Release Date: 16/08/2012 07:05:00??????Code(s): CMP ? ? 
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UNAUDITED CONDENSED CONSOLIDATED INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2012 Cipla Medpro South Africa Limited Registration number 2002/018027/06 JSE code CMP ISIN ZAE000128179 UNAUDITED CONDENSED CONSOLIDATED INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2012 - Revenue of R1,080 billion increased by 28% - Normalised HEPS and EPS of 35,0 cents increased by 31% - Third largest pharmaceutical company in South Africa, by value* - Fastest growing, of the top 10 pharmaceutical companies in South Africa, by value* - Interim dividend of 8,5 cents (2011: 6,5 cents) per share *Source: IMS June 2012 CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME Unaudited Unaudited Audited 6 months 6 months Year ended ended ended 30 June 30 June 31 December 2012 2011 2011 R'000 R'000 R'000 Revenue 1 079 786 842 812 1 767 561 Gross profit 579 140 490 250 1 055 516 Other income 1 017 79 712 121 264 Other operating expenses (366 571) (268 647) (725 705) Profit before finance costs and income tax 213 586 301 315 451 075 Finance costs (36 084) (31 030) (58 212) Finance income 1 209 4 131 15 586 Profit before income tax 178 711 274 416 408 449 Income tax expense (52 740) (81 803) (121 462) Profit for the period 125 971 192 613 286 987 Profit attributable to: Equity holders of the parent 122 160 190 084 281 961 Non-controlling interest 3 811 2 529 5 026 Profit for the period 125 971 192 613 286 987 Other comprehensive income for the period (net of income tax) Total comprehensive income for the period 125 971 192 613 286 987 Total comprehensive income attributable to: Equity holders of the parent 122 160 190 084 281 961 Non-controlling interest 3 811 2 529 5 026 Total comprehensive income for the period 125 971 192 613 286 987 Number of shares ('000) In issue (including treasury shares) 446 462 454 027 446 462 Weighted average (excluding treasury shares) Basic 440 023 447 587 446 945 Diluted 444 721 450 055 449 264 Earnings per share (cents) Basic 27,8 42,5 63,1 Diluted 27,5 42,2 62,8 RECONCILIATION OF HEADLINE EARNINGS Unaudited 6 months Unaudited 6 months Audited Year ended ended ended 30 June 30 June 31 December 2012 2011 2011 R'000 R'000 R'000 Profit attributable to equity holders of the parent 122 160 190 084 281 961 Adjusted for: (64) 215 Gain on disposals of property, plant and equipment (74) (72) Loss on disposal of joint venture 385 Total tax effects of adjustments 10 (98) Headline earnings 122 160 190 020 282 176 Headline earnings per share (cents) Basic 27,8 42,5 63,1 Diluted 27,5 42,2 62,8 CONDENSED CONSOLIDATED SEGMENTAL REPORT Unaudited Unaudited Audited 6 months 6 months Year ended ended ended 30 June 30 June 31 December 2012 2011 2011 R'000 R'000 R'000 Segment revenue external customers SEP 791 388 607 826 1 258 717 OTC 220 533 186 482 391 955 Other operating segments 67 865 48 504 116 889 Total 1 079 786 842 812 1 767 561 Segment result SEP 161 903 235 961 440 836 OTC 35 287 54 482 100 641 Other operating segments 16 396 10 872 26 857 Unallocated item legal settlement# (117 259) Total 213 586 301 315 451 075 # The unallocated item relates to the RBSA settlement. CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION Unaudited Unaudited Audited 30 June 30 June 31 December 2012 2011 2011 R'000 R'000 R'000 ASSETS Non-current assets 2 073 741 1 974 426 2 050 278 Property, plant and equipment 437 473 435 049 444 457 Intangible assets 1 565 193 1 507 557 1 535 443 Other investments 10 6 8 Loans receivable 3 191 3 191 Deferred tax assets 67 874 31 814 67 179 Current assets 952 279 805 316 786 857 Inventory 401 153 317 370 414 907 Income tax receivable 8 110 926 1 312 Trade and other receivables 451 987 363 635 350 264 Loans receivable 3 778 7 891 3 881 Cash and cash equivalents 87 251 115 494 16 493 Total assets 3 026 020 2 779 742 2 837 135 EQUITY AND LIABILITIES Capital and reserves 2 043 966 1 940 403 1 954 087 Non-controlling interest 14 605 9 501 12 544 Total equity 2 058 571 1 949 904 1 966 631 Non-current liabilities 337 906 315 685 340 134 Loans, borrowings and provisions 320 117 296 999 325 344 Deferred tax liabilities 17 789 18 686 14 790 Current liabilities 629 543 514 153 530 370 Trade and other payables 497 245 398 688 342 136 Loans, borrowings and provisions 51 114 10 054 51 976 Income tax payable 1 648 29 118 29 295 Bank overdrafts 79 536 76 293 106 963 Total liabilities 967 449 829 838 870 504 Total equity and liabilities 3 026 020 2 779 742 2 837 135 CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY Unaudited