Page 66 - SABN AR 2021

The following table details the Company’s sensitivity to a 10% increase or decrease in the South African rand against the relevant foreign currencies with all other variables constant. The sensitivity rate used is 10% and represents management’s, assessment of the reasonably possible change in foreign exchange rates. The sensitivity analysis includes paper and inventory acquisitions, foreign contract recoveries and management services. The translation of these items are then adjusted at 31 March for a 10% change in the euro, British pound and US dollar rates. A positive number indicates an increase in the pre-tax profit where the rand weakens against the relevant currency, whereas a negative number indicates a decrease in the pre-tax profit.
R’000
Balance at year-end
10% devaluation
10% revaluation
70 695
(7 066)
7 066
1 184
(118)
118
90
(9)
9
14
(1)
1
2021
Euro Paper acquisitions Euro Inventory acquisitions
British pound US dollar
2020
Inventory acquisitions Inventory acquisitions
Euro Paper acquisitions Euro Inventory acquisitions
25. Fair value information
86 857 4 293
(8 686)
(429)
8 686 429
The directors of the Company are of the opinion that the book value of financial instruments approximates fair value. The fair value of financial liabilities and assets for disclosure purposes is estimated by discounting the future contractual cash flows at the current market interest rate that is available to the SABN for similar financial instruments. Financial instruments consist of foreign exchange contract liabilities, and are accounted for through the profit and loss statement.
Fair value hierarchy
The SABN uses the following hierarchy for determining and disclosing the fair value of financial instruments by the valuation technique:
Level 1: Level 2: Level 3:
Quoted unadjusted prices in active markets for identical assets or liabilities that the Company can access at measurement date.
Inputs other than the quoted and adjusted prices included in Level 1 that are observable for the asset or liability either directly or indirectly.
Unobservable inputs for the asset or liability.
The carrying amount of the following financial assets and liabilities is considered a reasonable approximation of fair value:
– cash and cash equivalents;
– trade and other receivables; and – trade and other payables.
66 Annual Report 2021
South African Bank Note Company (RF) Proprietary Limited