Adcock Ingram Integrated Report 2018

ANNUAL FINANCIAL STATEMENTS 130 ADCOCK INGRAM  Integrated Report 2018 UNDERLYING CONCEPTS The financial statements are prepared on the going-concern basis, which assumes that the Group will continue in operation for the foreseeable future. The financial statements are prepared using the accrual basis of accounting whereby the effects of transactions and other events are recognised when they occur, rather than when the cash is received or paid. Assets and liabilities and income and expenses are not offset unless specifically permitted by an accounting standard. Financial assets and financial liabilities are only offset when there is a legally enforceable right to offset, and the intention is either to settle on a net basis or to realise the asset and settle the liability simultaneously. Accounting policies are the specific principles, bases, conventions, rules and practices applied in preparing and presenting financial statements. Changes in accounting policies are accounted for in accordance with the transitional provisions in the standard. If no such guidance is given, they are applied retrospectively. If after making every reasonable effort to do so, it is impracticable to apply the change retrospectively, it is applied prospectively from the beginning of the earliest period practicable. FOREIGN CURRENCIES The consolidated financial statements are presented in South African Rands (Rands), which is the Group’s presentational currency and the Company’s functional currency. Each foreign entity in the Group determines its own functional currency. FOREIGN CURRENCY TRANSACTIONS Transactions in foreign currencies are recorded at the rates of exchange ruling at the transaction date. FOREIGN CURRENCY BALANCES Monetary assets and liabilities denominated in foreign currencies are translated at the functional currency rate of exchange ruling at the reporting date. Exchange differences are taken to profit or loss. 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 (i.e. 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: “Exchange differences on translation of foreign operations”. 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, 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 • associate, Ayrton Drug Manufacturing Limited in Ghana, 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 fair value on the acquisition date, and the amount of any non-controlling interest in the acquiree. Annexure I – Accounting policies continued