Presenter: Dr Mampho Modise DDG: Public Finance, National Treasury | February 2019pmg-assets.s3-website-eu-west-1.amazonaws.com/190212... · 2019-02-14 · Cash receipts from stakeholders

Quarterly expenditure reporting for public entities

STANDING COMMITTEE ON APPROPRIATIONS

Presenter: Dr Mampho Modise| DDG: Public Finance, National Treasury | February 2019

Background

Types of public entities and what Public Finance reports on

• Schedule 1: Constitutional institutions e.g. Public Protector

• Schedule 2: Major public entities e.g. ESKOM

• Schedule 3

–Part A: National government public entities e.g. Iziko Museums

–Part B: National government business enterprises e.g. PRASA

–Part C: Provincial public entities e.g. EC Parks & Tourism Agency

–Part D: Provincial business enterprises e.g. Ithala Development Finance

Corporation

2

Financing and funding of public entities

Levies e.g. UIF

User charges e.g. SANRAL

Appropriations e.g. Nelson Mandela

Museum

3

SASSA NSFAS SARS

SANRAL NSF Service SETA

Legal Aid SA NHLS PRASA

NEF SANP IDC

NRF SAT RAF

Compensation Fund UIF

NSF

Challenges in reporting on public entities

• System for verification of data

– Data provided by public entities (either to their relevant executive authorities or NT)

is not on the Basic Accounting System (BAS) and thus cannot be verified

• They do not have budget programme structures like a department that are approved

by the relevant treasury and hence:

– their ‘programmes’ are not necessarily linked to deliverable objectives

– their spending is only in economic classification terms

• Accounting standards: departments use a modified cash basis vs. accrual accounting

for public entities

– The main difference between accrual and cash basis accounting lies in the timing of

when revenue and expenses are recognised

– The cash method accounts for revenue only when the money is received and for

expenses only when the money is paid out VS in accrual accounting where

revenue/expenditure is recorded even if the cash has not yet been received/paid

4

Challenges in reporting on public entities (2)

– In accrual accounting, when you purchase a long-lived asset, such as a vehicle, a

building or a computer, you don't immediately write off the full cost as an expense.

Rather, you spread the cost over the expected life of the asset, an accounting

procedure known as depreciation

– In relation to capital expenditure in public entities, only the portion of funds that will

be spent is recognised as expenditure, the rest is accounted for on the balance sheet

as deferred income

• Number and type of public entities do not enable a comparative analysis (Service

delivery agencies, Regulators, Development Finance Institutions, Social Security

Funds)

• Different financial years – e.g. water boards operate on the municipal financial year

from July to June (not on the April to March financial year)

5

6

Compensation Fund

R'000

2018/19

Approved

Budget

Qtr2

forecast

Qtr2

YTD

(Over)/under

spending

Compensation Fund, including Reserve Fund

Cash receipts from stakeholders 16 609 937 8 304 969 10 877 114 -2 572 145

Interest and rent on land 6 872 362 3 436 181 2 900 596 535 585

Transfers received (Social contributions) 9 737 575 4 868 788 7 976 518 -3 107 731

Cash paid to stakeholders 10 846 490 5 476 507 2 499 960 2 976 547

Current payments 1 933 959 1 020 242 500 476 519 766

Compensation of employees 843 370 421 685 125 265 296 420

Goods and services 1 090 589 598 557 369 728 228 829

Interest and rent on land - - 5 483 -5 483

Transfers and subsidies (benefit payments) 8 912 531 4 456 266 1 999 484 2 456 782

Cash flows from operating activities 5 763 447 2 828 462 8 377 154 -5 548 692

Cash flows from investing activities 304 584 95 430 -4 258 923 4 354 353

Net cash flow from investing activities - Other (e.g. sale of

discontinued operations, acquisition /sales of investments i.e.

subsidiary)

Net cash flow from investing activities - Other - - -4 275 973 4 275 973

Purchases of non-financial assets

Machinery and equipment 195 972 41 124 17 050 24 074

Other fixed assets 108 612 54 306 - 54 306

Cash flows from financing activities - - 827 -827

Cash at the beginning of the quarter -5 458 863 -2 733 032 -420 850 -2 312 182

Net change in cash and cash equivalents 5 458 863 2 733 032 4 084 958 -1 351 926

Cash at the end of the quarter - - 3 664 108 -3 664 108

7

Compensation Fund

• The Fund generates its revenue from an assessment levy on employers. The Fund received

R3.1 billion more than projected in quarter 2 due to increased compliance by employers.

