AGRIBEL HOLDINGS LTD FINANCIAL REVIEW 2021
3.1 Equity-settled share-based payments The expense is determined by using the market value , as traded on the ZARX exchange , of the shares on grant date , adjusted with the present value of dividends not entitled to . The share-based payment expense will be recognised over the vesting period . The vesting period includes the employment conditions and performance conditions ( not market related ) attached to an award . The expense will therefore be recognised , with corresponding increase in capital reserves in equity , and spread over the period from the grant date to the vesting date . The length of this period will vary from tranche to tranche . The accumulated expense recognised is the group ' s best estimate of the number of shares which will ultimately vest .
3.2 Fair value of financial instruments Where the fair value of financial assets and financial liabilities recorded in the statement of financial position cannot be derived from active markets , they are determined using valuation techniques including the discounted cash flows model . The inputs to these models are taken from observable markets where possible , but where this is not feasible , a degree of judgement is required in establishing fair values . The judgements include considerations of inputs such as liquidity risk , credit risk and volatility . Changes in assumptions about these factors could affect the reported fair value of financial instruments . The key assumptions used for estimating the fair value of financial instruments are disclosed in note 21.5 , Fair value measurements .
3.3 Impairment of financial assets Refer to note 11.5 for the detailed framework regarding impairment of financial assets .
For decision framework on loans receivable , refer to note 7.1.2 .
3.4 Inventory impairment provision Inventory is valued at the lower of cost and net realisable values . A provision is raised against inventory according to the nature , condition and age and net realisable value of inventory . For the carrying value of provision for slow moving inventory refer to note 10 . Specific factors that could impact the net realisable values of inventory is also considered . These could include : Strengthening of the rand against the US dollar ; Competitor prices ; Market share ; and Large volumes of inventory on hand
3.5 Taxes Deferred tax assets are recognised for all unused tax losses to the extent that it is probable that taxable profit will be available against which the loss can be utilised . Uncertainties exist with respect to the interpretation of complex tax regulations , changes in tax laws , and the amount and timing of future taxable income . Significant management judgement is required to determine the amount of deferred tax assets that can be recognised , based upon the likely timing and level of taxable future profits together with future tax planning strategies . For the carrying value of deferred tax refer to note 18.2 .
3.6 Provision for non-compliance with pre-season grain contracts The calculations are based on the following key assumptions :
Default rate on current deliveries extrapolated to the total extrapolated ; A fixed recovery rate on defaults ; and Compensating financial instruments .
For the carrying value of non-compliance provision refer to note 19 .
3.7 Useful life and residual value of property , plant and equipment The residual values , useful lives and methods of depreciation of property , plant and equipment are reviewed at each reporting date and adjusted prospectively , if appropriate . This review takes into account the location , condition and nature of the asset .
86 AGRIBEL ANNUAL FINANCIAL REVIEW 2021 Agribel Holdings Limited Reg nr : 1996 / 017629 / 06