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Integrated Report 2016
ANNUAL FINANCIAL STATEMENTS
(continued)
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A joint venture is an arrangement in which the Group has joint control, whereby the Group has rights to the net assets of the arrangement.
The Group has the following joint ventures:
•
Adcock Ingram Holdings Limited has a 49.9% interest in Adcock Ingram Limited, a company incorporated in India, which is involved in the
manufacturing of pharmaceutical products; and
•
Adcock Ingram Critical Care Proprietary Limited has a 50% indirect interest in National Renal Care Proprietary Limited, a company
incorporated in South Africa, which provides renal healthcare services.
Under the equity method, investments are carried in the statement of financial position at cost, plus post-acquisition changes in the Group’s
share of the profit or loss of these investments. Goodwill relating to equity-accounted investments is included in the carrying amount of the
investment and is not tested separately for impairment.
Joint ventures are accounted for from the date that joint control is obtained to the date that the Group ceases to have joint control.
The statement of comprehensive income reflects the Group’s share of these investments’ profit or loss. However, losses in excess of the Group’s
interest are not recognised. Additional losses are provided for and a liability is recognised, only to the extent that a legal or constructive
obligation exists. Where a joint venture recognises an entry directly in other comprehensive income, the Group in turn recognises its share as
other comprehensive income in the consolidated statement of comprehensive income. Profits and losses resulting from transactions between
the Group and equity-accounted investments are eliminated to the extent of the interest in the underlying investment.
After application of the equity method, each investment is assessed for indicators of impairment. If applicable, the impairment is calculated as
the difference between the carrying value and the higher of its value in use or fair value less costs to dispose. Impairment losses are recognised
in profit or loss, as part of equity accounted earnings.
In the Company financial statements, joint ventures are initially accounted for at cost when joint control is obtained and subsequently at cost
less accumulated impairment losses.
Upon loss of joint control over the joint venture, the Group measures and recognises any retaining investment at its fair value. Any difference
between the carrying amount of the joint venture upon loss of joint control and the fair value of the retained investment and proceeds from
disposal is recognised in profit or loss.
When an equity accounted investment is classified as held for sale in terms of IFRS 5, equity accounting is discontinued, and the investment is
held at the lower of its carrying value and fair value less costs to sell.
Where an equity accounted investment’s reporting date differs from the Group’s, the joint venture prepares financial results for the same period
as the Group. Where the equity accounted investment’s accounting policies differ from those of the Group, appropriate adjustments are made
to conform to the accounting policies of the Group.
The year-end of the joint venture, Adcock Ingram Limited (India) is March whilst the year-end of National Renal Care Proprietary Limited is
September.
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment is stated at cost, excluding the costs of day-to-day servicing, less accumulated depreciation and accumulated
impairment losses.
Where an item of property, plant and equipment comprises major components with different useful lives, the components are accounted
for as separate assets. Expenditure incurred on major inspection and overhaul, or to replace an item is also accounted for separately if the
recognition criteria are met. All other repairs and maintenance expenditures are charged to profit or loss during the financial period in which
they are incurred.
Each part of an item of property, plant and equipment with a cost that is significant is depreciated separately.
Depreciation is calculated on a straight-line basis, on the difference between the cost and residual value of an asset, over its useful life.
Depreciation starts when the asset is available for use. An asset’s residual value, useful life and depreciation method are reviewed at least at
each financial year-end.
Any adjustments to residual value, useful life or depreciation method applied are accounted for prospectively.