Public Sector

Notes to the Annual Financial Statements (continued)

for the year ended 31 December 2019

28. Financial instruments and risk management (continued)

The amounts disclosed are the contractual undiscounted cash flows due within 12 months and are equal to their carrying balances as the impact of discounting is not significant.

2019

Non-current liabilities Lease liabilities 24 Less than 1 to 2 Total Carrying 1 year years amount

- 278 553 278 553 278 553

Current liabilities Trade and other payables Lease liabilities 25 4 446 475

- 4 446 475 4 446 475 24 113 600 - 113 600 113 600 4 560 075 278 553 4 838 628 4 838 628

2018

Current liabilities Trade and other payables 25 3 469 473 Less than Total Carrying 1 year amount

- 3 469 473 3 469 473

Foreign exchange risk

The Institute transacts with other International Professional Bodies and is exposed to foreign exchange risk arising from various currencies, primarily with respect to the Pound Sterling. Foreign exchange risk arises from investment and other commercial transactions.

The Institute’s risk management objective is to manage foreign exchange risk related to foreign denominated cash flows. The Institute is exposed to currency risk related to changes in rates of exchange between the Pound Sterling and the Botswana Pula. A significant change in the currency exchange rate between the Pound Sterling and the Botswana Pula could have a material effect on the Institute’s surplus. There are no open forward cover contracts.

The Institute is exposed to currency risk through trade receivables, trade payables and certain bank accounts denominated in Pound Sterling as shown below: Exposure in Pula

The net carrying amounts, in Pula, of the various exposures, are denominated in the following currencies. The amounts have been presented in Pula by converting the foreign currency amounts at the closing rate at the reporting date:

Current assets: Trade and other receivables Cash and cash equivalents

Current liabilities: Trade and other payables Net Pula exposure 2019 2018 P P

930 436 1 037 563 3 278 533 2 866 710

(3 051 457) (2 665 632) 1 157 512 1 238 641

Exposure in foreign currency amounts

The net carrying amounts, in foreign currency of the above exposure was as follows: GBP exposure:

Current assets: Trade and other receivables Cash and cash equivalents

Current liabilities: Trade and other payables Net GBP exposure

Exchange rates

Pula per unit of foreign currency: GBP

69 695 78 014 245 581 215 547

(228 572) (200 428) 86 704 93 133

13.3501 13.2997

Foreign currency sensitivity analysis

The following information presents the sensitivity of the institute to an increase or decrease in the respective currencies it is exposed to. The sensitivity rate is the rate used when reporting foreign currency risk internally to key management personnel and represents management’s assessment of the reasonably possible change in foreign exchange rates. The sensitivity analysis includes only outstanding foreign currency denominated amounts and adjusts their translation at the reporting date. No changes were made to the methods and assumptions used in the preparation of the sensitivity analysis compared to the previous reporting period.

Notes to the Annual Financial Statements (continued)

for the year ended 31 December 2019

The strengthening of GBP against the Pula by 10% at 31 December 2019, would have had an approximate positive impact of P115 751 (2018: P 123 864) on the institute’s surplus, with all other variables held constant. A 10% weakening of the GBP against the Pula would have had the equal but opposite effect on the surplus to the amounts disclosed above, on the basis that all other variables remain constant.

Interest rate risk

Financial instruments which are sensitive to interest rate risk are cash and cash equivalents. Interest rates applicable to cash and cash equivalents fluctuate with movements in the Botswana prime interest and are comparable with rates currently available in the market.

Financial instruments subject to interest rate risk are summarised as follows:

Interest rate per annum

Stanlib Botswana Money Market fund 3.96% 4.30% 14 636 299 12 034 938

An increase of 50 basis points in interest rates during the reporting period would have resulted in an increase/decrease in the Institute’s surplus P 73 181 (2018: P 60 175) summarised as follows:

Stanlib Botswana Money market fund 73 181 60 175

A 50 basis point decrease in interest rates during the reporting period would have an equal but opposite effect on the reported surplus P73 181 (2018: P60 175) to the amounts disclosed above, on the basis that all variables remain constant.

2019 2018 2019 2018 P P

29. Contingent liabilities

The Council confirms that as at the reporting date there were no contingent liabilities which required disclosure.

30. Events after the reporting period

There were no material events that occurred after the end of the reporting period that require adjustment to the statement of profit or loss and other comprehensive income or the statement of financial position, that require disclosure or adjustment in the annual financial statements.

31. Contractual capital commitments

The Council of the Institute confirms that there were no significant contractual capital commitments as at the reporting date which require disclosure.

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