Senwesbel Consolidated Financial Statements | Page 46

9.1.4 Expected credit losses GROUP 2020 2019 R’m R’m R’m R’m R’m R’m R’m R’m Stage 1 Stage 2 Stage 3 Total Stage 1 Stage 2 Stage 3 Total Gross other loans receivable 513 1 074 50 1 637 564 1 004 22 1 590 Allowance for expected credit losses - (1) (12) (13) - (9) (3) (12) Net mortgage loans 513 1 073 38 1 624 564 995 19 1 578 Movements in stages during the year: Stage 1 to Stage 2 (166) 166 - - (157) 157 - - Stage 1 to Stage 3 - - - - (1) - 1 - Stage 2 to Stage 1 129 (129) - - 67 (67) - - Stage 2 to Stage 3 - (28) 28 - - (7) 7 - Total Movements (37) 9 28 - (91) 83 8 - Refer to note 24.1.2 Credit risk, for details regarding classification of accounts into stages and events leading to transfers between stages. 10. INVENTORY GROUP NOTES 2020 R’m 2019 R’m Merchandise and processed goods 10.1, 10.2 552 432 Consumables 29 22 Grain commodities 10.3, 10.4 62 155 Other commodities 10.6 239 - Balance at the end of the year 10.5 882 609 10.1 Included in merchandise is floor plan inventory of R137 million (2019: R56 million), which serves as security in terms of an agreement with the relevant supplier of farming equipment. 10.2 The merchandise inventory of R552 million (2019: R432 million) includes adjustments to net realisable value and provisions for obsolete stock to the value of R65 million (2019: R73 million). 10.3 Grain commodities represent grain purchased from producers. The price of such inventory is hedged on the South African Futures Exchange (Safex). Variance margins are also set off against these items. Consequently the carrying value is equal to the fair value thereof. 10.4 Grain inventory has been pledged as security for loans granted by financiers to the value of R45 million (2019: R135 million). A portion of KLK Landbou Ltd’s inventory balance has been pledged as security for bonds and finance granted by financiers, to the value of R150 million. 10.5 Inventory is valued as follows: GROUP 2020 R’m 2019 R’m VALUATION METHOD Merchandise and consumables 505 120 Weighted average cost price Mechanisation whole goods 315 334 Purchase price Grain commodities 62 155 Contract price and thereafter at fair value Balance at the end of the year 882 609 10.6 Other commodities consist of raisin and fuel inventory, which arose from the KLK Landbou Ltd business combination (refer to note 6.2). 45 SENWESBEL ANNUAL FINANCIAL STATEMENTS 2020 Senwesbel Limited Reg no: 1996/017629/06