Page 153 - DUT Annual Report 2020

DURBAN UNIVERSITY OF TECHNOLOGY
NOTES TO THE CONSOLIDATED ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2020
22. RISK MANAGEMENT (continued) 22.1 Market risk (continued)
As at December 31, 2020, if interest rates on the fixed term deposits had been entered into at rates 1% higher/lower, the surplus for the year would have been R 35 629 040 (2019: R 29 617 909 ) higher/lower as a result of higher/lower interest income.
The University has a number of receivables (i.e. student fees) where interest rates charged are at a fixed rate of 2% per month. No interest was charged in 2020 due to the effects of COVID-19. The amounts owed by staff are negligible.
The University holds a substantial amount of interest-bearing investments and interest earning bank deposits. Interest risks relating to the University’s investments are managed and monitored by the Investment Committee and management in the same manner as outlined above.
The following tables demonstrate the sensitivity of the University’s financial assets and financial liabilities that are subject to interest rate risk to a reasonable possible change in interest rates, with all other variables held constant.
Interest rate changes on basis points (BP)
December 31, 2020
Local capital market interest bearing Investments
December 31, 2019
Local capital market interest bearing Investments
Interest rate changes on basis points (BP)
December 31, 2020
Money market and call deposits Cash and cash equivalents
December 31, 2019
Money market and call deposits Cash and cash equivalents
Foreign currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates. The University enters into foreign currency transactions sporadically through the period however; its exposure to foreign currency risk is negligible on all financial instruments except the following investments.
The only area where the University is exposed to foreign exchange risk at financial position date is in the non- current investments which include international market unit trusts which are exposed to the US dollar. The impact of a 5% increase/decrease in exchange rates with all other variables held constant on the valuation of the investments at reporting date would be R6.167m (2019: R5,420m) higher/lower.
DURBAN UNIVERSITY OF TECHNOLOGY ANNUAL REPORT 2020
Impact of interest changes on funds employed in R’ millions
-200BP
-100BP
-50BP
50BP
100BP
200BP
(2. 24)
(1. 12)
(0. 06)
0.06
1.12
2.24
(1. 81)
(0. 9)
(0. 05)
0.05
0.9
1.81
Impact of interest changes on net surplus in R’ millions
-200BP
-100BP
-50BP
50BP
100BP
200BP
(71. 53)
(35. 77)
(17. 88)
17.88
35. 77
71. 53
(0.17)
(0.09)
(0.04)
0.04
0.09
0.17
(59. 24)
(29. 62)
(1. 48)
1.48
29.62
59.24
(0. 52)
(0. 26)
(0. 01)
0.01
0.26
0.52
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