• The largest spending item to stakeholders is cash paid to households for COIDA

(Compensation for Occupational Injuries and Diseases Act) claims:

– claims paid amounted to R 2 billion which is R2.5 billion less than forecasted due to

system interface challenges between the Umehluko system and the SAP system

• Slow spending on goods and services is due to delays with the procurement of the caseware

software licenses; procurement of office furniture and equipment by the Fund at provincial

offices and delays with phase 2 of the Fund’s filing project due to the lack of SAP capacity

• Cash flow from investing activities was R4.26 billion, which is R4.35 billion more than

forecasted as the Fund did not anticipate to collect more than the projected assessment

levies which was invested

• Cash available at the end of the quarter amounted to R3.7 billion

8

Legal Aid South Africa

R'000

2018/19

Approved

Budget

Qtr2

Forecast

Qtr2

YTD

Qtr2

Variance


Cash receipts from stakeholders 1 815 842 907 921 909 575 -1 654

Sales of goods and services other than capital assets 0 0 1 103 -1 103

Interest and rent on land 21 500 10 750 11 301 -551

Transfers received 1 794 342 897 171 897 171 0

Cash paid to stakeholders 1 805 020 902 510 901 708 802

Current payments 1 805 020 902 510 901 708 802

Compensation of employees 1 508 458 754 229 751 302 2 927

Goods and services 296 562 148 281 150 365 -2 084

Interest and rent on land 0 0 40 -40

Cash flows from operating activities 10 822 5 411 7 867 -2 456

Cash flows from investing activities 60 339 16 141 11 658 4 483

Purchases of non-financial assets 57 012 13 141 8 721 4 420

Buildings and fixed structures 11 259 5 630 2 026 3 604

Machinery and equipment 44 058 4 311 3 586 725

Other fixed assets 1 695 3 200 3 109 91

Sales of non-financial assets 3 327 3 000 2 937 63

Cash at the beginning of the quarter 277 483 239 349 196 158 43 191

Net change in cash and cash equivalents -42 863 -4 729 2 083 -6 813

Cash at the end of the quarter 234 620 234 620 198 242 36 378

9


• At the end of quarter 2, transfers received amounted to R897.2 million, but the entity

also realised income from other receipts, mainly interest on bank reserves

(R11.3 million)

• Expenditure on compensation of employees amounted to R751.3 million against a

projection of R754.2 million. Lower than planned spending of R2.9 million is largely the

result of vacancies (natural attrition)

• Higher than planned spending occurred on goods and services (R150.4 million vs.

projection of R148.3 million), and is due to insurance renewals planned for Q1 that

could only be finalised in Q2

• Expenditure on buildings and other fixed structures and machinery and equipment

amounted to R2 million and R3.6 million, against projections of R5.6 million and

R4.3 million, respectively. Lower than planned spending is attributable to delays

experienced in procurement of an office building and replacement of motor vehicles

(offer to purchase building in Port Elizabeth not yet accepted by seller and local offices

still finalising specifications of required vehicles)

10

National Empowerment Fund

R'000

2018/19

Approved

Budget

Qtr2

forecast

Qtr2

YTD

(Over)/under

spending


Cash flow direct

Cash receipts from stakeholders 435 993 217 996 112 108 105 888

Interest and rent on land 367 219 183 609 103 965 79 644

Unclassified revenue

Unclassified revenue 68 774 34 387 8 143 26 244

Cash paid to stakeholders 767 957 236 244 201 059 35 185

Current payments

Compensation of employees 120 146 60 073 62 535 -2 462

Goods and services 647 811 176 171 138 524 37 647

Cash flows from operating activities -331 964 -18 248 -88 951 70 703

Cash flows from advancing activities (Financial Institutions only) - -5 925 109 564 -115 489

Cash flows from investing activities - 5 500 882 4 618


Machinery and equipment - 4 500 882 3 618

Other fixed assets - 1 000 - 1 000

Cash at the beginning of the quarter 1 344 523 535 953 1 133 802 -597 850


Cash at the end of the quarter 1 012 559 506 280 1 153 533 -647 254

11


• The NEF derives its revenue primarily from interest received transfer from the

Department of Trade and Industry.

• Expected revenue for the year amounts to R435 million, of which 50 per cent was

expected within the period under review.

• Actual revenue for Q2 was below projections by R105.9 million, this was mainly due to

lower cash disbursement. Most of the cash flow items are interlinked. Disbursement

affects interest earned on investment, repayment of loans and closing balance of cash

and cash equivalent.

• Due to low disbursement activities in Q1 & Q2 than planned, interest income

investments was negatively affected. However, closing balance of cash and cash

equivalent remained high due low disbursements made (cash outflow).

• Negative net cash from operations was caused by repayment of creditors an amount of

R109.6 million. Payments were for accruals and current invoices received.

