PPS Integrated Report 2021 191 | Notes to the Consolidated Financial Statements 37.5 Valuation of owner-occupied property, investment property and Assets held for sale The value of owner-occupied property, investment property, and assets held for sale 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 5.45% to 11.62% (2020: 7.57% to 12.04%), an exit capitalisation range of 10.25% to 11.25% (2020: 10.00% to 11.50%), a revenue escalation range of 3.93% to 10.76% (2020: 5.80% to 8.51%) and an expense escalation range of 5.00% and 11.00% (2020: 6.74% to 12.05%). Any change in these assumptions will impact the values of the buildings. Additional information is provided in Note 2, Note 3 and Note 4 of these financial statements. 37.6 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. Additional information is provided in Note 18 of these financial statements. 37.7 Valuation of retention scheme 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 10.9% (2020: 11.5%), and the turnover of staff participating in the scheme (nil) (2020: nil). Additional information is provided in Note 20 of these financial statements. 37.8 Discounting of lease liability Lease liabilities are discounted 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. Additional information is provided in Note 2 and Note 21 of these financial statements. 37.9 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 Group, even though it holds less than half of the economic interest in some of these funds. Additional information is provided in Note 16 of these financial statements. 37.10 Impairment of loan to PPS Mutual Assumptions used to determine the impairment of loan to PPS Mutual are unbiased and probabilityweighted and includes consideration of a range of possible outcomes. Time value of money is taken into account by the discounting of expected 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. Additional information is provided in Note 8 of these financial statements. 38.MANAGEMENT OF RISKS 38.1 General The PPS Boards have overall responsibility for the Group's systems of internal control and risk management. The Chief Executives and executive management are responsible for the management and implementation of the PPS Group Enterprise Risk Management Framework and Governance Frameworks.
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