Investor Presentaiton
36
ANNUAL FINANCIAL STATEMENTS KEY MANAGEMENT ASSUMPTIONS CONTINUED
Consolidation of entities
These financial statements are the separate financial statements
of Standard Bank Namibia. The company is exempted from the
preparation of consolidated financial statements as the company
is a wholly-owned subsidiary of SBN Holdings Limited, a
Namibia-incorporated company which produces consolidated
financial statements available for public use.
Computer software intangible assets
The company reviews its assets under construction and assets
brought into use for impairment at each reporting date and tests
the carrying value for impairment whenever events or changes in
circumstances indicate that the carrying amount (or components
of the carrying amount) may not be recoverable. These
circumstances include, but are not limited to, new technological
developments, obsolescence, changes in the manner in which
the software is used or is expected to be used, changes
in discount rates, significant changes in macroeconomic
circumstances or changes in estimates of related future cash
benefits. The impairment tests are performed by comparing an
asset's recoverable amount to its carrying amount.
The recoverable amount is determined as the higher of an asset's
fair value less cost of disposal and its value in use. The value
in use is calculated by estimating future cash benefits that will
result from each asset and discounting those cash benefits
at an appropriate discount rate.
The review and testing of assets for impairment inherently requires
significant management judgement as it requires management to
derive the estimates of the identified assets' future cash flows in
order to derive the asset's recoverable amount.
Current and deferred tax
The company are subject to direct and indirect taxation
requirements which are determined with reference to
transactions and calculations for which the ultimate tax
determination has an element of uncertainty in the ordinary
course of business. The company recognise provisions for tax
based on objective estimates of the amount of taxes that may be
due. Where the final tax determination is different from the
amounts that were initially recorded, such differences will impact
the income tax expense and deferred tax provisions, disclosed in
note 33 and note 14, respectively, in the period in which such
determination is made. Uncertain tax positions are provided for
in accordance with the criteria defined within IAS 12 Income
Taxes and IFRIC 23. Deferred tax assets are reviewed at each
reporting date and are reduced to the extent that it is no longer
probable that the related tax benefit will be realised. The most
significant management assumption is the forecasts that are
used to support the probability assessment that sufficient
taxable profits will be generated by the company in order to
utilise the deferred tax assets.
Provisions
The principal assumptions taken into account in determining the
value at which provisions are recorded, include determining
whether there is an obligation, as well as assumptions about the
probability of the outflow of resources and the estimate of the
amount and timing for the settlement of the obligation. For legal
provisions, management assesses the probability of the outflow
of resources by taking into account historical data and the status
of the claim in consultation with the company's legal counsel. In
determining the amount and timing of the obligation once it has
been assessed to exist, management exercises its judgement by
taking into account all available information, including that
arising after the reporting date up to the date of the approval of
the financial results.
Refer to note 17 for provisions and other liabilities disclosures.
Post-employment benefits
The company's post-employment benefits consist of both
post-employment retirement funds and healthcare benefits. The
company's obligations to fund these benefits are derived from
actuarial valuations performed by the appointed actuaries taking
into account various assumptions. The funds are subject to a
statutory financial review by the company's independent
actuaries at intervals of not more than three years.
The principal assumptions used in the determination of the company's
obligation are set out in note 35.
NOTES TO THE ANNUAL FINANCIAL
STATEMENTS
1.
Cash and balances with the central bank
2.
Coins and bank notes
Balances with the Bank of Namibia¹.2
STANDARD BANK NAMIBIA LIMITED
Annual financial statements 2020
37
2020
N$'000
2019
N$'000
456 542
405 897
618 441
1 055 832
1 024 338
1 512 374
Total
1 These balances primarily comprise reserving requirements levied by the BoN. These balances are available for use by the company subject to
restrictions and limitations imposed by the BoN.
2 Coins and bank notes and the reserve balance with the BoN are classified as FVTPL while temporary excess balance with the BoN is classifie
amortised cost.
Derivative instruments
All derivatives are classified as derivatives held-for-trading. A summary of the fair values of the derivative assets and derivative
liabilities is as follows:
Fair value of assets
Fair value of liabilities
2020
N$'000
2019
N$'000
2020
N$'000
2019
N$'000
Held-for-trading
Held-for-hedging
366 163
6 125
Total
372 288
145 793
4 117
149 910
(362 123)
(142 511)
(362 123)
(142 511)
2.1
Use and measurement of derivative instruments
2.2
The risks associated with derivative instruments are monitored in the same manner as for the underlying instruments. Risks
are also measured across the product range in order to take into account possible correlations.
In the normal course of business, the company enters into a variety of foreign exchange and interest rate derivative
transactions for trading and hedging purposes. Derivative instruments used by the company in trading activities include swaps
and other similar types of instruments.
Derivatives held-for-trading
The company transacts derivative contracts to address client demand, both as a market maker in the wholesale markets
and in structuring tailored derivatives for clients. The company also take proprietary positions for its own account.
Trading derivative products include the following:
Fair value of assets
2020
N$'000
2019
N$'000
Fair value of liabilities
2020
N$'000
2019
N$'000
Notional amount¹
2020
N$'000
2019¹
N$'000
Foreign exchange
derivatives
355 536
Interest rate derivatives²
10 627
Total
366 163
140 281
5 512
145 793
(362 123)
(136 964)
(5 547)
369 918
(79 256)
650 739
147 693
(362 123)
(142 511)
290 662
798 432
1 The notional amount is the sum of the absolute value of all bought and sold contracts for both derivative assets and liabilities. The
used to assess the market risk associated with the positions held and should be used only as a means of assessing the company's participation in
derivative contracts.
2 This line has been updated for comparatives to include the notional amount for 2019.
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