2022 AVBOB Integrated Annual Report - FINANCIALS

1151 5 FINANCIAL STATEMENTS Continued AVBOB MUTUAL ASSURANCE SOCIETY AND ITS SUBSIDIARIES NOTES TO THE SUMMARISED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2022 (continued) SOCIETY GROUP 2022 2021 2022 2021 R 000 R 000 R 000 R 000 10. LEASES Right-of-use assets and lease liabilities: Property RIGHT-OF-USE-ASSETS Carrying value at the beginning of the year 67 492 54 749 99 057 82 612 Cost 119 780 78 389 178 175 118 479 Accumulated depreciation ( 52 288) ( 23 640) ( 79 118) ( 35 867) Additions 32 302 41 391 49 156 59 696 Depreciation ( 29 986) ( 28 648) ( 44 197) ( 43 251) Carrying value at the end of the year 69 808 67 492 104 016 99 057 LEASE LIABILITIES: RIGHT-OF-USE ASSETS 78 299 75 619 116 791 111 208 Non-current liability 53 388 49 265 79 613 72 794 Current liability 24 911 26 354 37 178 38 414 29 986 28 648 44 197 43 251 Interest expense 6 576 6 776 9 643 10 463 11. INVESTMENTS IN SUBSIDIARIES Unlisted Shares at cost 95 058 95 058 - - Fair value adjustment 419 942 383 942 - - Directors' valuation (Non-current asset) 515 000 479 000 - - Directors' valuation of subsidiaries: AVBOB Funeral Service Limited 374 000 332 000 - - AVBOB Industries Limited 141 000 147 000 - - 515 000 479 000 - - Amounts recognised in the statements of financial position: Depreciation charge on right-of-use assets: lease properties The total cash outflow for leases in 2022 was R36,2 million (2021: R34,3 million). Amounts recognised in the statements of comprehensive income: The fair values of investments in subsidiaries are based on the weighted average cost of capital (WACC) of each subsidiary, which are calculated based on a gross risk-free interest rate, an assumed equity risk premium, a market assessed risk factor (beta), and an allowance for subordinated debt on a market value basis. The market assessed risk factor (beta) captures the market’s view of the effect of all types of risk on the subsidiaries' operations, including operational and other non-economic risk. The recoverable amount of a subsidiary is determined based on an income approach calculation. These calculations use cash flow projections based on approved financial budgets covering a five-year period. Cash flows beyond the five- year period are extrapolated using the estimated growth rates.