ECIC IR 2023

ANNUAL Financial Statements for the year ended 31 March 2023

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Directors’ Report

Nature of business The Corporation is a self‑sustained, state‑owned, national export credit agency that is supervised and regulated by the Financial Sector Conduct Authority (FSCA) and the Prudential Authority (PA). The Corporation’s main business is to facilitate export trade and cross‑border investments between the Republic of South Africa (RSA) and other countries by providing political and/or commercial risk insurance on behalf of the Government of South Africa for such transactions. Share capital There has been no change in the authorised or issued share capital during the financial year. Corporate governance The Board of Directors embraces the principles of King IV and endeavours to comply with these recommendations as far as possible. The Corporation’s adherences to these principles are outlined in the Governance section of this report. Board of Directors The current directors are reflected on the General Information page. Executive management During the 2023 financial year, the following appointments were made: c Mr M Nkuhlu was appointed effective from 01 December 2022 as the CEO; and c Ms X Mpanza was appointed as the company secretary from 01 February 2023. Financial results The financial results of the Corporation are fully disclosed on pages 16 to 86. Dividends No dividend has been declared for the current and previous financial year in line with the Corporation’s dividend policy. Taxation status The Corporation pays income tax in terms of the Income Tax Act of 1962, as amended. The Corporation is also subject to and complies with all other South African taxes, including employees’ tax and Value Added Tax. As at year end, the Corporation was in good standing with respect to its tax responsibilities. During the budget speech in February 2022, the Minister of Finance announced that the corporate income tax rate will be reduced from 28 percent to 27 percent, for

companies with years of assessment ending on or after 31 March 2023. Both the current tax and deferred tax balances for the 2023 financial year have been calculated applying the reduced rate of 27 percent. Changes in accounting policies The accounting policies applied during the year ended 31 March 2023 are in all material respects consistent with those applied in the annual financial statements for the year ended 31 March 2022, as no material changes in accounting policies were effected in this financial year. The Corporation has no insurance exposure in Russia and Ukraine. Nevertheless, the supply disruptions triggered by the Russia/Ukraine war have further placed downward pressure on global growth with negative impact on many of the Emerging Market countries that the Corporation is doing business in. The Russia/Ukraine war and COVID‑19 has resulted in many countries experiencing high debt levels with some even defaulting on their obligations with the case in point being Ghana. Significant events As a consequence of the impact of macro‑economic environment mentioned above; the Corporation raised the provision for incurred but not reported claims reserve (IBNR) of $91 million (R1.6 billion) for four projects ensuing the default on debt by the Government of Ghana (GoG). For two of the four projects, a claim of $15.1 million was received during the current financial year which is still under consideration. The defaults by the GoG have increased the sovereign credit risk in terms of our in‑house country risk rating model from a level 4 to a level 5 thus resulting in a creation of the provision for unexpired risks (concentration risk reserve) amounting to $7.6 million (R129 million). Refer to note 14 for the detailed disclosure in this regard. These two factors resulted in the Corporation reporting an underwriting loss of R1.4 billion for the year ended 31 March 2023. The financial performance was further exacerbated by the foreign exchange losses reported of R612 million which are primarily driven by the depreciation of the South African Rand against the US Dollar from R14.4705 to R17.8139, therefore resulting into a net loss after tax of R1.5 billion, currency translation gain of R1.5 billion and total comprehensive loss of R40 million. Due to the loss reported in the current financial year, the deferred tax asset for tax losses has since increased from R45 million reported in the previous financial year to R109 million in the current financial year. Despite tax losses recorded over the two consecutive years, the Corporation has a track record of generating taxable profits in the previous years and is expected to generate Impact of macro‑economic environment in the operations

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