Management Report 2020
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Management Report 2020
25. Risk management and financial instruments
The sales revenues of the Company and its subsidiaries are generated mainly from
the commercialization of agricultural commodities such as cotton, soybeans and corn;
products that are quoted in dollars on the Chicago Board of Trade - CBOT and Inter-
continental Exchange Futures US - ICE international exchanges. Therefore, the vola-
tility of the international price of the commodity and the exchange rate are market
risks to which the Company and its subsidiaries are exposed.
In addition, the Company and its subsidiaries engage in financing operations in the
financial market at pre-fixed or post-fixed rates. Therefore, the Company presents a
risk to the variation of interest rates in the indebtedness contracted with post-fixed
interest rates.
Fair values are determined based on market price quotations, where available, or, in
the absence of these, on the present value of expected cash flows. The fair values of
cash and cash equivalents, trade receivables, short-term debt and trade payables are
equivalent to their book values. The fair values of other long-term assets and liabilities
do not differ significantly from their book values.
The estimated fair value of the long-term loans of the parent company and consoli-
dated at December 31, 2020 was R$ 1,743,946 and R$ 2,024,347, respectively, calcu-
lated at prevailing market rates, considering the nature, term and risks similar to
those of the contracts recorded, and can be compared with the book value of R$
1,753,056 and R$ 2,039,736.
The hierarchy of fair values of financial assets and liabilities recorded at fair value on
a recurring basis was performed using the following criteria:
Level 1 - Prices quoted (unadjusted) in active markets for assets and liabilities
and identical
Level 2 - Inputs, except quoted prices, included in Level 1 that are observable for
the asset or liability, directly (prices) or indirectly (derived from prices)
Level 3 - Assumptions, for assets or liabilities, that are not based on observable
market data (unobservable inputs).
SLC
Agrícola
The table below presents the hierarchy of fair values of financial assets and liabilities
recorded at fair value on a recurring basis:
ASSETS
Fair value through profit or loss
Cash and cash equivalents
Short term financial Investments
Subtotal
Amortized cost
Trade accounts receivable
Receivables from related parties
Subtotal
Fair value of hedge instruments
Operations with Derivatives
Subtotal
TOTAL ASSETS
LIABILITIES
Loans and financing
Parent Company
Book value
12/31/2020
12/31/2019
Fair value
Level 2
12/31/2020
Level 2
12/31/2019
1,319,290
663
1,319,953
649,548
54,302
703,850
1,319,290
663
1,319,953
649,548
54,302
703,850
178,085
27,721
205,806
137,114
32,090
169,204
178,085
27,721
205,806
137,114
32,090
169,204
207,847
207,847
1,733,606
41,467
41,467
914,521
207,847
207,847
1,733,606
41,467
41,467
914,521
Liabilities at the amortized cost
2,050,748
Suppliers
Payables to related parties
Liabilities lease with related par-
933,146
1,310
1,557,727
773,124
2,763
2,061,685
933,146
1,310
1,544,998
773,124
2,763
ties
Third-party lease liability
1,722,168
893,214
899,805
597,651
1,722,168
893,214
899,805
597,651
Leases to pay
153,139
225
113,471
5,753,725
3,944,766
153,139
5,764,662
375,207
375,207
51,358
51,358
6,128,932
3,996,124
375,207
375,207
6,139,869
Other accounts payable
Subtotal
Fair value of hedge instruments
Derivatives payable
Subtotal
Total LIABILITIES
225
113,471
3,932,037
51,358
51,358
3,983,395
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