Integrated Reports Senwes Financial Review 2018 - Page 34

FINANCIAL REVIEW 34 6. LOANS AND OTHER RECEIVABLES 7. INVENTORY Represent debtors for financing of mortgage loans (note 6.1) granted over varying terms of up to 120 months. The underlying asset serves as security for the loans/agreements. Interest rates are market-related and can be variable or fixed, depending on the specific agreement. GROUP COMPANY 2018 R’m 2017 R’m 2018 R’m 2017 R’m Gross investment in mortgage loans 2 023 1 930 2 023 1 930 Less: Unearned finance income (641) (625) (641) (625) Carrying amount 1 382 1 305 1 382 1 305 8 (303) (274) (303) (274) 6.1 1 079 1 031 1 079 1 031 Notes Less: Current portion Total loans and other receivables 6.1 Mortgage loans GROUP COMPANY 2018 R’m 2017 R’m 2018 R’m 2017 R’m Within one year 303 274 303 274 After one year but not more than five years 631 608 631 608 More than five years Carrying amount 448 423 448 423 1 382 1 305 1 382 1 305 Less: Current portion (303) (274) (303) (274) Total 1 079 1 031 1 079 1 031 6.1.1 TERMS AND CONDITIONS Mortgage loans are repayable over two to ten years, secured mainly by first bonds over property. The interest rates are market related, depending on the specific agreement. 6.1.2 PROVISION FOR IMPAIRMENT The provisions for impairment the loans receivable forms part of the short-term trade and other receivables under note 8. Please refer to note 8.5 since the provision for impairments forms part of the portfolio impairment provision. 6.1.3 FAIR VALUE As indicated in note 6.1.2 the impairment provisions forms part of trade and other receivables as disclosed in note 8 and the longterm loans receivable needs te be read in conjuction with note 8 to get to the fair value as the carrying value as reflected in this note is not the fair value. FINANCIAL REVIEW GROUP Merchandise Notes 2018 R’m 2017 R’m 2018 R’m 2017 R’m 7.1; 7.2 723 525 639 460 19 3 19 2 7.3; 7.4 253 146 51 63 7.5 995 674 709 525 Consumables Grain commodities Balance at the end of the year COMPANY 7.1 Included in merchandise is floor plan inventory of R184 million (2017: R160 million), which serves as security in terms of an agreement with the relevant supplier of farming equipment. 7.2 The merchandise inventory in company of R639 million (2017: R460 million) and group of R723 million (2017: R525 million) include adjustments to net realisable value and provisions for obsolete stock to the value of R89 million (2017: R33 million) for group and R85 million (2017: R29 million) for company. 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. 7.3 7.4 7.5 Grain inventory has been pledged as security for loans granted by financiers to the value of R163,2m (2017: Rnil). Inventory is valued as follows: GROUP 2018 R’m 2017 R’m Valuation method Merchandise and consumables 108 92 Mechanisation whole goods 634 436 Purchases price 253 146 Contract price and thereafter at fair value 995 674 Grain commodities Balance at the end of the year Weighted average cost price