• Spending on compensation of employees was higher than projected while for goods

and services, it was lower

12

National Health Laboratory Service

R'000

2018/19

Approved

Budget

Qtr2

forecast

Qtr2

YTD

(Over)/under

spending


Cash flow direct

Cash receipts from stakeholders 7 710 003 3 965 798 4 925 004 -959 206

Sales of goods and services other than capital assets 6 852 244 3 671 798 4 637 408 -965 610


Transfers received 789 759 240 000 234 616 5 384

Cash paid to stakeholders 7 221 937 3 736 322 3 517 406 218 916

Current payments

Compensation of employees 3 456 085 1 759 300 1 593 278 166 022

Goods and services 3 763 857 1 976 025 1 921 443 54 582

Interest and rent on land 1 995 998 2 685 -1 688

Cash flows from operating activities 488 066 229 476 1 407 598 -1 178 123




Other fixed assets 200 000 100 000 - 100 000

Cash flows from financing activities -71 739 -11 170 -47 303 36 133

Cash at the beginning of the quarter 593 614 616 635 1 114 455 -497 820

Net change in cash and cash equivalents 66 327 43 306 1 299 024 -1 255 719

Cash at the end of the quarter 659 941 659 941 2 413 480 -1 753 539

13


• NHLS’s cash balance increased from R1.1 billion, the closing cash balance for first quarter of

2018/19, to R2.4 billion at the end of the first quarter of 2018/19. This was mainly due to

– Higher than anticipated receipts from provinces for payment towards historical debt (it is noted that

R1,5 billion has been received for this). A total of R4,9 billion was received (Cash receipts from

stakeholders) by the end of the second quarter of 2018/19 compared to R4,0 billion forecast for the

same period

• Important to note total cash at the end of the second quarter of 2018/19 (R2.4 billion) only equates to

4 months of NHLS’s monthly cash requirement (i.e. average monthly expenditure in 2017/18 equated

to R586.9 million). Provinces will need to ensure that invoices are settled promptly so that NHLS

operations remain unaffected

• A total of R3,5 billion or 94,5% (cash payment to stakeholders), of which R1,9 billion was on goods

and services and R1,6 billion on compensation of employees, was spent against the revised forecast

of R3,7 billion. The variance of R218,9 million or 5,5% was mainly due to:

– Goods and services; R54,6 million lower than forecast of R2,0 billion as a result of procurement

delays. There is currently a shortage of staff in the Supply Chain Management unit. However,

spending is expected to increase in the fourth quarter once posts are filled

– Compensation of employees spent R166 million lower than the projected forecast of R1,8 billion

mainly due to vacancies that were not filled due to operational budget constraints

• A settlement agreement of R1.2 billion was reached with Gauteng Provincial Department of Health on

outstanding debt. It should be noted that the R1.2 billion will flow to the entity over 2 years in 3

instalments

14

National Research Foundation

R'000

2018/19

Approved

Budget

Qtr2

forecast

Qtr2

YTD

(Over)/under

spending


Cash flow direct


Sales of goods and services other than capital assets 76 068 36 957 24 667 12 291


Transfers received 3 691 441 2 677 367 2 042 319 635 049

Unclassified revenue

Unclassified revenue 716 007 -754 302 810 102 -1 564 404

Cash paid to stakeholders 4 025 947 1 973 490 2 170 005 -196 515

Current payments


Goods and services 3 139 327 1 520 868 1 784 011 -263 143

Interest and rent on land - - 14 -14

Transfers and subsidies 1 181 735 357 378

Cash flows from operating activities 495 594 -4 455 712 794 -717 249



Buidlings and fixed structures 6 575 2 758 3 395 -637

Land and subsoil assets 11 745 6 800 - 6 800


Other fixed assets 131 96 359 -263

Cash flows from financing activities -4 -2 -16 14

Cash at the beginning of the quarter 462 002 462 002 462 002 -0

Net change in cash and cash equivalents 42 998 -162 002 605 372 -767 374

Cash at the end of the quarter 505 000 300 000 1 067 374 -767 374

15


• NRF’s main source of revenue consists of the transfer payment from the Department of Science and

Technology, unclassified revenue as a source of other income and sale of other goods and services.

Unclassified revenue refers to:

Contract income – represents formal contracts with the Department of Science and Technology,

other government departments and organisations; and

Other income – interest received on funds invested and trading income for non-core business

activities.

