Adcock Ingram Integrated Report 2018

ANNUAL FINANCIAL STATEMENTS Notes to the Company annual financial statements continued 108 ADCOCK INGRAM  Integrated Report 2018 2018 2017 R’000 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 6 281 1 852 Dividends received Adcock Ingram Intellectual Property Proprietary Limited – 245 000 Adcock Ingram Limited India 15 759 5 387 15 759 250 387 Dividends Paid Adcock Ingram Limited 6 942 5 014 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: 2018 2017 Financial instruments Classification per IAS 39 R’000 R’000 Investment in Group Risk Holdings Proprietary Limited (1) Available-for-sale 1 937 1 906 Amounts owing by Group companies (2) Loans and receivables 265 154 327 742 Amounts owing to Group companies (2) Loans and borrowings 2 370 152 2 451 328 Bank (2) Loans and receivables 30 809 26 121 Bank overdraft (2) Loans and borrowings 250 000 – (1) Level 3: The value of the investments is based on Adcock Ingram's proportionate share of the net asset value of this company. (2) The carrying value approximates the fair value. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES The Company's principal financial liabilities comprise borrowings. 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 2018 2017 R'000 R'000 Cash and cash equivalents Cash at banks +1 308 261 Bank overdraft +1 (2 500) –