Page 44 - UKZN Foundation AR 2023

UNIVERSITY OF KWAZULU-NATAL FOUNDATION TRUST
Trust Deed number: IT 589/2003
NOTES TO THE ANNUAL FINANCIAL STATEMENTS (continued) for the year ended 31 December 2023
13 FiNANCiAL RiSK MANAGEMENT OBJECTiVES AND POLiCiES (continued)
Fair value estimation
Market values have been used to determine the fair value of financial assets at fair value through profit or loss and is based on quoted market prices at the statement of financial position date which have been summarised in the table below:
Financial assets at fair value through profit or loss: 31 December 2023
Equity Securities :
Investec Opportunity Fund 27four Balanced Prescient Fund
Financial assets at fair value through profit or loss: 31 December 2022
Equity Securities :
Investec Opportunity Fund
27four Balanced Prescient Fund
There were no transfers between levels 1 and 2 for recurring fair value measurements during the year. For transfers in and out of level 3 measurements see (iii) below.
The Trust’s policy is to recognise transfers into and transfers out of fair value hierarchy levels as at the end of the reporting period.
Level 1: The fair value of financial instruments traded in active markets (such as publicly traded derivatives, and equity securities) is based on quoted market prices at the end of the reporting period. The quoted market price used for financial assets held by the trust is the current bid price. These instruments are included in level 1.
Level 2: The fair value of financial instruments that are not traded in an active market (for example, over-the-counter derivatives) is determined using valuation techniques which maximise the use of observable market data and rely as little as possible on entity-specific estimates. If all significant inputs required to fair value an instrument are observable, the instrument is included in level 2.
Level 3: If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3. This is the
Level 1 Level 2 Level 3 RRR
163 750 689 130 037 217
Level 1 RRR
143 261 459 - - 113 694 228 - -
Level 2
Level 3
- -
- -
case for unlisted equity securities.
Specific valuation techniques used to value financial instruments include:
• the use of quoted market prices or dealer quotes for similar instruments
• for interest rate swaps - the present value of the estimated future cash flows based on observable yield curves
• for foreign currency forwards - present value of future cash flows based on the forward exchange rates at the balance sheet date
• for foreign currency options - option pricing models (e.g. Black-Scholes model), and
• for other financial instruments - discounted cash flow analysis.
All of the resulting fair value estimates are included in level 2 except for unlisted equity securities, a contingent consideration receivable and certain derivative contracts, where the fair values have been determined based on present values and the discount rates used were adjusted for counterparty or own credit risk.
Capital management
The capital of the Foundation comprises both restricted funds designated for specific purposes and unrestricted funds, being funds that can be employed by the Board of Trustees at its discretion.
Contingent liabilities
The Foundation does not have any contingent liabilities that warrant disclosure in terms of IAS 37.
42 UKZN FOUNDATiON ANNUAL REPORT 2023