• In the second quarter of 2018/19 NRF’S receipts amounted to R2.9 billion which was R913.8 million

more than expected

• Goods and services at the end of the second quarter amounted to R1.8 billion or 56.8 per cent of the

approved budget and was R263.1 million more than projected. This was due to higher uptake on

grants and bursaries awarded to university students which was higher than originally anticipated. This

will be offset by a decline in bursary uptake during quarter four

• Cash available at the beginning of the second quarter amounted to R462.0 million as projected while

cash available at the end of the second quarter was R767.4 million more than expected

• Net cash flow from investing activities was R107.4 million which was R50.1 million less than projecteddue to reduced spending plans on buildings and fixed structures, and other fixed assets

16

National Skills Fund

R'000

2018/19

Approved

Budget

Qtr2

forecast

Qtr2

YTD

(Over)/under

spending


Cash flow direct

Cash receipts from stakeholders 3 894 954 1 947 477 1 905 912 41 565


Outside shareholders interest

Outside shareholders Interest - - - -



Current payments


Goods and services 232 291 116 145 55 459 60 686

Transfers and subsidies 5 666 628 2 833 314 1 693 865 1 139 449

Cash flows from operating activities -2 107 404 -1 053 701 122 541 -1 176 242

Cash flows from advancing activities (Financial Institutions only) 2 322 118 1 161 059 -50 625 1 211 684

Cash flows from investing activities 1 709 588 854 789 33 922 820 867


Buidlings and fixed structures 1 687 141 843 568 32 580 810 988


Other fixed assets 17 500 8 750 1 049 7 701

Cash at the beginning of the quarter 1 647 422 823 705 9 604 814 101

Net change in cash and cash equivalents -1 494 874 -747 431 37 994 -785 425

Cash at the end of the quarter 152 548 76 274 47 598 28 676

17


• The entity receives income primarily from the skills development levy, with other

revenue generated from interest on investments

• Expenditure for compensation of employees in the second quarter is lower than

projected by R17.7 million due to vacant posts that were not filled as projected

• Expenditure on transfers and subsidies to higher education institutions was lower than

projected by R1.1 billion due to tender delays in the construction of nine new Technical

and Vocational Education and Training (TVET) college campuses across the country,

as well as delays in the rolling out of the Centres of Specialisation Programmes at

TVET Colleges. Most of the contracts have been finalised and spending is expected to

commence in the third quarter of 2018/19

• The cash at the end of the second quarter of 2018/19 amounted to R47.6 million

against a forecast of R76.3 million, reflecting a variance of R28.7 million. The lower than

projected cash at the end of the quarter is due to grant disbursements that were made

towards the end of the second quarter instead of quarter three

18

National Student Financial Aid Scheme

R'000

2018/19

Approved

Budget

Qtr2

forecast

Qtr2

YTD

(Over)/under

spending


Cash flow direct

Cash receipts from stakeholders 23 049 694 22 510 286 21 457 676 1 052 610


Interest and rent on land 565 719 271 946 286 431 -14 485

Transfers received 22 459 962 22 214 396 21 153 901 1 060 495

Cash paid to stakeholders 22 622 445 16 139 819 16 947 789 -807 970

Current payments

Compensation of employees 187 801 90 145 89 775 370

Goods and services 94 859 49 674 77 343 -27 668

Transfers and subsidies 22 339 785 16 000 000 16 780 672 -780 672

Cash flows from operating activities 427 249 6 370 467 4 509 887 1 860 580

Cash flows from advancing activities (Financial Institutions only) 548 243 320 478 -1 560 624 1 881 102

Cash flows from investing activities -10 404 -8 404 -9 317 913


Machinery and equipment -5 598 -4 048 -3 917 -131

Other fixed assets -4 806 -4 356 -5 399 1 043

Cash at the beginning of the quarter 2 777 204 -3 028 031 5 599 427 -8 627 458

Net change in cash and cash equivalents 985 896 6 699 348 2 958 579 3 740 769

Cash at the end of the quarter 3 763 100 3 671 317 8 558 006 -4 886 689

19


• The entity’s total cash receipts from stakeholders amount to R21.5 billion in the second

quarter of 2018/19.

• Expenditure for goods and services amounted to R77.3 million, reflecting overspending by

R27.7 million mainly due:

– Overspending on debt collection commission

– Overspending on travel and subsistence due to staff being deployed to all institutions to

assist with the close-off of the funding for the 2016 and 2017 academic years, assist

students with sBux queries and user assistance, outreach initiatives conducted by the

Marketing and Communications unit to promote the signing of Non-Bursary Agreements

(NBA’s), funding awareness and the 2019 applications process. This also includes

additional costs incurred in the deployment of staff, since the start of September 2018, to

the NYDA offices to assist the interns employed at these offices with 2019 applications

• Transfers and subsidies overspent by R780.7 million mainly due to the payment of bursaries

and student allowances. The appointment of the NSFAS Administrator assisted with the

speedy resolution of current year funding backlogs as the system capacity and data

integration issues with institutions were resolved allowing the entity to disburse funding faster

20

• Net cash flow from operations underspent by R1.9 billion due to a change in

classification of expenditure as a result of the fee free higher education announcement.

