Page 98 - Stellar IAR2015

NOTES TO THE ANNUAL FINANCIAL STATEMENTS (CONTINUED)32. FAIR VALUE INFORMATION (Continued)Valuation processed used to derive level 3 fair valuesThe Board of Directors have approved the valuation methodologies as set out in the Accounting Policies note 1.5. The Company receives reports from Investment Entities on at each reporting date, either in the form of audited nancial statements or unaudited management accounts. These are then used in the primary valuation techniques used to determine fair value or in the secondary valuation techniques used in the form of a reasonability checks.The valuation techniques and inputs used for each investment held at fair value have been detailed in note 3.Sensitivity analysis of level 3 inputsThe table below summarises the sensitivity of the investments classi ed as level 3 measurements:Primary valuation technique VWAP adjusted for Market PremiumAdjusted market valueDiscounted cash owsPrice to bookNet asset valueNet asset valueReasonably Signi cant possibleTorre Industries LtdMine Restoration Investments LtdTellumat (Pty) LtdCadiz Holdings LtdIntegrated Equipment Rentals (Pty) LtdPraxis Financial Services (Pty) LtdTorre Industries LtdFair value as at 30 November 2015 900 83314 026100 119134 390--unobservable inputs Market PremiumLack of liquidity discountTarget debt/equity ratio: Beta: Unsystematic risk premium: Terminal growth rate:NAV discountn/an/aInput/s (range)16.8%-20%10.90% 0.61-2% 5-7% -29%n/an/aincrease / (decrease) 38 572 / (38 572)1 722 / (1 722)26 702 / (8 457) 22 672 / (4 741)27 835 / (6 805) 24 376 / (4 215) 9 498 / (9 498)n/an/aTorre has been valued using the price of recent transactions, which has been adjusted downwards for the change in the 30-day VWAP of Torre shares between the date of the rm intention announcement (6 July 2015) at R4.46 per Torre share and the close of the nancial reporting period (30 November 2015) at R4.40 per Torre share. The reasonably possible change in fair value (holding all other variables constant) was determined with reference to an adjustment of a 5% increase / (decrease) to the Market Premium.Mine Restoration Investments LtdThe fair value of the investment has been determined using an adjusted market value. The reasonably possible change in fair value (holding all other variables constant) was determined with reference to an adjustment of a 10% decrease / (increase) to the liquidity discount.94 | STELLAR CAPITAL PARTNERS