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Annual Report and Accounts 2020 to 2021

The Gambling Commission's 2020 to 2021 Annual Report and Accounts

  1. Contents
  2. Notes to the accounts
  3. Financial instruments

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.

Because of the way that the Commission is funded the Commission is not exposed to the degree of financial risk faced by business entities.

Also financial instruments play a more limited role in creating or changing risk than would be typical of listed companies, 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.

Currency risk

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.

Market rate risk

Other than finance leases, the Commission has no borrowings and therefore is not exposed to interest rate risk.

Credit 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.

Liquidity 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. The nature of the lease agreements and the resulting cash flows did not change and, as a result, the impact on liquidity is considered to be negligible.

Financial assets & financial liabilities

Financial assets

Type of financial asset2020-21
Cash and cash equivalentsAmortised cost17,55616,605
Trade and other receivablesAmortised cost13098
DepositsAmortised cost--
LoansAmortised cost1352
Contract assetsAmortised cost--
Subtotal – amortised cost-17,69916,755
Equity investments – held through OCI inc. Investment Funds and Shares and Equity type InvestmentsFVOCI--
Investment in subsidiariesFVOCI--
Subtotal – FVOCI
Derivative financial instrument assetsFVTPL--
FI non Derivatives through PLFVTPL--
Subtotal – FVTPL---
Total financial assets-17,69916,755

Financial liabilities

Type of financial asset2020-21
Trade and other payablesAmortised cost(1,402)(1,678)
Lease liabilityAmortised cost(4,237)(5,180)
Contract liabilitiesAmortised cost--
Subtotal – amortised cost-(5,639)(6,858)
Derivative financial instrument liabilitiesFVTPL--
Subtotal – FVTPL---
Total financial liabilities-(5,639)(6,858)

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 (e.g. 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).

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Related party transactions
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Contingent liabilities disclosed under IAS 37
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