Page 337 - SAMRC Annual Report 2024-2025

FINANCIAL INFORMATION

ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2025
NOTES TO THE ANNUAL FINANCIAL STATEMENTS

(CONTINUED)

49. Risk management

Liquidity risk
The entity’s risk to liquidity is a result of the funds available to cover future commitments. The entity manages
liquidity risk through an ongoing review of future commitments and credit facilities. Trade and other payables are
due within 12 months and equal their carrying balances as the impact of discounting is not significant.
SAMRC’s primary source of income is government grants and contractual income, funds receivable is estimated
when preparing the MTEF. Budgets are prepared for each contract and spend is monitored on an ongoing basis
to ensure the liquidity of the entity.

Credit risk
This is the risk that one party to a financial instrument will cause a financial loss for the other party by failing to
discharge an obligation. Management has a debtors policy in place, and this makes provision for credit evaluation
for customers requiring credit above R1 million. Investments are allowed only in liquid securities and only with
the South African Reserve Bank.
Contract work constitutes a significant portion of the SAMRC’s income, and the major exposure is delays in
finalising contracts, and disputes in terms of whether or not the outputs have been produced. A certain number
of contracts are started and paid on a reimbursive basis, and this poses a risk if the funder is not satisfied with
the outputs.

The SAMRC operates internationally and is exposed to foreign exchange risk arising from various currency
exposures, primarily with respect to the US dollar; GBP and the Euro. SAMRC receives substantial funding from
the UK; USA and Europe, as a result its statement of financial position can be affected by movements in the
US dollar; GBP and Euro. Foreign exchange risk arises from future commercial transactions, recognised assets
and liabilities and net investments.
Due to uncertainties in respect of when cash will be received from overseas, SAMRC does not hedge foreign
exchange fluctuations.
Approximately 12% of SAMRC’s Trade and funder/grant debtors (R11,299,635) are exposed to currency risk
compared to 13% last year (R11,884,443).
SAMRC’s project office does a scenario calculation looking at how much would be lost if there was an unfavourable
currency change. On the basis of this outcome, it will be decided whether or not to proceed with a particular project.

Market risk
Interest rate risk
In respect of income-earning financial assets interest-bearing financial liabilities, the table below indicates their
average effective interest rates at the reporting date and the periods in which they mature.

SAMRC ANNUAL REPOR T 2025-26 335