SACAA Annual Report 2022_23

PART F I Annual Financial Statements Annual Financial Statements for the year ended 31 March 2023 Notes to the Annual Financial Statements 2023

2022

27. Risk management (continued) Interest rate risk Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The SACAA is exposed to interest rate risk as it invests funds in the money market at floating interest rates. At 31 March 2023, no derivative financial instruments were used to manage the SACAA’s exposure to interest rate risk. The SACAA has adopted a policy of investing the majority of surplus cash in call account investments and corporation for public deposit as a means to safeguard and mitigate interest rate risk. The risk is further managed through the fact that the surplus funds are invested in reputable financial institutions and corporation for public deposit. Credit risk The SACAA is exposed to credit risk, which is the risk of financial loss to the SACAA if a counterparty to a financial instrument fails to meet its contractual obligations. Credit risk consists mainly of cash deposits, cash equivalents, derivative financial instruments and

trade debtors and other receivables. The SACAA only deposits cash with major banks and corporation for public deposit with high quality credit standing and limits exposure to any one counter-party. Trade receivables comprise a widespread customer base. Management evaluated credit risk relating to customers on an ongoing basis. If customers are independently rated, these ratings are used. Otherwise, if there is no independent rating, risk control assesses the credit quality of the customer, taking into account its financial position, past experience and other factors. Individual risk limits are set based on internal or external ratings in accordance with limits set by management. The utilisation of credit limits is regularly monitored. Sales to retail customers are settled in cash or by credit cards. Where management considered debtors to be impaired, a provision for doubtful debts was raised. The COVID-19 outbreak caused a reduction in economic activity and severely impacted the aviation industry and the SACAA client base. This was taken into account when impairment of receivables were considered.

Financial assets exposed to credit risk at year end were as follows:

2023

2022

Financial instrument Cash and cash equivalents

470 929 556 68 923 459

338 881 270 62 602 113

Statutory receivables less unallocated receipts

Security deposits Staff advances Other receivables

7 739 538

7 497 342

257 222 75 500

168 297 113 220

547 925 275

409 262 242

218 I Annual Report 2022/23 I Annual Financial Statements