Note 5

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        2010
        R'000
        Audited  
5 BUSINESS COMBINATIONS
  5.1   Unique Formulations
      On 17 November 2009, the group acquired 100% of the assets of
      Unique Formulations, a vitamin and mineral supplement company
      based in Cape Town, as a going concern.
       
      The fair value of the identifiable assets as at the date of acquisition was:
      Property, plant and equipment 196
      Marketing-related intangible assets 24 204
      Inventories 2 024
      Accounts receivable 2 669  
      Fair value of net assets 29 093
      Goodwill 8 448  
      Net purchase price 37 541  
      Of the total purchase price, a payment of R17,5 million has been deferred.
      The deferred portion of the purchase price, which has been fully provided
      for, is subject to the achievement of certain performance criteria.
       
      From the date of acquisition, the Unique business contributed R23,1 million
      towards revenue. Should the Unique business have been included from
      1 October 2009, the contribution is estimated to have been R24,8 million
      to revenue.
       
      As the business was fully integrated into the OTC segment, it is difficult
      to determine the exact contribution towards operating profit.
       
      The significant factors that contributed to the recognition of goodwill
      include, but are not limited to, the acquisition of trade listings of an
      established product portfolio within the FMCG channel.
       
      A total of R0,3 million of costs relating to this business combination
      were incurred and expensed during the year.
       
  5.2   Indigenous Systems (Pty) Limited
      On 1 April 2010, The Scientific Group (Pty) Limited acquired the net assets
      of Indigenous Systems (Pty) Limited (“Indigenous”), an unlisted company
      in South Africa, as a going concern.
      Property, plant and equipment 1 925
      Inventories 7 642
      Accounts receivable 7 018
      Accounts payable (3 585)  
      Net purchase price 13 000  
      Of the total purchase price, a payment of R3,2 million has been deferred.
      The deferred portion of the purchase price, which has been fully provided
      for, is subject to the achievement of certain revenue targets.
       
      From the date of acquisition, the Indigenous business contributed R20,5 million
      towards revenue and R3,2 million towards profit before income tax.
       
      Should the Indigenous business have been included from 1 October 2009, the
      contribution is estimated to have been R39 million to revenue and R5,9 million
      towards profit before income tax.
       
  5.3   Ayrton Drug Manufacturing Limited (Ayrton)
      On 1 April 2010, Adcock Ingram International (Pty) Limited, a wholly owned
      subsidiary of Adcock Ingram Holdings Limited, acquired a 65,59% stake in a
      leading listed Ghanaian pharmaceutical company, Ayrton Drug Manufacturing
      Limited (“Ayrton”) for R121 million.
       
      The fair value of the identifiable assets as at the date of acquisition was:
      Property, plant and equipment 20 355
      Marketing-related intangible assets 28 295
      Customer-related intangible assets 9 141
      Other intangible assets 1 211
      Cash and cash equivalents 14 417
      Inventories 20 299
      Accounts receivable 23 778
      Accounts payable (10 028)
      Receiver of Revenue (1 465)
      Deferred tax (9 359)
      Non-controlling interests (33 636)  
      Fair value of net assets 63 008
      Cash and cash equivalents (14 417)
      Goodwill 57 869  
      Net purchase price 106 460  
       
      Following the initial transaction, Adcock Ingram International (Pty)
      Limited acquired an additional 0,59% of the shares of Ayrton for
      R1 million, increasing its ownership to 66,18% at 30 September
      2010. Adcock has placed an order on the Ghanaian stock exchange
      to purchase additional shares at GH¢0,16.
       
      From the date of acquisition, the Ayrton business contributed
      R43,5 million towards revenue and R9,7 million towards profit
      before income tax.
       
      Should the Ayrton business have been included from 1 October
      2009, the contribution is estimated to have been R85,7 million
      to revenue and R19,4 million towards profit before income tax.
       
      Goodwill represents the difference between the purchase
      consideration and the fair value of the net assets acquired as there
      are no further separately identifiable intangible assets. The
      significant factors that contributed to the recognition of goodwill
      include, but are not limited to, the establishment of a presence
      within the Western African markets, with local management and
      distribution capabilities to drive the group’s product sales into the
      various channels and customers that exist within those markets.
       
      A total of R1,9 million of costs relating to this business combination
      were incurred and expensed during the year.


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