Bursaries are classified as expenditure from operations reflected under transfers and

subsidies whereas the loan portions of the previous funding model was classified as

advancing activities due to their recoverable nature. The announcement meant that only

first time entering students from the 2018 academic year would receive full bursaries

whereas students who entered higher education in prior years would still receive a loan

which is convertible partly into a bursary based on their academic results in 2018. This

was not initially clear at the budget planning stage

• Cash at the end of the second quarter amounted to R8.6 billion, which is R4.9 billion

higher than projected as the NSFAS had planned to disburse the unspent funding of the

prior year backlog and includes the multi-year memoranda of understanding (MOU)

from other funders who provide upfront funding


21

Passenger Rail Agency of South Africa

R'000

2018/19

Approved

Budget

Qtr2

forecast

Qtr2

YTD

(Over)/under

spending

Variance as a % of

Qtr2 forecast


Cash receipts from stakeholders 11 045 448 5 084 356 4 646 493 437 862 8,6%

Sales of goods and services other than capital assets 3 570 202 1 765 983 1 092 660 673 323 38,1%

Interest and rent on land 510 543 255 434 490 895 -235 461 -92,2%

Transfers received 6 964 703 3 062 939 3 062 939 -0 0,0%

Cash paid to stakeholders 10 206 623 5 084 356 5 104 219 -19 864 -0,4%

Current payments -

Compensation of employees 5 736 431 2 865 479 2 801 065 64 413 2,2%

Goods and services 4 466 828 2 216 775 2 294 195 -77 420 -3,5%

Interest and rent on land 1 806 902 6 670 -5 768 -639,5%

Transfers and subsidies 1 559 1 200 2 289 -1 089 -90,7%

Net Cash flows from operating activities 838 825 - -457 726 457 726

Cash flows from investing activities 12 653 090 3 163 273 1 167 871 1 995 402 63,1%

Cash flows from financing activities 4 202 867 - - -

Cash at the beginning of the quarter 13 940 960 13 803 529 13 793 653 9 875 0,1%

Net change in cash and cash equivalents -7 611 398 -3 163 273 -1 625 597 -1 537 676 48,6%

Cash at the end of the quarter 6 329 562 10 640 256 12 168 056 -1 527 800 -14,4%

22


• The agency generates revenue from the sale of train and bus tickets, rental income

from property leasing and transfers from the Department of Transport

• Cash flow from operations

– Cash receipts from stakeholders were 8.6 per cent, or R437.9 million lower than what

was forecasted mainly as a result of declining passenger numbers and fare evasion

– Interest earned is higher than expected as a result of the significant positive cash

balances

– Cash paid to stakeholders was 0.4 per cent, or R19.9 million higher than expected

due to higher payments on goods and services

• Cash flow from investing activities is 63.1 per cent, or R2.0 billion lower than

projected due to low spending on capital assets is as a result of Supply Chain

Management (SCM) challenges that has resulted in delayed capital spending

• Cash available at the end of the quarter amounted to R12.2 billion, which is

14.4 per cent, or R1.5 billion more than expected

23

Road Accident Fund

R'000

2018/19

Approved

Budget

Qtr2

forecast

Qtr2

YTD

(Over)/under

spending

Variance as a % of

Qtr2 forecast

Road Accident Fund

Cash receipts from stakeholders 41 231 342 19 908 475 20 394 580 -486 105 -2,4%

Interest and rent on land 82 033 50 415 43 253 7 162 14,2%

Transfers received 41 149 309 19 858 060 20 351 136 -493 076 -2,5%

Unclassified revenue - - 191 -191

Cash paid to stakeholders 41 125 264 20 022 961 19 911 239 111 722 0,6%

Current payments -

Compensation of employees 1 794 922 893 530 868 668 24 861 2,8%

Goods and services 731 172 297 582 411 604 -114 022 -38,3%

Interest and rent on land 267 351 137 179 148 423 -11 245 -8,2%

Transfers and subsidies 38 331 820 18 694 671 18 482 544 212 127 1,1%

Net cash flows from operating activities 106 077 -114 486 483 341 -597 826 522,2%

Cash flows from investing activities 105 355 52 786 30 121 22 665 42,9%

Cash at the beginning of the quarter 1 681 311 1 979 096 1 567 189 411 907 20,8%

Net change in cash and cash equivalents 722 -167 272 453 220 -620 492 370,9%

Cash at the end of the quarter 1 682 033 1 811 824 2 020 409 -208 584 -11,5%

24

Road Accident Fund

• The Fund generates its revenue from the road accident fund fuel levy

• The Fund has limited control over claims from accident victims resulting in significant

cash paid to claimants

• Net Cash Flow from Operations was 522.2 per cent, or R597.8 million higher than

projections as a result of increased claims payments to road accident victims

• As a result, cash available at the end of the quarter is R453.2 million

25

South African National Parks

R'000

2018/19

Approved

Budget

Qtr2

forecast

Qtr2

YTD

(Over)/under

spending


Cash flow direct

Cash receipts from stakeholders 2 141 560 535 390 1 180 263 -644 873

Sales of goods and services other than capital assets 1 822 524 455 631 1 004 022 -548 391


