quarterly expenditure reporting for public...

Quarterly expenditure reporting for public entities

STANDING COMMITTEE ON APPROPRIATIONS

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

Qtr3

forecast

Qtr3

YTD

(Over)/under

spending

Compensation Fund, including Reserve Fund

Cash flow direct

Cash receipts from stakeholders 16 609 937 12 457 453 11 410 220 1 047 233

Interest and rent on land 6 872 362 5 154 272 3 222 339 1 931 932

Transfers received 9 737 575 7 303 181 8 187 881 -884 700

Cash paid to stakeholders 10 846 490 8 214 761 7 624 603 590 158

Current payments

Compensation of employees 843 370 632 528 396 400 236 128

Goods and services 1 090 589 897 835 4 714 640 -3 816 805

Interest and rent on land - - - -

Transfers and subsidies 8 912 531 6 684 398 2 513 563 4 170 835

Cash flows from operating activities 5 763 447 4 242 692 3 785 617 457 075

Cash flows from investing activities 304 584 143 145 60 122 83 023

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

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

subsidiary)



subsidiary)

- - - -

Purchase of non-financial assets

Machinery and equipment 195 972 61 686 42 877 18 809

Other fixed assets 108 612 81 459 17 245 64 214

Cash flows from financing activities - - - -

Cash at the beginning of the quarter -5 458 863 -4 099 547 -2 055 987 -2 043 561

Net change in cash and cash equivalents 5 458 863 4 099 547 3 725 495 374 052

Cash at the end of the quarter - - 1 669 509 -1 669 509

7

Compensation Fund

• The Fund generates its revenue from an assessment levy on employers. The Fund received R884.7 million more

than projected in quarter 3 due to increased compliance by employers and advertising by the Fund on due dates

for submission of Return on Earnings.

• 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 R2.5 billion which is R4.2 billion less than forecast due to the Umehluko system not

working in December 2018, thus the fund was unable to process the payment of medical invoices. The

forecast for claims paid also provided for the clearing of backlogs, however there was no backlog to clear.

• The slow spending on compensation of employees is due to non-payment by the Fund of Department of Labour

salary claims for October, November and December 2018.

• The spending on Goods and services amounted R405.3 million which is R492.5 million lower than forecasted

due to delays in implementing phase two (2) of the CF Filing project due to lack of SAP resources. Slow

spending during the third quarter is also attributed to delays in procuring the Caseware software license and the

implementation of cost cutting measures which resulted in numerous meetings being held internally culminating

in savings on items for catering, venues and facilities.

• Cash flow from investing activities was R60.1 million, which is R83 million less than forecast due to delays in the

replacement of vehicles and furniture in the provinces. Filing project was also delayed on phase (two) 2 due to

lack of SAP resources in the third quarter.

• Cash available at the end of the quarter amounted to R1.7 billion.

8

Legal Aid South Africa

R'000

2018/19

Approved

Budget

Qtr3

Forecast

Qtr3

YTD

Qtr3

Variance


Cash receipts from stakeholders 1 815 842 1 361 882 1 362 128 -246

Sales of goods and services other than capital assets 0 0 0 0

Interest and rent on land 21 500 16 125 16 371 -246

Transfers received 1 794 342 1 345 757 1 345 757 0


Current payments 1 805 020 1 353 765 1 324 995 28 770

Compensation of employees 1 508 458 1 131 344 1 097 603 33 741

Goods and services 296 562 222 421 227 392 -4 971

Interest and rent on land 0 0 0 0

Cash flows from operating activities 10 822 8 117 37 133 -29 016


Purchases of non-financial assets 57 012 42 759 13 279 29 480

Buildings and fixed structures 11 259 8 444 3 618 4 826


Other fixed assets 1 695 1 271 3 215 -1 944

Sales of non-financial assets 3 327 2 495 3 215 -720

Cash at the beginning of the quarter 277 483 266 767 177 375 89 392

Net change in cash and cash equivalents -42 863 -32 147 27 069 -59 216

Cash at the end of the quarter 234 620 234 620 204 444 30 176

9


• At the end of quarter 3, transfers received amounted to R1.3 billion. However the entity

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

(R16.4 million)

• Expenditure on compensation of employees amounted to R1.1 billion against a

projection of R1.13 billion. Lower than planned spending (R33.7 million) is largely the

result of vacancies (natural attrition)

• Higher than planned spending occurred on goods and services (R227.4 million vs.

projection of R222.4 million), and is due to the entity making an upfront rental payment

in Dec 2018 for Jan 2019. Payment was deliberately made upfront to avoid interest

charged, because the entity would only reopen after 7 Jan 2019.

