Notes to the summary financial statements continued for the year ended 31 March 2023 6. Fair value of financial instruments The calculation of fair value requires various inputs into the valuation methodologies used. The source of the inputs used affects the reliability and accuracy of the valuations. Signi cant inputs have been classi ed into the hierarchical levels in line with IFRS 13 – Fair Value Measurement, as shown below. Level 1: Quoted prices in active markets for identical assets or liabilities. Level 2: Inputs other than quoted prices that are observable for the asset or liability (directly or indirectly). Level 3: Inputs for the asset or liability that are unobservable. Fair value of instruments measured at fair value The fair values of the group’s nancial instruments that are measured at fair value are categorised as follows: Financial instrument Fair value 2023 ZAR’000 Fair value 2022 ZAR’000 Valuation method Level in fair value hierarchy Financial assets Investments held at fair value through pro t or loss 22 20 Unit trusts comprising quoted prices in a public market Level 2 Forward exchange contracts 1 350 – Fair value using forward exchange rates that are publicly available Level 2 Currency depreciation features 22 12 Discounted cash ow techniques Level 3 Financial liabilities Forward exchange contracts – 1 237 Fair value using forward exchange rates that are publicly available Level 2 Currency depreciation features relate to clauses in content acquisition agreements that provide the group with protection in the event of signi cant depreciation of the group’s functional currency relative to the currency of the content acquisition agreement. The fair value of currency depreciation features is measured through the use of discounted cash ow techniques using the LIBOR rate of 0.46%. Key inputs used in measuring fair value include the terms and benchmark rates contained in content acquisition agreements and average spot exchange rates prevailing at the relevant measurement dates. The carrying values of all other nancial instruments are considered to be a reasonable approximation of their fair values. Fair values are mainly determined using observable inputs, which re ect market conditions in their expectations of future cash ows related to the asset or liability at 31 March 2023. Overview Introduction Understanding Phuthuma Nathi Understanding MultiChoice SA MultiChoice SA performance Financial review Corporate governance review Shareholder information Phuthuma Nathi Investments (RF) Limited Integrated annual report 2023 77
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