Africa and India. In India, the Group has a 49.9% share in a manufacturing facility, and full ownership of an entity providing regulatory support services to the Southern African businesses.

Sub-Saharan Africa

India

Business units

Adcock Ingram operates through a decentralised, autonomous operational structure that consists of four business units, each one structured to serve specific customer and consumer needs, and to meet applicable regulatory requirements.

	Consumer	Over the Counter	Prescription
Consumer competes mainly in	Over the Counter focuses on	The Prescription portfolio
the Fast Moving Consumer	medicinal products sold	comprises products
Goods (FMCG) retail space,	predominantly in corporate	prescribed by medical
selling a range of healthcare,	and independent pharmacies,	practitioners and includes a
personal care and homecare	without a prescription, where	range of quality and
products and includes	the pharmacist plays a role in	affordable branded generic
market-leading brands such as	the product choice.	medicines, as well as
Panado, Epi-max, Bioplus and	Key brands include Corenza,	specialised instrumentation
Plush.		Allergex and Citro-Soda.	and surgical products.
(%)	16
Turnover		22
			39
(%)	26
prot
	32
Trading		24
assets (%)	17
		28
Total		25

Hospital

The Hospital division is a leading supplier of critical care products, including intravenous solutions, blood collection products and renal dialysis systems.

23

18

20

Contribution to group

2 INTEGRATED REPORT 2021

At a glance	Corporate governance	Our performance	Sustainability	Remuneration	Financial results	Notice of AGM

Our mission

We are committed to providing quality products that improve the health and lives of people in the markets we serve

Respec t	Empowerment
Have respect for	Believe in
people, society and	empowerment of
the environment	our people, thus
	encouraging
	entrepreneurship,
Integrit y	innovation and	Qualit y
accountability
Act with integrity at		Provide quality
all times		products and services

Equalit y	Our core	Transparenc y
Practice non-discrimination	Believe in transparency
and equal opportunities	values	and open communication

Proudly South African company

As members of Proudly South African we share a commitment to an uplifting ethos that promotes social and economic change and progress.

We make meaningful contributions to building South Africa's economy, alleviating unemployment and retaining existing employment opportunities.

Listed on the JSE (AIP)

Market Capitalisation of R7.4 billion Revenue of R7.8 billion

Number of employees 2 223

1. Level 3 B-BBEE contributor Majority shareholder of Adcock Ingram

Adcock Ingram Holdings Limited Group Structure

100

Adcock

100

Adcock

49.9

Adcock Ingram

100

Adcock

100

Adcock

100

Adcock

Ingram International

Ingram Healthcare

Ltd (India)

Ingram Critical Care

Ingram Intellectual

Ingram Ltd

(Pty) Ltd

(Pty) Ltd

(Pty) Ltd

Property (Pty) Ltd

51

Adcock Ingram

49

100

Plush

100

Adcock Ingram

100

Dilwed

100

Adcock Ingram

49

Menarini SA

100

Adcock Ingram

East Africa

Professional Leather

Pharma Private

Investments

Intellectual

(Pty) Ltd

Pharmaceuticals

Ltd (Kenya)

Care (Pty) Ltd

Limited

(Pty) Ltd

Property No 1 (Pty) Ltd

(Pty) Ltd

10

Relicare Tech

90

100

Lulu

50

National Renal

100

Novartis

100

Premier

Services Private Ltd

and Marula

Care (Pty) Ltd

Ophthalmics

Pharmaceutical

(India)

(Pty) Ltd

(Pty) Ltd

Company (Pty) Ltd

100

Virtual Logistics

50

Metamorphosa

(Pty) Ltd

(Pty) Ltd

100

Genop

100

Genop

%

Shareholding percent

Holdings

Healthcare

Dormant entities

(Pty) Ltd

(Pty) Ltd

INTEGRATED REPORT 2021 3