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

amounted to R3.6 million and R6.4 million, against projections of R8.4 million and

R33 million, respectively. Lower than planned spending is attributable to delays

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

(late acceptance by landlord of offer to purchase building in Port Elizabeth and vehicles

required by local offices no longer in stock at supplier).

10

National Empowerment Fund

R'000

2018/19

Approved

Budget

Qtr3

forecast

Qtr3

YTD

(Over)/

under

spending


Cash flow direct

Cash receipts from stakeholders 435 993 326 994 274 755 52 239

Interest and rent on land 367 219 275 414 250 433 24 981

Unclassified revenue

Unclassified revenue 68 774 51 581 24 322 27 258

Cash paid to stakeholders 767 957 575 969 317 244 258 725

Current payments

Compensation of employees 120 146 90 109 93 629 -3 520

Goods and services 647 811 485 860 223 615 262 244

Cash flows from operating activities -331 964 -248 975 -42 489 -206 485

Cash at the beginning of the quarter 1 344 523 1 008 394 1 133 802 -125 408

Net change in cash and cash equivalents -331 964 -248 975 -42 489 -206 485

Cash at the end of the quarter 1 012 559 759 419 1 091 313 -331 894

11


• The NEF derives its revenue primarily from interest on loans.

• During Q3, revenue received was lower than projected by R52.2 million due to lower

cash disbursement. Disbursement affects interest earned on investment, repayment of

loans and closing balance of cash and cash equivalent.

• Due to low disbursement activities, 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 for accruals and current invoices received.

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

and services, it was lower.

• Over the years, National Treasury raised concern on the high level of impairments in

the National Empowerment Fund which affect its cash flows. As a result, the entity has

been requesting for recapitalisation as well as for increase in borrowing powers.

• In response to these requests, National Treasury maintained that agreement between

Minsters of Economic Development and, Trade and Industry to merge the NEF into the

Industrial Development Corporation should be implemented first. The process has been

very slow.

12

National Health Laboratory Service

R'000

2018/19

Approved

Budget

Qtr3

forecast

Qtr3

YTD

(Over)/under

spending


Cash flow direct

Cash receipts from stakeholders 7 710 003 6 419 593 6 726 639 -307 046

Sales of goods and services other than capital assets 6 852 244 5 874 877 6 051 293 -176 416

Interest and rent on land 68 000 91 287 112 175 -20 888

Transfers received 789 759 453 429 563 171 -109 742


Current payments


Goods and services 3 763 857 3 011 086 2 918 491 92 595

Interest and rent on land 1 995 1 496 - 1 496

Cash flows from operating activities 488 066 768 061 1 231 925 -463 864


Purchases of non-financial assets


Other fixed assets 200 000 150 000 - 150 000

Sales of non-financial assets - - -44 44

Cash flows from financing activities -71 739 -53 804 -55 483 1 679

Cash at the beginning of the quarter 593 614 210 940 1 114 456 -903 516

Net change in cash and cash equivalents 66 327 451 757 1 102 138 -650 381

Cash at the end of the quarter 659 941 662 696 2 216 594 -1 553 898

13


• NHLS’s cash balance increased from R1.1 billion as at the end of the second quarter to

R2.2 billion in the third quarter. This was mainly due to:

– Higher than anticipated receipts from provinces.

– Important to note total cash at the end of the third quarter of 2018/19 (R2.2 billion) only equates

to approximately 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 R6.7 billion was received (Cash receipts from stakeholders) by the end of the third

quarter of 2018/19 compared to R6.4 billion forecast for the same period. This is mainly due to the

higher than anticipated test volumes (NHLS had anticipated that electronic gate-keeping rules will

be implemented which will result in reduction of test volumes).

• A total of R5.5 billion or 97.2% (cash payment to stakeholders), of which R2.9 billion was on goods

and services R2.6 billion on compensation of employees, was spent against the revised forecast of

R5.7 billion. The variance of R155.3 million or 2.7% was mainly due to vacancies that were not

filled (COE variance - R62.7 million) and procurement delays (goods and services variance-

R92,6 million) as result of shortage of staff in the Supply Chain Management unit (SCM).

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

• The shortage of staff in the SCM unit (causing delays in finalisation of tenders under non-financial

assets) has also resulted in lower than anticipated spending, R188.2 million lower than forecasted

spending of R262.5 million, in the third quarter of 2018/19 for non-financial assets.

