Annual Report and Accounts 2021 to 2022
21. Financial instruments
IFRS 7 and IFRS 9 (Financial Instruments: Disclosures) establishes principles for the presentation, recognition and measurement, and disclosure of financial instruments as liabilities or equity.
In accordance with IFRS 7 and IFRS 9, the carrying values of short term assets and liabilities (at amortised cost) are not considered different to fair value.
The Commission is not exposed to the degree of financial risk faced by business entities, because of the way that it is funded.
Financial instruments also play a more limited role in creating or changing risk than would be typical of financial entities, to which these standards mainly apply.
The Commission has obtained consent from its sponsoring department to place surplus funds on bank deposit. It would also require consent from its sponsoring department prior to acquiring financial instruments or borrowings.
The Commission is a domestic organisation with the great majority of transactions, and all assets and liabilities being in the UK and denominated in sterling. The Commission has no overseas operations. The Commission therefore is not exposed to currency rate fluctuations.
Interest rate risk
Other than finance leases, the Commission has no borrowings and therefore is not exposed to interest rate risk.
The Commission does not provide credit arrangements for the payment of licence fees by the industry. All fees must be paid on or before the date prescribed to prevent a breach of the licence and the licence being revoked. As the Commission relies on fees receivable from the gambling industry (payable immediately) and departmental grant-in-aid for specific projects the Commission has very low exposure to credit risk.
Other than finance leases, the Commission has no borrowings and relies on fees receivable from the gambling industry and departmental grant-in-aid for its cash requirements, the Commission is exposed to minimal liquidity risk.
The Commission adopted IFRS 16 Leases during the 2019-20 financial year.
Financial assets and financial liabilities
|Financial assets||Type of financial asset
|Cash and cash equivalents||Amortised cost||27,325||17,556|
|Trade and other receivables||Amortised cost||21,231||11,400|
|Contract assets||Amortised cost||-||-|
|Subtotal – amortised cost||-||48,558||28,969|
|Equity investments – held through OCI inc. Investment Funds and Shares and Equity type Investments||FVOCI||-||-|
|Investment in subsidiaries||FVOCI||-||-|
|Subtotal – FVOCI||-||-||-|
|Derivative financial instrument assets||FVTPL||-||-|
|FI non Derivatives through PL||FVTPL||-||-|
|Subtotal – FVTPL||-||-||-|
|Total financial assets||-||48,558||28,969|
|Financial liabilities||Type of financial asset
|Trade and other payables||Amortised cost||(24,323)||(12,357)|
|Lease liability||Amortised cost||(3,329)||(4,237)|
|Contract liabilities||Amortised cost||-||-|
|Subtotal – amortised cost||-||(27,652)||(16,594)|
|Derivative financial instrument liabilities||FVTPL||-||-|
|Subtotal – FVTPL||-||-||-|
|Total financial liabilities||-||(27,652)||(16,594)|
Definitions under IFRS 9:
Financial assets measured at amortised cost
Held in a business model whose objective is to hold assets to collect contractual cash flows only (for example, a simple debt instrument not classified at fair value).
Financial assets classified and measured at FVOCI (Financial asset at fair value through other comprehensive income)
Held in business model whose objective is achieved by collecting contracts and selling financial assets. This category is mandatory for some debt instruments (i.e. all except those measured at amortised cost (AC) or FVTPL) and irrevocably elected equity instruments (which can also be measured at FVOCI).
Financial assets measured at FVTPL (Financial asset at fair value through profit or loss)
For all other equity instruments, excluding those elected above, all derivatives and any instruments specifically designated to this category using the fair value option (available on initial recognition as an alternative to measuring at FVOCI to reduce an accounting mismatch).Previous section
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22. Contingent liabilities disclosed under IAS 37
Last updated: 10 July 2023
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