Integrated Reports Senwesbel Consolidated Financial Statements 2018 - Page 80

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 16. 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. 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 IMPAIRMENT OF NON-FINANCIAL ASSETS The assessment of the recoverable amount and exposure of the Prodist Investments, loans and guarantees requires estimation and judgement around estimates and assumptions used, including: • The manner in which a restructuring plan may be decided upon and the effective implementation thereof to realis ́ՍمՔ)ͥѡ͕́Aɽ+$QɕͅѥمՔ͕쁅+$QЁɔѼɕѽ̸()M9]M 099U0%99 %0MQQ59QL$$)Mݕ͉1ѕIؼ