Bidvest CEO Brian Joffe, who took the reins as Chairperson at Adcock Ingram last month told a shareholders meeting yesterday that this is one measure to realise the great potential of the underperforming Adcock Ingram.
The talks follow a year long struggle between Joffe’s Bidvest and CFR to acquire Adcock Ingram. The Adcok Ingram board backed CFR and were not in favour of the Bidvest bid. Bidvest ultimately beat CFR by buying out minorities and with the support of the other major shareholder, the Public Investment Corporation.
The costs related to the failed bid total about R140m, Joffe disclosed. When a shareholder reacted with shock to this number, he said: “I agree”.
In a trading statement also published yesterday, Adcock Ingram said these costs were under review and would be settled “to the extent they are due and payable”. R35m of it was expensed in the previous financial year and more than R100m will therefore be expensed in the six months ending March 31.
Joffe did not want to expand on the new strategy for Adcock Ingram and said the group’s processes and structure was being reviewed. “Things are not looking great, but we have a reasonable expectation that they will improve.” He said trading was flat in the second quarter with the Southern African business lagging revenue in the corresponding period by 6%. Performance in the OTC and Prescription Generics portfolios show the group falling behind market growth, he said.
The group is suffering from unfavourable revenue mix and the effect of rand depreciation on imported active ingredients, as well as certain facilities running below capacity.
Joffe said while some of these factors like currency movements affected Adcock Ingram, they should be opportunities. Competitors have to deal with the same issues and the one with the best strategy will outperform the others, he said.
The meeting was convened to solve an earlier oversight by Adcock Ingram to have shareholders approve the remuneration of non-executive directors for the financial years 2012/13 and 2013/14 in terms of the Companies Act.
R5.6m in directors fees were therefore paid out to directors without the necessary authorisation in FY2013 and the same amount is due for payment in the current year.
The directors were initially requested to repay the amounts received, but that would not be necessary, since approval was given by more than 99% of the votes at the meeting.
Joffe told Business that the oversight, while it shouldn’t happen, was the kind of thing that sometimes happens in big companies.
He does not view it as in indication that corporate governance at Adcock Ingram is lacking. “From what I’ve seen it’s rather more over the top for my liking,” he said.
An attorney who specialises in company law tells Business Adcock shareholders can’t approve directors’ remuneration retrospectively. He asked not to be named and said the total amount on unauthorised payments should have been recovered from the directors and that should have been the end of the matter.
He warned Adcock was exposing itself to a shareholder complaint at the Companies and Intellectual Property Commission (CIPC) for contravening the Act.