Sanlam acquired an effective 28.7% interest in ACT Healthcare Assets (Proprietary) Limited, for R703 million. The acquisition agreement provides for a performance warranty in AfroCentric Health (Pty) Ltd, any breach of which, entitles Sanlam to claim a maximum additional 4.3% interest in the shares of ACT Healthcare Assets (Proprietary) Limited in satisfaction of such claim. AfroCentric has provided a performance warranty based on AfroCentric Health Group’s full year headline earnings (excluding certain items set out in the Subscription Agreement) for the period ended 30 June 2017 shall be no less than R330 million. Should a shortfall exist Sanlam has the option to elect cash or shares that is calculated per the acquisition agreement. In the event that the claim calculates at an amount in excess of 4.3%, Sanlam has a right to require AfroCentric Investment Corporation Limited to repurchase the shares owned by Sanlam at Sanlam’s initial cost plus interest at the 90 day deposit rate from the date of investment to the date of redemption. The Board do not expect such conditions to arise, but International Accounting Standards (IAS 32) dictates the disclosure of such circumstances under Non-current liabilities, rather than Capital and reserves. The contra entry has been included in a Conditional put option reserve. The conditional financial obligation is accounted for in terms of IAS 32.23, which requires the conditional financial obligation to be recognised at the redemption amount and does not take into account the probability of the conditional put option vesting (and, if so, the likelihood of it being exercised) and its fair value.