Adcock Ingram Integrated Report 2018

ANNUAL FINANCIAL STATEMENTS 134 ADCOCK INGRAM  Integrated Report 2018 FINANCIAL ASSETS INITIAL RECOGNITION AND MEASUREMENT Financial assets within the scope of IAS 39 are appropriately classified as financial assets at fair value through profit or loss, loans and receivables, held-to-maturity investments, available-for-sale financial assets, or as derivatives designated as hedging instruments in an effective hedge. The Group determines the classification of its financial assets at initial recognition. The Group’s classification of financial assets is as follows: Description of asset Classification Amounts owing by Group companies* Loans and receivables Trade and other receivables Loans and receivables Cash and cash equivalents Loans and receivables Investments Available-for-sale Other financial assets Loans and receivables/Available-for-sale * Relates to Adcock Ingram Holdings Limited. All financial assets are recognised initially at fair value plus, in the case of instruments not at fair value through profit or loss, directly attributable transaction costs. SUBSEQUENT MEASUREMENT The subsequent measurement of financial assets depends on their classification, as follows: Loans and receivables Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. After initial measurement, such financial assets are subsequently measured at amortised cost using the effective interest rate method, less impairment. Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the effective interest rate. The effective interest rate amortisation is included in finance income in the statement of comprehensive income. The losses arising from impairment are recognised in profit or loss in fixed and administrative expenses. Available-for-sale financial assets Available-for-sale financial assets could include equity investments. Equity investments classified as available-for-sale are those which are neither classified as held for trading nor designated as fair value through profit or loss. After initial measurement, available-for-sale financial assets are subsequently measured at fair value with unrealised gains and losses recognised as other comprehensive income until the investment is derecognised, at which time the cumulative gain or loss is recognised in fixed and administrative expenses. DERECOGNITION Financial assets or parts thereof are derecognised when: • the right to receive the cash flows has expired; or • the Group transfers the right to receive the cash flows, and also transfers either all the risks and rewards, or control over the asset. When the Group has transferred its rights to receive cash flows from an asset and has neither transferred nor retained substantially all the risks and rewards of the asset nor transferred control of the asset, the asset is recognised to the extent of the Group’s continuing involvement in the asset. In that case, the Group also recognises an associated liability. The transferred asset and the associated liability are measured on a basis that reflects the rights and obligations that the Group has retained. Continuing involvement that takes the form of a guarantee over the transferred asset is measured at the lower of the original carrying amount of the asset and the maximum amount of consideration that the Group could be required to repay. Impairment of financial assets The Group assesses at each reporting date whether there is any objective evidence that a financial asset or a group of financial assets is impaired. A financial asset or a group of financial assets is deemed to be impaired if, and only if, there is objective evidence of impairment as a result of one or more events that has occurred after the initial recognition of the asset (an incurred “loss event”) and the loss event has an impact on the estimated future cash flows of the financial asset or the group of financial assets that can be reliably estimated. Evidence of impairment may include indications Annexure I – Accounting policies continued