O   FINANCIAL INSTRUMENTS
   

FAIR VALUE HIERARCHY

The classification of financial instruments and the fair value hierarchy are as follows:

Financial instruments Classification per IAS 39   2018
R’000		   2017
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 
R’000 		   2017
R’000		  
Cash and cash equivalents            
Cash at banks +1   308    261  
Bank overdraft +1   (2 500)   –