Transfers received 259 088 64 772 144 898 -80 126

Cash paid to stakeholders 2 103 176 525 794 1 084 125 -558 331

Current payments

Compensation of employees 1 021 468 255 367 536 085 -280 718

Goods and services 1 062 216 265 554 538 773 -273 219



Cash flows from investing activities -66 042 -66 069 -147 191 81 122

Net cash flow from investing activitiesNet cash flow from investing activities - Other (e.g. sale of

discontinued operations, acquisition /sales of investments i.e.

subsidiary) -66 042 -66 042 -8 548 -57 494


Buidlings and fixed structures - -69 -134 265 134 196

Other fixed assets - - -4 411 4 411

Sales of non-financial assets

Sales of non-financial assets - 42 33 9

Cash flows from financing activities -48 020 -17 546 -23 830 6 284

Cash at the beginning of the quarter 1 778 443 1 776 646 1 151 094 625 552


Cash at the end of the quarter 1 702 765 1 702 765 1 353 563 349 202

26


• The Parks generates revenue from the gate fees, accommodation, conservation fees

and activities and transfers from the Department of Environmental Affairs

• In the second quarter of 2018/19, Parks receipts amounted to R1.2 billion which was

R644.9 million more than what was expected

• Transfers received amounted to R144.9 million and constitute 12.3 per cent of the total

cash receipts from stakeholders

• Cash available at the beginning of the second quarter amounted to R1.2 billion, which

was R625.6 million less than expected

• Cash available at the end of the second quarter amounted to R1.4 billion, which was

R349.2 million less than expected

27

South African Revenue Services

R'000

2018/19

Approved

Budget

Qtr2

forecast

Qtr2

YTD

(Over)/

underspending

variances

South African Revenue Service

Cash flow direct





Cash paid to stakeholders 10 534 495 5 497 987 5 443 680 54 307

Current payments

Compensation of employees 7 331 463 3 582 250 3 987 472 -405 222



Cash flows from operating activities -175 259 -318 369 -702 789 384 420

Cash flows from advancing activities (Financial Institutions only) 40 000 20 000 - 20 000



Buidlings and fixed structures 87 865 71 640 30 799 40 841




Sales of non-financial assets - - 221 -221

Cash flows from financing activities -12 588 -6 294 182 -6 476

Cash at the beginning of the quarter 2 476 607 2 476 607 2 476 608 -1

Net change in cash and cash equivalents -896 552 -864 736 -1 032 424 167 689

Cash at the end of the quarter 1 580 055 1 611 871 1 444 183 167 688

28


• SARS’ revenue is comprised of National Treasury transfers, commission fees and interest income

from surplus funds

• Cash receipts from stakeholders was R438.7 million lower than the quarter 2 forecast mainly

due to the fact that the entity already received the R977 million retention of surplus from 2017/18

at the beginning of 2018/19, this surplus is expected to be utilised during the last quarter of the

financial year in order to absorb the budgeted deficit of R1.2 billion

• Cash paid to stakeholders was R54.3 million lower than the quarter 2 forecast

– Compensation of employees was R405.2 million higher than the quarter 2 forecast mainly due to

appointment of 1237 staff members. 158 permanent staff; 338 Seasonal workers; 30 graduates;

705 internal appointments; and 6 reinstatements

– Goods and services was R459.6 million lower than the quarter 2 forecast mainly due to delays

on payment of approved projects due to the delayed receipt of valid invoices from the service

provider. Track and Trace marker solution, Goods control project, Reporting of conveyances and

goods project, Registration, Licensing & Accreditation project and deployment of a mobile

scanner at city deep. SARS is yet to receive valid invoices to be able to process payment. SARS

is also constantly identifying opportunities to reprioritise funds to key priorities

29


• Cash flow from investing was R229.8 million lower than the quarter 2 forecast

– Buildings and fixed structure which includes non-residential, lease improvements and assets

under construction was R40.8 million lower than the quarter 2 forecast mainly due to the

reprioritisation of certain project, e.g. Corporate Real Estate project due to budget constraints.