Unaudited Audited 6 months 6 months Year ended ended ended 30 June 30 June 31 December 2012 2011 2011 R'000 R'000 R'000 Total equity at beginning of the period 1 966 631 1 784 868 1 784 868 Total comprehensive income for the period 125 971 192 613 286 987 Share buy-back (49 983) IFRS 2 Share-based Payments 1 204 165 1 455 Changes in ownership interest 1 407 Dividends paid (35 235) (27 742) (58 103) Total equity at end of the period 2 058 571 1 949 904 1 966 631 Comprising: Capital and reserves 2 043 966 1 940 403 1 954 087 Non-controlling interest 14 605 9 501 12 544 Total equity 2 058 571 1 949 904 1 966 631 CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS Unaudited Unaudited Audited 6 months 6 months Year ended ended ended 30 June 30 June 31 December 2012 2011 2011 R'000 R'000 R'000 Cash flows from operating activities 145 004 147 905 112 008 Cash flows from investing activities (38 317) (59 127) (107 021) Cash flows from financing activities (8 502) (24 729) (70 609) Net increase (decrease) in cash and cash equivalents 98 185 64 049 (65 622) Cash and cash equivalents at beginning of the period (90 470) (24 848) (24 848) Cash and cash equivalents at end of the period 7 715 39 201 (90 470) COMMENTARY OVERVIEW We present our interim results for the period ended 30 June 2012. The delays in registration of our medicines continue to impact on the growth of our company. We do, however, feel that this situation will improve during the second half of 2012. The difficult trading conditions persist with a volatile and weakening exchange rate and the implementation of the negligible Single Exit Price (SEP) price increase on certain products. As a result of our continuing policy to take out forward exchange contracts (FECs) to limit our exposure to the USD currency, we recorded unrealised losses on the mark to market valuation (fair valuation) of FECs of R34,2 million (2011: unrealised gains of R28,6 million), as required by International Financial Reporting Standards (IFRS). As a result of the exchange rate and the change in our product mix our gross profit margin has decreased; however, our trading results still reflect significant improvements due to the increase in revenue of more than 28%. As reported on SENS on 22 June 2012 and 29 June 2012, our 2011 provisional annual results were restated before the approval of our 2011 Integrated Annual Report, to account for the subsequent event relating to the Reckitt Benckiser South Africa (Pty) Ltd (RBSA) settlement. REVIEW OF OPERATIONS Cipla Medpro Holdings (Pty) Ltd (Cipla Medpro), a wholly owned subsidiary of Cipla Medpro South Africa Ltd (CMSA or the group), continues its growth and was ranked third largest pharmaceutical company by value for the 12 months to June 2012. Cipla Medpro had the highest Evolution Index (EV) of the top 10 pharmaceutical companies in South Africa for the 12 months to June 2012 (104,4) as well as the six months to June 2012 (107,9) (IMS, June 2012). Cipla Medpro's share in the total private market was 5,1% for the 12 months to June 2012 and 5,2% for the six months to June 2012. The total private market grew by 9,6% for the 12 months to June 2012 and by 8,2% for the six months to June 2012. Cipla Medpro's performance again outstripped the market and grew by 14,4% for the 12 months to June 2012 and by 16,8% for the six months to June 2012 (IMS, June 2012). We remain focused on growing our over-the-counter (OTC) business and can already see gains from the strategies in place. Our oncology division is up and running and an exciting space to be in for the future. Our small animal (Cipla Vet) business grew by 10,1% to R12,0 million (2011: R10,9 million) and our large animal (Cipla Agrimed) business grew by 46,8% to R49,9 million (2011: R34,0 million). Cipla Medpro was awarded R353 million (excluding VAT) in the respiratory products tender and expects a further R100 million from other tenders, excluding antiretroviral's (ARVs). Turnover of the factory (CMM) continues to improve and an increase of more than 65% was recorded when compared to the corresponding comparative period. We are pleased to report that a profit before interest and tax (PBIT) has been recorded at CMM of R1,9 million for the first six months (2011: loss before interest and tax of R10,1 million), which is a significant improvement of R12,0 million. The improvement is mainly attributable to the increased and more stable uptake from the State on the ARV tender. REVIEW OF RESULTS Statement of comprehensive income Actual earnings per share (EPS) and headline earnings per share (HEPS) have decreased by 34,6% to 27,8 cents (2011: 