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Integrated Report 2016
ANNUAL FINANCIAL STATEMENTS
(continued)
SIX
THREE
ONE
FOUR
TWO
A restriction on the BEE party to transfer the equity instrument subsequent to its vesting is not treated as a vesting condition, but is factored
into the fair value determination of the instrument.
BEE transactions are accounted for as equity-settled share-based payments and are treated the same as equity-settled transactions.
TREASURY SHARES
Shares in Adcock Ingram Holdings Limited held by the Group, including shares held by structured entities deemed to be controlled by the
Group, are classified within total equity as treasury shares. Treasury shares are treated as a deduction from the issued and weighted average
number of shares for earnings per share and headline earnings per share purposes and the cost price of the shares is reflected as a reduction
in capital and reserves in the statement of financial position. Dividends received on treasury shares are eliminated on consolidation. No gain
or loss is recognised in the statement of comprehensive income through profit or loss on the purchase, sale, issue or cancellation of treasury
shares. The consideration paid or received with regard to treasury shares is recognised in equity.
CONTINGENT ASSETS AND CONTINGENT LIABILITIES
A contingent asset is a possible asset that arises from past events and whose existence will be confirmed by the occurrence or non-occurrence
of one or more uncertain future events not wholly within the control of the Group. Contingent assets are not recognised as assets.
A contingent liability is a possible obligation that arises from past events and whose existence will be confirmed by the occurrence or non-
occurrence of one or more uncertain future events not wholly within the control of the Group. Alternatively it may be a present obligation that
arises from past events but is not recognised because an outflow of economic benefits to settle the obligation is not probable, or the amount
of the obligation cannot be measured with sufficient reliability. Contingent liabilities are not recognised as liabilities unless they are acquired
as part of a business combination.
Recognised amounts in the financial statements are adjusted to reflect significant events arising after the date of the statement of financial
position, but before the financial statements are authorised for issue, provided there is evidence of the conditions existing at the reporting
date. Events after the reporting date that are indicative of conditions that arose after this date are dealt with by way of a note.
SIGNIFICANT ACCOUNTING JUDGEMENTS AND ESTIMATES
In the process of applying the Group’s accounting policies, management has made certain judgements, estimates and assumptions, apart
from those involving estimations, which have a significant effect on the amounts recognised in the financial statements.
The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date, that have a significant risk of
causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are discussed below.
STRUCTURED ENTITIES
OWNER-DRIVER COMPANIES
Various owner-driver companies exist in the Group. These entities were incorporated to support the distribution network of the Group and are
consolidated into the Group in accordance with IFRS 10.
Based on the contractual terms, the activities of these entities are being conducted on behalf of the Group according to its specific business
needs so that the Group obtains benefits from these entities’ operations. In addition, it was assessed that the Group controls each of these
entities as there is insufficient assets within these entities to allow each entity to finance its own activities without the support of the Group.
AD-IZINYOSI (RF) PROPRIETARY LIMITED AND ADBEE (RF) LIMITED
During the year, the Group facilitated the restructuring of their existing BEE vehicle, which was performed in line with the circular dated 28 May
2015. This has led to the formation of Ad-Izinyosi (RF) Proprietary Limited and AdBEE (RF) Limited, a company with instruments listed on the JSE.
Adcock Ingram considered the relevant activities of both entities, the Company’s involvement in facilitating the restructuring, the Company’s
protective rights in respect of the companies acting in accordance with their Memorandum of Incorporation; and the Company’s lack of
future financial exposure to the overall scheme. The conclusions was that in the Company’s judgement the Group does not have power over
the relevant activities of these two entities, nor benefit from the variable returns that would emanate from such entities. These entities are
therefore not consolidated into the Group.