Limpopo Gambling Board Final

LIMPOPO GAMBLING BOARD Financial Statements for the year ended 31 March 2023 29. Risk management (continued) Credit risk

Credit risk refers to the risk that a counter party will default on its contractual obligations resulting in financial loss to the entity. To mitigate credit risks, the entity has adopted a policy of only dealing with creditworthy parties. Credit risk with respect to trade and other receivables is limited due to our policy of not granting credit to third parties and also due to the fact the Limpopo Gambling Board is not a trading entity or profit orientated. Management manages the credit risk relating to staff loans by deducting payments due by employees monthly from their salaries. Our main source of income is through grants received from the Department of Economic Development, Environment and Tourism. Financial assets that potentially subject the entity to credit risk, consist principally of cash and cash equivalents and short term deposits. The entity’s cash and cash equivalents and short term deposits are placed with high credit quality financial institution. Market risk This is the risk that the fair value or future cash flows from a financial instrument will fluctuate as a result of the changes in market prices. Values in financial instruments may change, thus resulting in both potential gains and losses. The entity’s activities do not expose it to significant market risks. The entity’s activities expose it primarily to the risk of fluctuations in interest rate. Market risk exposures are measured using sensitivity analysis. A sensitivity analysis shows how surplus would have been affected by changes in the relevant risk variable that were reasonably possible at the reporting date. Interest rate sensitivity analysis The entity’s major source of revenue is government grants and to a lesser extent, interest income depending on cash equivalents held. A major expense is on salaries which are fixed for a financial year. The basis points increases or decreases, as detailed in the table below, were determined by Management and represent Management’s assessment of the reasonably possible change in interest rates. The sensitivity analysis below has been determined based on financial instruments exposure to interest rates at reporting date. As the entity does not have any instruments that affect net assets directly, the disclosure only indicates the effect of the change in interest rates on surplus. Interest rate risk is a risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates.

A change in the market interest at the reporting date would have increased / (decreased) the surplus for the year by the amounts below.

LIMPOPO GAMBLING BOARD 2022/23

181