compressed_Annual Report 2016-ilovepdf-compressed

More documents

Recommendations

Info

attention; and A significant part of Fund’s business involves the acceptance and management of risk. Primary responsibility for risk management at an operational level rests with the executive management. The Fund’s risk management processes, of which the systems of internal, financial and operating controls are an integral part, are designed to control and monitor risk throughout the Fund. For effectiveness, these processes rely on regular communication, sound judgement and a thorough knowledge of the products and markets by the people closest to them. Management is tasked with integrating the management of risk into the day-to-day activities of the Fund. 4 FINANCIAL RISK MANAGEMENT 4.1 Financial risk factors The Fund’s activities expose it to a variety of financial risks: market risk (including cash flow interest rate risk and price risk), credit risk and liquidity risk. The organization’s overall risk management programme focuses on the unpredictability of consumer and financial markets and seeks to minimise potential adverse effects on the Fund’s financial performance. Risk management is carried out by management under policies approved by the board of directors. Management identifies, and evaluates risks in close co-operation with the Fund’s board of directors. The board provides written principles for overall risk management, as well as written policies covering specific areas, such as interest rate risk, credit risk, use non-derivative financial instruments, and investment of excess liquidity. a) Market risk Market risk includes currency risk, interest rate risk and equity price risk. From time to time financial (i) (ii) instruments are entered into to reduce this exposure to market risk Currency risk Currency risk is the risk that the financial instruments that are denominated in foreign currency will fluctuate due to changes in foreign exchange rates. The Fund is not exposed to currency risk at the reporting date as there were no financial instruments that are denominated in foreign currency. The Fund also operates in Swaziland only. Interest rate risk Interest rate risk is the risk that the fair value or future cash flows of a financial instrument or an insurance contract will fluctuate due to changes in market interest rates. The Fund continuously assesses the market expectations within South Africa and Swaziland interest rate environments. The Fund’s exposure to market risk for changes in interest rates relates primarily to the Fund’s investments. As part of the process of managing the Fund’s interest rate risk, interest rate characteristics of new investments are positioned according to expected movements in interest rates. The following financial instruments will be directly impacted by changes in market interest rates: financial assets at fair value through profit or loss, cash and cash equivalents, and undertaking liabilities. A change of 50 basis points in interest rates at the reporting date would have increased (decreased) profit or loss by the amounts shown below. This analysis assumes that all other variables remain constant. The monetary sensitivity analysis to changes in interest rates on assets is performed on the same basis as for <strong>2016</strong>: 42 ANNUAL REPORT 2017
Profit or loss and/or Equity <strong>2016</strong> 2015 Financial assets – At fair value through profit/ or loss (note 8) 325 172 655 295 432 697 Cash and cash equivalent (note 10) 234 452 272 308 269 665 Base assets 559 624 927 603 702 362 Increase of 50 basis points 2 798 125 3 018 512 Decrease of 50 basis points (2 798 125) (3 018 512) (iii) Price risk Equity price risk The Fund is currently exposed to equity price risk because at the statement of financial position date there were investments held by the Fund that were classified either as available for sale or at fair value through profit and loss. Commodity Price risk The Fund is not exposed to commodity price risk. (b) Credit risk Credit risk is the risk that counterparty to a financial instrument will fail to discharge an obligation and cause the Fund to incur a financial loss Credit risk is managed on a Fund basis. Credit risk arises from cash and cash equivalents and deposits with Funds and financial institutions, as well as credit exposures to oil companies for fuel levy receivables, including outstanding receivables and committed transactions. For banks and financial institutions, deposits are only placed with high credit quality financial institutions. As there is no independent rating, risk control E E to assesses the credit quality of it’s clients, taking into account its financial position, past experience and other factors, the Fund only deal with reputable and international oil companies. The banks and financial institutions on which deposits are placed by the Fund are: First National Bank Swaziland Limited Nedbank Swaziland Limited Standard Bank of Swaziland Swaziland Building Society Swaziland Development and Savings Bank African Alliance Swaziland Limited (Investment Managers) Stanlib Asset Management Limited (Investment Managers) Sanlam Investment Management (Investment Managers) The oil companies with which the Fund’s fuel levy receivables are collectable are: Chevron Oil Swaziland Limited Galp Energia Swaziland (Proprietary) Limited Engen Swaziland (Proprietary) Limited Total Swaziland (Proprietary) Limited Exel Petroleum Swaziland (Proprietary) Limited The board of directors does not expect any losses from non-performance by these counterparties. (c) Liquidity risk Liquidity risk is the risk that the Fund will encounter difficulty in raising funds to meet commitments associated with financial instruments and reinsurance contracts. Prudent liquidity risk management implies maintaining sufficient cash and marketable securities, the availability of funding through an adequate amount of committed credit facilities and the ability to close out market positions. Due to the dynamic nature of the underlying businesses, the Fund maintains flexibility in funding by maintaining availability under committed credit lines. SINCEPHETELO MVA FUND 43
Page 1 and 2: RT MOTOR VEHICLE ACCIDENT SINCEPHET
Page 3 and 4: SINCEPHETELO MVA FUND SINCEPHETELO
Page 5 and 6: 06 Vision, Values, Mission Statemen
Page 7 and 8: SMVAF PROFILE The Motor Vehicle Acc
Page 9 and 10: MR. MARTIN SIMELANE CHIEF FINANCIAL
Page 11 and 12: has indeed yielded positive results
Page 13 and 14: the Fund as it entered into additio
Page 15 and 16: SINCEPHETELO MVA FUND SINCEPHETELO
Page 17 and 18: INCOME + INVESTMENT INCOME VS TOTAL
Page 19 and 20: 2014 2015 2016 ASSETS LIABILITIES A
Page 21 and 22: ANNUAL FINANCIAL STATEMENTS for the
Page 23 and 24: BANKERS INVESTMENT MANAGERS Postal
Page 25 and 26: We have audited the annual financia
Page 27 and 28: REPORT OF THE BOARD OF DIRECTORS fo
Page 29 and 30: STATEMENT OF FINANCIAL POSITION at
Page 31 and 32: STATEMENT OF CASH FLOWS for the yea
Page 33 and 34: continue to be different from US GA
Page 35 and 36: on the present value of expected cl
Page 37 and 38: is impaired. The amount of the prov
Page 39 and 40: pension fund exceed the contributio
Page 41: Test Discounted outstanding claims
Page 45 and 46: NOTES TO THE ANNUAL FINANCIAL STATE
Page 47 and 48: NOTES TO THE ANNUAL FINANCIAL STATE
Page 49 and 50: Motor vehicle Freehold land and bui
Page 51 and 52: Newera Bonds The E35 832 876.71 bon
Page 53 and 54: Gratuity Gratuity is provided for i
Page 55 and 56: eserves are held, be consistent wit
Page 57 and 58: Movement in the defined benefit obl
Page 59 and 60: Designated at fair value Available
Page 61 and 62: Less than 1 month or available/paya
Page 63 and 64: 18.2 Year end balances arising from
Page 65 and 66: SINCEPHETELO MVA FUND 65
Page 67 and 68: SINCEPHETELO MVA FUND 67
Page 69 and 70: Designed and Produced by: BrandIn S

compressed_Annual Report 2016-ilovepdf-compressed

You also want an ePaper? Increase the reach of your titles

Delete template?

Save as template?