14

National Research Foundation

R'000

2018/19

Approved

Budget

Qtr3

forecast

Qtr3

YTD

(Over)/

under

spending


Cash flow direct


Sales of goods and services other than capital assets 76 068 54 367 43 391 10 976


Transfers received 3 691 441 2 915 055 2 710 263 204 792


Unclassified revenue 716 007 160 740 587 382 -426 642

Cash paid to stakeholders 4 025 947 2 962 956 3 003 298 -40 342

Current payments


Goods and services 3 139 327 2 301 205 2 424 222 -123 016

Interest and rent on land - - 16 -16

Transfers and subsidies 1 181 836 1 073 -236




Buidlings and fixed structures 6 575 3 478 4 303 -825

Land and subsoil assets 11 745 9 597 - 9 597


Other fixed assets 131 96 366 -270

Cash flows from financing activities -4 -3 -16 13

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

Net change in cash and cash equivalents 42 998 -62 002 188 260 -250 262

Cash at the end of the quarter 505 000 400 000 650 262 -250 262

15


• The NRF’s main source of revenue is transfer payments from the Department of Science and Technology,

with the remainder “unclassified revenue”, consisting of contract revenue from other government

departments and entities and interest received on funds invested.

• In the third quarter of 2018/19, NRF’s receipts amounted to R3.4 billion, R217.8 million higher than projected

as a result of increased revenue generated from private stakeholders for the South African Research Chairs

Initiative (SARChI). Funding from these sources are expected increase significantly, in line with the long-

term investment trajectory on scientific research and innovation in support of the National Research and

Development Strategy.

• Goods and services at the end of the third quarter was higher than projected by R123 million or 5.3 per cent.

The entity spent R2.4 billion against a forecast of R2.3 billion, due to the entity expanding its bursary and

scholarship programme intake to reach more recipients, this has resulted in higher than anticipated

payments to various universities.

• Spending on compensation of employees was lower than projected due to the entity transferring a portion of

the payroll budget to fund capital projects that focus on research and development. In addition, lower

spending is as a result of unfilled posts due to delays in HR processes.

• Cash flow from investing activities was R171.5 million against a projected R244 million, resulting in

underspending of R72.8 million due to reduced spending plans on buildings and fixed structures, and other

fixed assets. The lower spending was also caused by slow activities in the South African Environmental

Observation Network (SAEON), which is a national research facility managed by the NRF, resulting in

slowing spending.

16

National Skills Fund

R'000

2018/19

Approved

Budget

Qtr3

forecast

Qtr3

YTD

(Over)/

under

spending


Cash receipts from stakeholders 3 894 954 2 921 215 2 898 981 22 234



Cash paid to stakeholders 6 002 358 4 501 768 2 506 820 1 994 948

Current payments


Goods and services 232 291 174 218 75 376 98 842


Cash flows from operating activities -2 107 404 -1 580 553 392 161 -1 972 714

Cash flows from advancing activities (Financial Institutions only) 2 322 118 1 741 588 -92 056 1 833 644

Cash flows from investing activities 1 709 588 1 282 191 114 461 1 167 730


Buidlings and fixed structures 1 687 141 1 265 356 111 861 1 153 495

Machinery and equipment 4 947 3 710 750 2 960


Cash at the beginning of the quarter 1 647 422 1 235 567 9 604 1 225 963

Net change in cash and cash equivalents -1 494 874 -1 121 156 185 644 -1 306 800


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 third quarter is lower than projected by

R25 million due to vacant posts that were not filled as projected

• Expenditure on goods and services is lower than projected by R98.8 million due to the costs

related to tools of trade (computers, software) that couldn’t be procured as a result of vacancies

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

R1.9 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. Spending is expected to

scale up in the fourth quarter of 2018/19

• By the third quarter, investment activities increased from R1.74 million to R1.83 million, an

increase of R92 million owing to increases in NSF’s PIC Investment Portfolio

• The cash at the end of the third quarter of 2018/19 amounted to R195.2 million against a forecast

of R114.4 million, reflecting a variance of R80.8 million. The higher than projected cash at the end

of the quarter is due to the late receipt of invoices which delayed the processing of grants

disbursements in the third quarter.