42,5 cents) as a result of the inclusion of the non-recurring settlement income in 2011 of R68,8 million (2012: Rnil), the unrealised FEC gains in 2011 of R28,6 million (2012: unrealised FEC losses of R34,2 million) and RBSA legal expenses and notional interest of R10,0 million in 2012 (2011: Rnil). These calculations are based on 440,0 million (2011: 447,6 million) weighted average number of shares in issue for the first six months of 2012 (before the effects of dilution are taken into account). Headline earnings have decreased to R122,2 million (2011: R190,0 million). There were no items included in the 2012 reconciliation of headline earnings (2011: gain on disposal of property, plant and equipment of R0,1 million, net of tax). On a normalised basis, after adjusting for the items referred to above, our normalised EPS and HEPS have increased by 30,6% to 35,0 cents (2011: 26,8 cents). We are pleased to report an increase in revenue of 28,1% to R1,080 billion (2011: R842,8 million) despite the slow registrations at the Medicines Control Council (MCC), however, the gross profit margin has decreased to 53,6% from 58,2% at 30 June 2011, mainly due to the change in our product mix and exchange rate. This growth in revenue has been achieved organically with a significant increase in the demand of ARVs from the State. It is pleasing to note that the increased demand in ARVs has allowed CMM to reach satisfactory production levels which resulted in a small PBIT for the first six months. PBIT for the period decreased by 29,1% to R213,6 million (2011: R301,3 million), with operating expenses increasing to R366,6 million (2011: R268,6 million) for the current period. Excluding the positive impact of the settlement income in 2011 and the unrealised FEC movements, PBIT grew by 21,5%. Profit after tax for the period was R126,0 million (2011: R192,6 million). The effective tax rate improved slightly to 29,5% (2011: 29,8%) and remains slightly higher than the statutory tax rate. Net finance costs increased from R26,9 million to R34,9 million mainly as a result of the following: - notional interest of R2,1 million (2011: Rnil) on the outstanding RBSA settlement amount (IFRS adjustment); - notional interest on extended credit terms of R16,5 million (2011: R12,0 million) (IFRS adjustment); and - interest on the Nedbank Ltd long-term loan facilities of R12,0 million (2011: R10,4 million). Statement of financial position Loans, borrowings and provisions, less the net cash position, have increased to R363,5 million (2011: R267,9 million) mainly as a result of the RBSA settlement amount. The group's net cash surplus decreased from R39,2 million at 30 June 2011 to R7,7 million at 30 June 2012 as a result of: - the final dividend of R33,5 million paid in May 2012; and - provisional tax payments of R73,0 million at the end of June 2012. Debtors days have increased slightly, when compared to December 2011, to 67 days (31 December 2011: 64 days and 30 June 2011: 67 days). Creditors days are currently at 152 days (31 December 2011: 170 days and 30 June 2011: 185 days) with the reduction as a result of us continuing to settle certain invoices early to take advantage of the exchange rate, where possible. The inventory days have decreased to 148 days (31 December 2011: 181 days and 30 June 2011: 156 days) as the high levels of ARVs have normalised. Statement of cash flows Cash flows generated from operating activities are R145,0 million (2011: R147,9 million), after adjusting for the non-cash flow effects of depreciation of R14,6 million (2011: R11,5 million), IFRS 2 Share-based Payment expenses of R1,2 million (2011: R0,2 million) and FEC unrealised losses of R34,2 million (2011: unrealised gains of R28,6 million). The final dividend relating to 2011 of R33,5 million was paid to shareholders during May 2012. Investing activities resulted in outflows of R38,3 million (2011: R59,1 million) due to acquisitions of property, plant and equipment and intangible assets. A net R8,5 million was utilised for financing activities (2011: R24,7 million), mainly for the working capital and instalment sale facilities at the factory. BASIS OF PREPARATION The condensed consolidated interim financial results have been prepared in accordance with the recognition and measurement criteria of all applicable standards and interpretations of IFRS, the disclosure requirements as set out in IAS 34 Interim Financial Reporting, the Companies Act of 2008, as amended, where applicable the AC 500 standards as issued by the Accounting Practices Board or its successor, and the Listings Requirements of the JSE Ltd. The