SENWES ANNUAL FINANCIAL STATEMENTS 2022
2.1.4 Fair value measurements The group measures financial instruments , such as derivatives and certain inventory , such as grain commodity at fair value at each statement of financial position date . Also , fair values of financial instruments measured at amortised cost are disclosed in note 7.1.2 , 7.2.1 , 7.2.2 , 7.2.3 and 7.2.5 .
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date . The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either :
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In the principal market for the asset or liability , or In the absence of a principal market , in the most advantageous market for the asset or liability . The principal or the most advantageous market must be accessible to the group .
The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability , assuming that market participants act in their economic best interest .
A fair value measurement of a non-financial asset takes into account a market participant ' s ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant who would use the asset in its highest and best use .
The group uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value , maximising the use of relevant observable inputs and minimising the use of unobservable inputs .
All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised within the fair value hierarchy , described as follows , based on the lowest level input that is significant to the fair value measurement as a whole :
Level 1 − Quoted ( unadjusted ) market prices in active markets for identical assets or liabilities . Level 2 − Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable . Level 3 − Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable .
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For assets and liabilities that are recognised in the financial statements on a recurring basis , the group determines whether transfers have occurred between levels in the hierarchy by reassessing categorisation ( based on the lowest level input that is significant to the fair value measurement as a whole ) at the end of each reporting period .
For the purpose of fair value disclosures , the group has determined classes of assets and liabilities on the basis of the nature , characteristics and risks of the asset or liability and the level of the fair value hierarchy as explained above .
2.2 Foreign currencies
2.2.1 Functional and presentation currency Items included in the financial statements are measured using the currency of the primary economic environment in which the business operates ( functional currency ). The financial statements are presented in South African rand , which is the company ’ s and group ’ s functional and presentation currency .
2.2.2 Foreign transactions Transactions in foreign currencies are converted at spot rates applicable on the transaction dates . Monetary assets and / or liabilities in foreign currencies are converted to rand at spot rates applicable at the reporting date . Exchange differences arising on settlement or recovery of such transactions are recognised in profit or loss .
2.2.3 Foreign operations The results and financial position of all group entities ( none of which has the currency of a hyper-inflationary economy ) that have a functional currency different to the group ’ s presentation currency , are translated into the presentation currency as follows :
• Assets and liabilities at the closing exchange rate at the reporting date ;
• Income and expense items are translated at the average exchange rates ( unless this average is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates , in which case income and expenses are translated at the dates of the transactions ); and
• All resulting exchange differences are recognised in other comprehensive income .
On disposal of foreign operations , the component of other comprehensive income relating to that particular foreign operation is reclassified out of other comprehensive income . Goodwill and fair value adjustments arising from the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and translated at the closing rate at the reporting date .
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