Agribel Annual Financial Review | Page 89

AGRIBEL HOLDINGS LTD FINANCIAL REVIEW 2021
3.8 Impairment of non-financial assets Impairment exists when the carrying value of an asset or cash generating unit exceeds its recoverable amount , which is the higher of its fair value less cost to sell and its value in use . The fair value less cost to sell calculation is based on available data from binding sales transactions in an arm ’ s length transaction of similar assets or observable market prices less incremental costs for disposing of the assets . The value in use calculation is based on a discounted cash flow model . The cash flows are derived from the budget for the next five years and do not include restructuring activities that the group is not yet committed to , or significant future investments that will enhance the asset ’ s performance of the cash generating unit being tested . The recoverable amount is most sensitive to the discount rate used for the discounted cash flow model as well as the expected future cash inflows and the growth rate used for extrapolation purposes .
3.9 Leases Determining the lease term of contracts with renewal and termination options – Group as lessee The group determines the lease term as the non-cancellable term of the lease , together with any periods covered by an option to extend the lease if it is reasonably certain to be exercised , or any periods covered by an option to terminate the lease , if it is reasonably certain not to be exercised . The Group has several lease contracts that include extension and termination options . The Group applies judgement in evaluating whether it is reasonably certain whether or not to exercise the option to renew or terminate the lease . That is , it considers all relevant factors that create an economic incentive for it to exercise either the renewal or termination . After the commencement date , the Group reassesses the lease term if there is a significant event or change in circumstances that is within its control and affects its ability to exercise or not to exercise the option to renew or to terminate ( e . g ., construction of significant leasehold improvements or significant customisation to the leased asset ).
Refer to Note 4 for information on potential future rental payments relating to periods following the exercise date of extension and termination options that are not included in the lease term .
Agribel Holdings Limited Reg nr : 1996 / 017629 / 06 AGRIBEL ANNUAL FINANCIAL REVIEW 2021
87