Refurbishment of new Pier Durban State warehouse for which the business case is pending

approval from the executive authority

– Machinery and equipment which includes furniture and office equipment, transport equipment,

security equipment, generators and plant and equipment and IT data storage equipment was

R186 million lower than the quarter 2 forecast mainly due to outstanding valid invoices from

suppliers/service providers

– Other fixed assets which includes computer software was R3.2 million lower than the quarter 2

forecast mainly due to the delayed receipt of invoices from suppliers. Payment is expected to be

made in the third quarter

30

The South African National Roads Agency Limited

R'000

2018/19

Approved

Budget

Qtr2

forecast

Qtr2

YTD

(Over)/under

spending

Variance as a % of

Qtr2 forecast


Cash receipts from stakeholders 15 461 797 7 730 899 10 510 751 -2 779 853 -36,0%

Sales of goods and services other than capital assets 4 573 776 2 286 888 2 933 628 -646 740 -28,3%

Interest and rent on land 938 752 469 376 17 573 451 803 96,3%

Transfers received 9 949 269 4 974 635 7 559 550 -2 584 916 -52,0%

Cash paid to stakeholders 14 251 556 4 313 528 6 315 312 -2 001 784 -46,4%

Current payments -

Compensation of employees 403 374 201 687 161 420 40 267 20,0%

Goods and services 10 701 014 2 538 257 3 507 513 -969 256 -38,2%

Interest and rent on land 3 147 168 1 573 584 2 646 379 -1 072 795 -68,2%

Net cash flows from operating activities 1 210 241 3 417 371 4 195 439 -778 068 -22,8%

Cash flows from investing activities 10 021 655 5 010 828 5 858 049 -847 222 -16,9%

Investment in associates -

Cash flows from financing activities 13 361 354 6 680 677 -143 928 6 824 605 102,2%

Cash at the beginning of the quarter 3 078 965 3 099 271 9 687 883 -6 588 612 -212,6%

Net change in cash and cash equivalents 4 949 940 5 287 220 -1 806 539 7 093 759 134,2%

Cash at the end of the quarter 8 028 905 8 386 491 7 881 344 505 147 6,0%

31


• The Agency operates two distinct businesses (toll and non-toll)

• The agency receive transfers from the Department of Transport and generates incomefrom toll-fees

• Net Cash flow from operations is 22.8 per cent, or R778.1 million higher thanexpected

– Cash receipts are 36 per cent, or R2.8 billion higher than expected due to higher thanplanned transfers from the Department of Transport

– Cash payments are 46.4 per cent or R2.0 billion higher than expected due topayments to service providers for road maintenance and higher than planned interestpayments on borrowings

– Cash flow from investing is 16.9 per cent, or R847.2 million higher than expecteddue to commencement in construction of various projects

• Cash flow from financing limited proceeds from borrowings realised at the end of thefirst quarter due to non-issuance of bonds

• Cash available at the end of the quarter amounted to R7.9 billion, which is 6 per cent,or R505.1 million lower than expected

32

South African Social Security Agency

R'000

2018/19

Approved

Budget

Qtr2

forecast

Qtr2

YTD

(Over)/under

spending


Cash flow direct


Sales of goods and services other than capital assets 5 477 2 740 564 2 176




Current payments

Compensation of employees 3 463 965 1 731 983 1 552 078 179 905


Transfers and subsidies 30 001 15 001 19 298 -4 298


Cash flows from investing activities 31 091 15 545 -561 417 535 178

Investment in associates

Investment in associates - - -541 000 541 000


Buidlings and fixed structures - - 3 082 -3 082


Other fixed assets - - 4 507 -4 507


Sales of non-financial assets 322 161 475 -314

Cash flows from financing activities 869 435 - 435

Cash at the beginning of the quarter 542 278 271 137 509 168 -238 031

Net change in cash and cash equivalents 11 261 5 633 380 796 -375 163

Cash at the end of the quarter 553 539 276 770 889 964 -613 195

Grand Total 16 673 088 8 336 547 8 769 009 -432 463

33


• The transfer payment from the Department of Social Development is SASSA’s main source of revenue. Total cash

receipts for 2018/19 is R7.8 billion

• A total of R3.8 billion was received (Cash receipts from stakeholders) in the second quarter of 2018/19, which is

R100 million lower when compared to the forecast of R3.9 billion at the beginning of the quarter. The lower revenue

is mainly due to the misalignment between the initial forecast populated by SASSA for National Treasury’s quarterly

reporting purposes and the forecast schedule sent to the National department to facilitate transfer payments each

month. This has had a carry through effect from quarter one

• A total of R2.8 billion was paid (Cash payments to stakeholders) in the second quarter of 2018/19, which is

R1.1 million lower when compared to the forecast of R3.9 billion at the beginning of the quarter. The lower payment

is mainly due to delays in the finalisation of the agreement between SASSA and SAPO regarding the payment

contractor fee along with delays in paying of CPS. Pending payments to both stakeholders are expected to be

settled in Quarter three

• During the second quarter of 2018/19 R13.3 million was spent on machinery and equipment which is R2.1 million

less when compared to the forecast of R15.4 million at the beginning of the quarter. The low spending is mainly

due to delays in the procurement processes and receiving of invoices relating to the 2018/19 financial year

• To assist SAPO prepare for the takeover of grant payment, an advance payment of R541 million was made to

