Adcock Ingram Integrated Report 2018

ANNUAL FINANCIAL STATEMENTS 118 ADCOCK INGRAM  Integrated Report 2018 Annexure D – Post-retirement medical liability The Company and its subsidiaries operate a post-employment medical benefit scheme that covers certain retirees and one employee still in service. The liability is valued annually using the Projected Unit Credit method prescribed by IAS 19. The latest full actuarial valuation was performed on 30 June 2018. The following table summarises the components of net benefit expense recognised in the statement of comprehensive income, the funded status and amounts recognised in the statement of financial position. 2018 2017 R’000 R’000 Net benefit expense Current service cost 39 39 Interest cost on benefit obligation 1 510 1 612 1 549 1 651 Expected contributions within the next 12 months 41 42 Defined benefit obligation at 1 July (16 793) (16 994) Interest cost (1 510) (1 612) Current service cost (39) (39) Benefits paid 1 368 1 341 Actuarial gains on obligation 634 511 Defined benefit obligation at 30 June (16 340) (16 793) Assumptions % % The assumptions used in the valuations are as follows: Discount rate 9.40 9.40 CPI increase 6.20 6.50 Healthcare cost inflation 8.20 8.50 Expected retirement age 63 63 Post-retirement mortality table PA(90) ultimate table PA(90) ultimate table Value +1%/year -1%/year Sensitivity analysis R'000 R'000 R'000 The liability was recalculated to show the effect of: 2018 A one percentage point variance in the assumed rate of healthcare costs inflation (16 340) (18 025) (14 897) A one percentage point variance in the discount rate (16 340) (14 951) (17 987) A one year variance in the expected retirement age (16 340) (16 250) (16 435) 2017 A one percentage point variance in the assumed rate of healthcare costs inflation (16 793) (18 564) (15 282) A one percentage point variance in the discount rate (16 793) (15 333) (18 531) A one year variance in the expected retirement age (16 793) (16 710) (16 881)