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Integrated Report 2016
ANNUAL FINANCIAL STATEMENTS
(continued)
ANNEXURE I – ACCOUNTING POLICIES
CONTINUED
If non-monetary items measured in a foreign currency are carried at historical cost, the exchange rate used is the rate applicable at the initial
transaction date. If they are carried at fair value, the rate used is the rate at the date when the fair value was determined.
The gain or loss arising on retranslation of non-monetary items is treated in line with the recognition of the gain or loss on change in fair value
of the item (ie translation differences on items whose fair value gain or loss is recognised in other comprehensive income or profit or loss is
also recognised in other comprehensive income or profit or loss, respectively).
FOREIGN OPERATIONS
At the reporting date, the assets and liabilities of the foreign operations are translated into the presentation currency of the Group (Rands)
at the exchange rate ruling at the reporting date. Items of profit or loss are translated at the weighted average exchange rate for the year.
Exchange differences are taken directly to a separate component of other comprehensive income. On disposal of a foreign operation, the
deferred cumulative amount recognised in other comprehensive income relating to that particular foreign operation is recognised in profit
or loss.
Goodwill and fair value adjustments relating to the carrying amounts of assets and liabilities arising on the acquisition of a foreign operation
are treated as assets and liabilities of that foreign operation, and are translated at the closing rate. The functional currencies of the foreign
operations are as follows:
•
joint venture, Adcock Ingram Limited in India, the Indian Rupee;
•
subsidiary, Adcock Ingram Healthcare Private Limited in India (discontinued operation), the Indian Rupee;
•
subsidiary, Relicare Tech Services Private Limited in India, the Indian Rupee;
•
subsidiary, Datlabs (Private) Limited in Zimbabwe, the United States Dollar;
•
subsidiary, Adcock Ingram East Africa Limited in Kenya, the Kenyan Shilling; and
•
subsidiary, Ayrton Drug Manufacturing Limited in Ghana (discontinued operation), the Ghanaian Cedi.
INTEREST IN GROUP COMPANIES
BUSINESS COMBINATIONS
Business combinations are accounted for using the acquisition method. The cost of an acquisition is measured as the aggregate of the
consideration transferred, measured at acquisition date fair value and the amount of any non-controlling interest in the acquiree.
For each business combination, the Group measures the non-controlling interest in the acquiree either at fair value or at the proportionate
share of the acquiree’s identifiable net assets. Acquisition costs incurred are expensed.
When the Group acquires a business, it assesses the financial assets and liabilities assumed for appropriate classification and designation
in accordance with the contractual terms, economic circumstances and pertinent conditions as at the acquisition date. This includes the
separation of embedded derivatives in host contracts of the acquiree.
The excess of the consideration transferred, the amount of any non-controlling interest in the acquiree and the acquisition date fair value
of any previous equity interest in the acquiree over the fair value of the Group’s share of the identifiable net assets acquired is recorded
as goodwill. If this is less than the fair value of the net assets of the subsidiary acquired in the case of a bargain purchase, the difference is
recognised directly in profit or loss. In instances where the contingent consideration does not fall within the scope of IAS 39, it is measured
in accordance with the appropriate IFRS.
If the business combination is achieved in stages, the acquisition date fair value of the acquirer’s previously held equity interest in the acquiree
is remeasured to fair value as at the acquisition date through profit or loss or other comprehensive income, as appropriate.
Any contingent consideration to be transferred by the acquirer will be recognised at fair value at the acquisition date.
Subsequent changes to the fair value of the contingent consideration, which is deemed to be an asset or liability, will be recognised in
accordance with IAS 39 either in profit or loss or as a charge to other comprehensive income, as appropriate. If the contingent consideration
is classified as equity, it is not remeasured until it is finally settled within equity.
EQUITY-ACCOUNTED INVESTMENTS
The equity-accounted investments are the Group’s investments in joint ventures.