accounting policies and methods of computation applied in the preparation of these consolidated interim financial results are consistent with those followed in the preparation of the consolidated financial statements for the year ended 31 December 2011. The condensed consolidated interim financial results for the six months ended 30 June 2012, have not been audited or reviewed by the group's external auditors. C Aucamp (Chief Financial Officer) is responsible for these condensed consolidated financial results and has been involved with the preparation thereof in conjunction with MW Daly and E van der Merwe, all three of whom are qualified Chartered Accountants (South Africa). DIRECTORATE There have been no changes to the board and it continues to function in accordance with its approved charter. SUBSEQUENT EVENTS The directors are not aware of any matter or circumstance which is material to the financial affairs of the group, which has occurred subsequent to 30 June 2012, that has not been otherwise dealt with in these condensed consolidated interim financial results. PCS Luthuli JS Smith Chairman Chief Executive Officer 8 August 2012 DECLARATION OF ORDINARY DIVIDEND Notice is hereby given that an interim cash dividend (dividend number 5) of 8,5 cents per share (gross) has been declared by the board in respect of the six months ended 30 June 2012, an increase of 30,8% when compared to the interim dividend of 6,5 cents in 2011 (before the effects of dividend withholding tax, where applicable). The company's policy to maintain a dividend cover of between four and five times, has been complied with when the results are analysed on a normalised basis. The dividend cover is based on normalised earnings due to the non-cash effect of the unrealised gains and losses on FECs that may or may not be realised in the future, as well as the effects of once-off items. The dividend has been declared out of income reserves. The salient dates for the payment of the interim dividend are detailed below: Last day to trade cum dividend Friday, 28 September 2012 Shares trade ex dividend Monday, 1 October 2012 Record date Friday, 5 October 2012 Payment date Monday, 8 October 2012 Share certificates may not be dematerialised or rematerialised between Monday, 1 October 2012 and Friday, 5 October 2012, both dates inclusive. In terms of the new Dividends Tax effective 1 April 2012, the following additional information is disclosed: 1. Local dividend tax rate is 15%; 2. No STC credits have been utilised; 3. Net local dividend amount is 7,225 cents per share for shareholders liable to pay the new Dividends Tax and 8,5 cents per share for shareholders exempt from paying the new Dividends Tax; 4. The issued share capital of CMSA as at the date of this declaration is 446 461 759 ordinary shares; and 5. CMSAs tax reference number is 9987069144. By order of the board MW Daly Durban Company Secretary 8 August 2012 FORWARD-LOOKING STATEMENTS This announcement contains certain forward-looking statements with respect to the financial condition and results of the operations of Cipla Medpro South Africa Ltd that, by their nature, involve risk and uncertainty because they relate to events and depend on circumstances that may or may not occur in the future. These may relate to future prospects, opportunities and strategies. If one or more of these risks materialise, or should underlying assumptions prove incorrect, actual results may differ from those anticipated. By consequence, all forward- looking statements have not been reviewed or reported on by the group's auditors. CORPORATE INFORMATION Non-executive directors PCS Luthuli (Chairman); MB Caga; JvD du Preez; ND Mokone; MT Mosweu; SMD Zungu Executive directors JS Smith (Chief Executive Officer); C Aucamp (Chief Financial Officer) Company Secretary MW Daly Registration number 2002/018027/06 JSE code CMP ISIN ZAE000128179 Registered address 1474 South Coast Road, Mobeni, KwaZulu-Natal, 4052 Postal address PO Box 32003, Mobeni, 4060 Transfer secretaries Computershare Investor Services (Pty) Ltd Telephone +27 31 451 3800 Facsimile +27 31 451 3889 Email investor@ciplamedpro.co.za Whistle-blowing hotline 0800 21 21 51 (toll free) Sponsor Nedbank Capital Auditors Mazars Legal advisors Norton Rose South Africa (incorporated as Deneys Reitz Inc.) www.ciplamedsa.co.za Date: 16/08/2012 07:05:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE'). The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct, indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on, information disseminated through SENS.
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