18

National Student Financial Aid Scheme

R'000

2018/19

Approved

Budget

Qtr3

forecast

Qtr3

YTD

(Over)/

under

spending







Current payments

Compensation of employees 187 801 142 729 142 932 -203



Cash flows from operating activities 427 249 315 434 5 157 282 -4 841 848

Cash flows from advancing activities (Financial Institutions only) 548 243 498 455 -1 268 454 1 766 909

Cash flows from investing activities 10 404 4 957 4 169 787


Machinery and equipment 5 598 963 776 187

Other fixed assets 4 806 3 994 3 393 601

Cash at the beginning of the quarter 2 798 012 2 862 385 3 663 940 -801 556

Net change in cash and cash equivalents 965 088 808 932 3 884 658 -3 075 726

Cash at the end of the quarter 3 763 100 3 671 317 7 548 599 -3 877 282

19


• The entity’s total cash receipts from stakeholders amount to R22.7 billion, which is

98.6 per cent of the total budget

• Expenditure for goods and services amounted to R125 million, reflecting overspending by

R53.4 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 underspent by R5 billion mainly due to the delays in disbursing

prepayments for the 2019 academic year. These delays were caused by late applications

which affected the evaluation process. The payments will be made at the beginning of the

fourth quarter

20


• Net cash flow from operation activities overspent by R4.8 billion due to a change in the

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

Bursaries are classified as an 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 third quarter amounted to R7.5 billion, which is R3.9 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

Qtr3

forecast

Qtr3

YTD

(Over)/under

spending


Cash receipts from stakeholders 11 045 448 8 498 355 6 969 205 1 529 150

Sales of goods and services other than capital assets 3 570 202 2 682 039 1 647 637 1 034 402




Current payments



Interest and rent on land 1 806 1 353 -9 949 11 302

Transfers and subsidies 1 559 1 370 8 900 -7 530

Cash flows from operating activities 838 825 838 825 -180 501 1 019 326

Cash flows from investing activities 12 653 090 6 959 200 2 141 794 4 817 405

Cash flows from financing activities 4 202 867 - - -


Net change in cash and cash equivalents -7 611 398 -6 120 375 -2 322 295 -3 798 080


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 18 per cent, or R1.5 billion lower than what was

forecasted. This was mainly from sales of goods and services, as a result of declining

passenger numbers, asset vandalism, low levels of fleet utilisation, and fare evasion;

– Transfers received was 15,4 per cent, or R838,8 million less than projected due to the

department withholding capital grant funds. These have since been transferred in quarter 4.

– Interest and rent on land is high as a result of high bank balances that are expected to reduce

as PRASA spends on its capital programmes;

– Cash paid to stakeholders was 6.7 per cent, or R509.8 million lower than expected due to

lower payments on goods and services as a result of items such as professional fees, lease

payments and security costs.

• Cash flow from investing is 69.2 per cent, or R4.8 billion lower than projected due to low

spending on capital assets and is as a result of Supply Chain Management (SCM) challenges that

has resulted in delayed capital spending; a rescue plan is being developed to address this

challenge.

• Cash available at the end of the quarter amounted to R11.5 billion, which is 48.4 per cent, or

R3.7 billion more than expected.

23

Road Accident Fund

R'000

2018/19

Approved

Budget

Qtr3

forecast

Qtr3

YTD

(Over)/under

spending

Road Accident Fund




Unclassified revenue - - 178 -178


Current payments





Cash flows from operating activities 106 077 -98 183 1 552 410 -1 650 593



Net change in cash and cash equivalents 722 -177 308 1 507 303 -1 684 611


24

Road Accident Fund

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

• The Fund has no control over claims from accident victims resulting in significant cash

paid to claimants;

• Cash receipts were 1.8 per cent, or R548,4 million higher than expected,

• Cash paid to stakeholders was 3.5 per cent, or R1.1 billion lower than expected as a

result of slower payments to households for compensation related to road accident

claims;

• As a result, cash available at the end of the third quarter is R3.1 billion.

