Management Report 2020
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SLC
Agrícola
Management Report 2020
j) Provisions
A provision is recognized, based on a past event, if the Group has a legal or
constructive obligation that can be reliably estimated, and it is probable that
an economic resource will be required to settle the obligation.
Provisions for tax, civil, environmental and labor risks | Provisions are made
for all disputes relating to legal proceedings for which an outflow of resources
is likely to be made to settle the litigation/obligation and a reasonable esti-
mate can be made. The evaluation of the probability of loss includes the eval-
uation of available evidence, the hierarchy of laws, available jurisprudence, the
most recent court decisions and their relevance in the legal system, as well as
the evaluation of external lawyers. The provisions are reviewed and adjusted
to consider changes in circumstances, such as applicable statute of limitations,
tax inspection findings or additional exposures identified based on new mat-
ters or court decisions.
k) Share-based payment
The Company has a Stock Option Plan and a Restricted Stock Plan for directors
and managers, under the administration of a management committee, created
by the Board of Directors. In the years ended December 31, 2020 and 2019,
the Company measured and recognized these benefits as an expense in ac-
cordance with CPC 10 (R1) (IFRS 2). Details of the Company's programs can
be found in note 27.
The fair value of share-based payment benefits at the grant date is recognized
as personnel expenses, with a corresponding increase in equity, for the period
in which the employees unconditionally acquire the right to the benefits. The
amount recognized as an expense is adjusted to reflect the number of shares
for which there is an expectation that the conditions of service and non-market
vesting conditions will be met, so that the amount finally recognized as an
expense is based on the actual number of awards meeting these conditions at
vesting date. For share-based payment awards with a non-market vesting con-
dition, the fair value at grant date is measured to reflect such conditions and
there is no change for differences between expected and actual benefits.
1) Financial income and financial expenses
Financial income includes interest income, foreign exchange variation in re-
ceivables and payables balances, changes in fair value of financial assets
measured at fair value through profit or loss, gains on hedge instruments that
are recognized in profit or loss and reclassifications of gains previously recog-
nized in other comprehensive income. Interest income is recognized in income
using the effective interest method.
Financial expenses include interest expense on loans, foreign exchange varia-
tion in accounts receivable and payable balances, changes in fair value of fi-
nancial assets measured at fair value through profit or loss, impairment losses
recognized on financial assets (except receivables), AVP- present value adjust-
ment of lease contracts and losses on hedge instruments that are recognized
in profit or loss. Loan costs that are not directly attributable to the acquisition,
construction or production of a qualifying asset are measured in income using
the effective interest method.
m) Earnings per share
The basic calculation of earnings per share is made by dividing net income for
the year, attributed to the holders of the parent company's common shares, by
the weighted average number of common shares outstanding during the year
in accordance with technical pronouncement CPC 41 (IAS 33). The calculation
of diluted earnings per share is the division of net income for the year adjusted
for any dividends or other items related to dilutive potential common shares
that have been deducted to determine profit or loss attributable to the holders
of the Company's common equity, any interest recognized in the period related
to the dilutive potential common shares, and any other changes in revenues or
expenses that would result from the conversion of the dilutive potential com-
mon shares into the weighted average number of common shares that would
be issued on the conversion of all dilutive potential common shares into com-
mon shares (Note 22.i).
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