ECIC IR 2023

ANNUAL Financial Statements for the year ended 31 March 2023

E

D

H

S

I

L I

N

B

2

0

A

0

T

S

1

E

E X P O R T C R E

L T D

O C

A S

C

R I

D I

F

T

A

I

N

H

S

T

U

U

R

O

A

S

N

F

C

O

E

N

C

O

O

I

R

T

P

A

O

R

Notes to the Financial Statements

5.1.1 Currency risk Currency risk is the risk arising from fair value and /or changes in future cash flows of financial instruments fluctuating from their expected values as a result of changes in exchange rates. This arises from a mismatch between the currencies of assets and liabilities of the Corporation. The Corporation is exposed to currency risk for transactions that are denominated in a currency other than the Corporation’s functional currency of US Dollar which is due to the Corporation’s revenues being denominated in US Dollar. To minimise the impact of currency risk, the Corporation matches the currency of liabilities with the currency of assets. The Corporation is exposed to fluctuations in the balances or transactions that are denominated in Rand. This is due to the Corporation’s functional currency being the US Dollar, though its operations are domiciled in South Africa. The Corporation’s exposure to Rand foreign currency risk at the reporting date was as follows:

2023 R’000

2022 R’000

Cash and cash equivalents

236 466

180 677

Financial assets at fair value and derivative instruments

2 589 009

2 587 404

Trade and other receivables Insurance contract liabilities

5 940

4 800

(17 684) (22 373) (40 537)

(5 463)

Lease liability

(140)

Trade and other payables

(46 582)

2 750 821

2 720 696

The exchange rates used is sourced from South African Reserve Bank and the following were applied:

US Dollar to SA Rand exchange rates: Closing rate

17,8139 16,9849

14,4705

Average rate 14,8540 A 10 percent depreciation or appreciation in the Rand against the US Dollar at the reporting date would have increased or decreased equity and profit or loss by amounts reflected below. The analysis assumes all other variables stay the same.

Profit/(loss) after tax

Equity

10% depreciation R’000

10% appreciation R’000

10% depreciation R’000

10% appreciation R’000

2023 2022

(231 533) (247 856)

288 321 305 528

367 432 390 713

(367 432) (390 713)

5.1.2 Interest rate risk Interest rate risk is the risk arising from fair value and/or future cash flows of a financial instruments fluctuating from their expected values as a result of changes in market interest rates. The Corporation has exposure to fixed‑rate financial assets whose value is impacted by changes in interest rates. The Corporation’s insurance liabilities and reinsurance assets are also impacted by changes in the interest rates because it provides insurance cover for loan agreements whose values are also impacted by changes in interest rates. The Finance, Investment and Insurance Committee continuously monitor this risk and advises the Board where a change in investment strategy is warranted. The Corporation’s fixed interest rate portfolio is managed by external fund managers who are continuously monitored.

YOUR EXPORT RISK PARTNER

48