25

South African National Parks

R'000

2018/19

Approved

Budget

Qtr3

forecast

Qtr3

YTD

(Over)/

under

spending


Cash flow direct

Cash receipts from stakeholders 2 141 560 535 390 1 719 079 -1 183 689

Sales of goods and services other than capital assets 1 822 524 455 631 1 545 471 -1 089 840


Transfers received 259 088 64 772 125 351 -60 579

Cash paid to stakeholders 2 103 176 525 794 1 664 591 -1 138 797

Current payments

Compensation of employees 1 021 468 255 367 827 637 -572 270

Goods and services 1 062 216 265 554 824 496 -558 942



Cash flows from investing activities -66 042 -65 931 170 485 -236 416



subsidiary)



subsidiary) -66 042 -66 042 -16 276 -49 766


Buidlings and fixed structures - 69 182 316 -182 247

Other fixed assets - - 4 411 -4 411

Sales of non-financial assets - 42 34 8

Cash flows from financing activities -48 020 -17 546 -33 077 15 531

Cash at the beginning of the quarter 1 778 443 1 776 784 1 776 646 139

Net change in cash and cash equivalents -75 678 -74 019 -181 558 107 539

Cash at the end of the quarter 1 702 765 1 702 765 1 595 088 107 678

26


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

other park activities, including transfers from the Department of Environmental Affairs.

• In the third quarter of 2018/19, Parks cumulative receipts amounted to R1.7 billion,

against projected receipts of R535.4 million for the third quarter. Receipts are higher

than projected due to an increase in sales of goods and services other than capital

assets.

• Transfers received amounted to R125.4 million and constitute 13.7 per cent of the total

cash receipts from stakeholders.

• Cash available at the beginning of the third quarter amounted to R1.8 billion, which was

R134 thousands less than expected.

• Cash available at the end of the third quarter amounted to R1.6 billion, which was

R107.7 million less than expected.

27

South African Revenue Services

R'000

2018/19

Approved

Budget

Qtr3

forecast

Qtr3

YTD

(Over)/

underspending

variances

South African Revenue Service

Cash flow direct


Sales of goods and services other than capital assets 307 776 230 832 479 091 -248 259



Cash paid to stakeholders 10 534 495 7 981 620 7 981 521 98

Current payments

Compensation of employees 7 331 463 5 466 663 5 807 642 -340 979


Interest and rent on land 66 49 99 -50

Cash flows from operating activities -175 259 -212 193 -631 820 419 628

Cash flows from advancing activities (Financial Institutions

only) 40 000 30 000 20 000 10 000



Buidlings and fixed structures 87 865 87 590 44 961 42 629


Other fixed assets 279 454 178 328 179 027 -699

Sales of non-financial assets - - 230 -230

Cash flows from financing activities -12 588 -9 441 292 -9 733

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 -832 426 -1 093 601 261 175


28

South African Revenue Services

• Cash flow from investing was R158.3 million lower than the quarter 3 forecast.

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

assets under construction was R42.6 million lower than the quarter 3 forecast mainly

due to deferment of certain projects brought about by budget cuts and delays in

payments to suppliers.

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

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

storage equipment was R116.6 million lower than the quarter 3 forecast mainly due

to outstanding invoices from suppliers.

– Other fixed assets which includes computer software was R699 000 higher than the

quarter 3 forecast mainly due to payments of outstanding supplier invoices from

previous quarter.

29

The South African National Roads Agency Limited

R'000

2018/19

Approved

Budget

Qtr3

forecast

Qtr3

YTD

(Over)/under

spending



Sales of goods and services other than capital assets 4 573 776 3 430 332 2 916 767 513 565


Transfers received 9 949 269 7 461 952 8 464 324 -1 002 372

Cash paid to stakeholders 14 251 556 10 688 667 13 358 358 -2 669 691

Current payments


Goods and services 10 701 014 8 025 761 9 937 975 -1 912 215

Interest and rent on land 3 147 168 2 360 376 3 125 541 -765 165

Cash flows from operating activities 1 210 241 438 305 -1 819 797 2 258 102

Cash flows from investing activities 10 021 655 7 516 241 5 388 521 2 127 720

Cash flows from financing activities 13 361 354 10 021 016 2 586 221 7 434 795

Cash at the beginning of the quarter 3 078 965 3 290 947 7 937 026 -4 646 079

Net change in cash and cash equivalents 4 949 940 3 243 079 -4 227 835 7 470 914

Cash at the end of the quarter 8 028 905 6 534 026 3 709 190 2 824 836

30


• 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 515.2 per cent, or R2.3 billion higher than expected.

– Cash receipts are 3.7 per cent, or R411.6 million higher than expected due to highertransfers received from the Department of Transport.

– Cash payments are 25.0 per cent or R2.7 billion higher than expected due to higherpayments to service providers for road maintenance and higher interest payment onborrowings and rent on land. This also accounts for the 23,8 per cent higher thanexpected spending in goods and services.

• Cash flow from investing is 28.3 per cent, or R2.1 billion lower than expected due tothe late commencement in construction of various projects.

• