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Integrated Report 2016
ANNUAL FINANCIAL STATEMENTS
(continued)
2016
R’000
2015
R’000
N.
RELATED PARTIES
Related party transactions exist between the Company and other subsidiaries within the Adcock
Ingram Group. All transactions with related parties are concluded at arm’s length.
The following related party transactions occurred:
Interest received
Adcock Ingram Healthcare Proprietary Limited
27 074
21 981
Dividends received
Adcock Ingram Intellectual Property Proprietary Limited
300 000
–
Adcock Ingram Limited India
4 656
–
304 656
–
Dividends Paid
Adcock Ingram Limited
5 614
–
The related balances (where applicable) are shown in note F. Refer to Annexure H for nature of the relationships of related parties.
O.
FINANCIAL INSTRUMENTS
Fair value hierarchy
The classification of financial instruments and the fair value
hierarchy are as follows:
Financial instruments
Classification per IAS 39
2016
R’000
2015
R’000
Investment in Group Risk Holdings Proprietary Limited
(1)
Available-for-sale
2 215
2 915
Amounts owing by Group companies
Loans and receivables
327 154
269 318
Amounts owing to Group companies
Loans and borrowings
2 501 806
2 155 994
Bank
Loans and receivables
2 367
–
Bank overdraft
Loans and borrowings
–
398 229
(1)
Level 3: The value of the investment in Group Risk Holdings is based on Adcock Ingram’s proportionate share of the net asset value of the company.
Financial risk management objectives and policies
The Company’s principal financial liabilities comprise borrowings and a bank overdraft. The main purpose of these financial liabilities is
to raise finance for the Group’s operations.
The Company’s financial assets comprise investments and receivables.
The main risks arising from the Company’s financial instruments are interest rate, credit and liquidity. The Board of directors reviews
and agrees policies for managing each of these risks, which are summarised in Annexure E.
Interest rate sensitivity
The following table demonstrates the sensitivity to a reasonably possible change in interest rates, with all other variables held
constant, of the Company’s profit before tax (through the impact on balances subject to floating rates):
Change in rate
Increase/(Decrease)
in profit before tax
%
June
2016
R’000
June
2015
R’000
Cash and cash equivalents
Cash at banks
+1
24
–
Bank overdraft
+1
–
(3 982)
NOTES TO THE COMPANY ANNUAL FINANCIAL
STATEMENTS
CONTINUED