The investment vehicle for the venture capital funds have the mandate of re-investing capital funds. The objective is to generate returns for the holder of shares in the form of dividends.

The total shareholding percentage is less than 20% and as such, no significant influence is exercised over the venture capital fund.

The investments in cell captives relate to investments held in the Guardrisk cell captive.

These investments are classified as financial assets and are measured at fair value through profit and loss due to it being equity investments.

The short-term loan relates to an interest free loan granted to Shelsley Proprietary Limited and is measured at fair value through profit and loss.

The following hierarchy is used to classify financial instruments for fair value measurement purposes:

Level 1 – Quoted prices (unadjusted) in active markets for identical assets or liabilities

Level 2 – Inputs other than quoted prices included within level 1 that are observable for the asset or liability either directly (that is, as prices) or indirectly (that is, derived from prices)

Level 3 – Inputs for the asset or liability that are not based on observable market data (unobservable inputs)

The level in the fair value hierarchy within which the fair value measurement is categorised in its entirety is determined on the basis of the lowest level input that is significant to the fair value measurement. The significance of an input is assessed against the fair value measurement in its entirety. If a fair value measurement uses observable inputs that require significant adjustment based on unobservable inputs, that measurement is a level 3 measurement.

Assessing the significance of a particular input to the fair value measurement in its entirety requires judgement, considering factors specific to the asset or liability.

Specific valuation techniques used to value financial instruments include:

• the fair value of the equity investments measured at fair value through profit and loss are determined based on a valuation of the net asset value attributable to the investments;
• the fair value of the short-term loan receivable is determined with reference to the market-related borrowing rate; and
• the fair value of the remaining financial instruments is determined using discounted cash flow analysis and price earnings (PE) ratios.

The assets disclosed below have been classified as level 3 financial instruments, i.e. the inputs are not based on observable market data. The carrying amount of all assets in the table below approximates the fair value of the assets.

Group fair value measurements using significant unobservable inputs (level 3):

The table below presents the movements for the year:

Investments in Venture Capital Funds and Investments in Cell Captive

The fair value of the equity investments measured at fair value through profit and loss are determined based on a valuation of the net asset value attributable to the investments, as management has deemed it representative of fair value.

The fair value of the short-term loan receivable is derived from the amortised cost, calculated using the borrowing rate for a similar instrument in an arms-length transaction.

The following table summarises the quantitative information about the significant unobservable inputs used in level 3 fair value measurements.

The finance department of the Group performs the valuations of the investments for financial reporting purposes, including level 3 fair values. The team reports directly to the CFO. Discussions of the valuation processes and results are held between the CFO and Group Finance at year-end to determine the fair value of investments unless there is an indication of impairment which will result in a write off of the investment at that point in time.