SAPO

• SASSA’s cash balance at the beginning of the quarter amounts to R509.2 million and at the end of the quarter

amounts to R890 million resulting in a variance of R380.8 million due to the lower than expected payments made

during the quarter as mentioned above

• The agency is encouraged to monitor its spending on non-core items in order to compensate for other potential

pressures that may arise during the year. According to the IYM submitted by SASSA as at June 2018, SASSA has

sufficient current assets to cover its current liabilities approximately 3 times

34

South African Tourism

R'000

2018/19

Approved

Budget

Qtr2

forecast

Qtr2

YTD

(Over)/under

spending


Cash flow direct


Sales of goods and services other than capital assets 210 376 105 188 125 400 -20 212

Interest and rent on land 21 140 8 456 7 577 879

Transfers received 1 208 048 1 034 913 1 034 895 18

Cash paid to stakeholders 1 415 548 707 777 701 147 6 630

Current payments



Interest and rent on land 8 6 3 3


Cash flows from financing activities -98 50 24 26

Cash at the beginning of the quarter 573 802 264 651 642 025 -377 374

Net change in cash and cash equivalents -0 440 830 466 749 -25 919

Cash at the end of the quarter 573 802 705 482 1 108 774 -403 293

35


• SAT primarily derives income from transfers made by government, interest on investment, grading

income, and sundry income (income from exhibitions such as for instance INDABA and Meetings

Africa)

• Revenue from these sources is projected at R1.4 billion for 2018/19, with R1.1 billion expected

within the second quarter. Actual revenue for the period under review is lower by R19.3 million

due to lower sales of goods and services

• Department of Tourism has transferred R1 billion or 85.7 per cent of the R1.2 billion allocation for

2018/19 to SAT. Transfers constitute 88.6 per cent of the total cash receipts from stakeholders

• At the beginning of the second quarter, the entity opened with a cash balance of R642 million,

which increased by R466.7 million, bringing the closing cash balance by end of the second quarter

to R1.1 billion. The increase is due to the upfront payment of the transfer payment. The entity

receives a significant amount of their funds upfront to avoid forex uncertainty

• Expenditure for goods and services amounted to R604.4 million, which is 0.7 per cent or

R4.2 million lower than projected. This is mainly attributed to underspending due to efficiency

savings. Spending towards goods and services is primarily driven by international and domestic

marketing activities undertaken to fulfill mandate, grading expense, foreign and exchange loss and

administrative expenditure (legal fees, IT support and licensing fees)

36

Unemployment Insurance Fund

R'000

2018/19

Approved

Budget

Qtr2

forecast

Qtr2

YTD (Over)/under

spending


Cash receipts from stakeholders 32 687 805 16 343 903 18 721 484 -2 377 582

Fines, penalties and forfeits 301 160 150 580 110 792 39 788

Interest and rent on land 2 338 424 1 169 212 6 405 659 -5 236 447

Transfers received (UI Contributions) 21 057 893 10 528 947 9 338 407 1 190 540

Profit from sale of investment instruments 8 990 328 4 495 164 2 866 626 1 628 538


Current payments 3 476 572 1 733 668 1 040 224 693 444

Compensation of employees 1 579 867 792 958 600 314 192 644


Transfers and subsidies (benefit payments) 13 799 079 6 899 540 5 505 284 1 394 256

Cash flows from operating activities 15 412 154 7 710 696 12 175 976 -4 465 281

Cash flows from investing activities 212 450 106 225 -11 433 990 11 540 215

Net cash flow from investing activities - Other - - -11 461 547 11 461 547

Purchases of non-financial assets 122 500 61 250 16 574 44 676

Buildings and fixed structures - - 16 026 -16 026



Cash at the beginning of the quarter -10 709 321 -5 359 280 2 017 175 -7 376 455

Net change in cash and cash equivalents 15 199 704 7 604 471 686 872 6 917 598

Cash at the end of the quarter 4 490 383 2 245 191 2 704 048 -458 857

37


• The Fund generates its revenue from a specific purpose tax on employers and

employees of equal contribution of 1 per cent on pay and from interest on investments

• The largest spending item is cash paid to beneficiaries for UIF benefits:

– Benefits paid amounted to R5.5 billion which is R1.4 billion less than forecasted dueto delays in implementing the amended benefits promulgated in January 2017

• The slow spending on goods and services is due to the implementation of strict cost

containment measures

• Cash flow from investing activities was R11.5 billion more than expected due to the

fund not budgeting or forecasting for this item, as well as the sale of investment

instruments such as shares

• Cash available at the end of the quarter amounted to R2.7 billion, which is

R458.9 million more than forecasted due to slower spending on current payments and

benefits paid

Documents

Presenter: Dr Mampho Modise DDG: Public Finance, National Treasury | February 2019pmg-assets.s3-website-eu-west-1.amazonaws.com/190212... · 2019-02-14 · Cash receipts from stakeholders