2019 Integrated Report

PPS INTEGRATED REPORT 2019 | 155 35.5 Valuation of owner-occupied property and investment property The value of the owner-occupied property and investment property depends on a number of factors that are determined using a number of assumptions. The assumptions used in determining the value was based on a yield range of 7.83% to 9.83% (2018: 8.50% to 10.25%). Any change in these assumptions will impact the values of the buildings. 35.6 Deferred tax asset Deferred tax assets are recognised for unused tax losses and on deductible temporary differences to the extent that it is probable that future taxable profits will be available against which they can be utilised. 35.7 Valuation of long-term incentive and retention schemes The cost of the benefits of the long-term incentive scheme depends on a number of assumptions used in calculating the present value under the projected unit credit method. The assumptions used in determining the charge to the Statement of Profit or Loss and Other Comprehensive income arising from these obligations include the expected growth in the apportionment account (rolling five-year average historical growth 10.3% (2018: 11.5%), the turnover of staff participating in the scheme (nil) (2018: nil) and the discount rate (an appropriate market-related yield curve as at the reporting date). Any changes in these assumptions will impact the charge to the Statement of Profit or Loss and Other Comprehensive income. The assumptions used in determining the charge to the Statement of Profit or Loss and Other Comprehensive income arising from obligations in terms of the Retention Scheme include the expected growth in the PPS Profit-Share Account (rolling five-year average historical growth 7.1% (2018: 16.7%), and the turnover of staff participating in the scheme (nil) (2018: nil). 35.8 Amortisation of lease liability Lease liabilities are amortised at each Group entity’s incremental borrowing rate. These rates are set at South African Banks’ Prime lending rate less 100 bps, which is a best estimate of the rate which Group entities would have to pay to borrow over a similar term, and with a similar security, the funds necessary to obtain an asset of a similar value to the right-of-use assets in a similar economic environment. 35.9 Consolidation of entities in which the group holds less than 50% The trustees have concluded that the Group controls, in the manner contemplated by IFRS, unit trusts managed by Professional Provident Society Investments Proprietary Limited, even though it holds less than half of the economic interest in some of these funds. 35.10 Impairment of loan to PPS Mutual Assumptions used to determine the impairment of loan to PPS Mutual are unbiased and probability-weighted and includes consideration of a range of possible outcomes. Time value of money is taken into account by the discounting of future losses to the reporting date at a risk-adjusted discount rate. Reasonable and supportable information is used about past events, current conditions and forecasts of future economic conditions.