Adcock Ingram Integrated Report 2018

ANNUAL FINANCIAL STATEMENTS 132 ADCOCK INGRAM  Integrated Report 2018 Upon loss of significant influence over the associate or 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 associate or joint venture upon loss of significant influence or joint control and the fair value of the retained investment and proceeds from disposal is recognised in profit or loss. Where an equity accounted investment’s reporting date differs from the Group’s, the joint venture and/or associate prepares financial results for the same financial 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. The year-end of the associate, Ayrton Drug Manufacturing Limited is June. 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 depreciationmethod applied, are changes in the accounting estimate and accounted for prospectively. The following useful lives have been estimated: Freehold land Not depreciated Freehold buildings – general purpose 40 years – specialised 20 – 50 years Leasehold improvements The shorter of the lease term of the useful life Plant, equipment and vehicles 3 – 15 years Furniture and fittings 3 – 15 years Computer equipment 3 years Assets in the course of construction are carried at cost, including professional fees, less any impairment loss. When these assets are ready for its intended use, it is transferred into the appropriate category at which point depreciation commences on the same basis as on other property, plant and equipment. An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected from its use. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in profit or loss in the year the asset is derecognised. GOODWILL AND INTANGIBLE ASSETS GOODWILL Goodwill is initially measured at cost, being the excess of the consideration transferred, the amount of any non-controlling interest and in a business combination achieved in stages, the acquisition date fair value of any previously held equity interest in the acquiree, over the fair value of the acquiree’s net identifiable assets acquired and liabilities assumed. If this consideration is lower than the fair value of the net assets of the subsidiary acquired, the difference is recognised in profit or loss. Goodwill relating to subsidiaries is recognised as an asset and is subsequently measured at cost less accumulated impairment losses. A cash-generating unit (CGU) is the smallest identifiable group of assets that generates cash inflows that are largely independent of the cash inflows from other assets or group of assets. Where goodwill forms part of a CGU and part of the operation within that unit is disposed of, the goodwill associated with the operation disposed of is included in the carrying amount of the operation when determining the gain or loss on disposal of the operation. Goodwill disposed of in this circumstance is measured based on the relative values of the operation disposed of and the portion of the CGU retained. Annexure I – Accounting policies continued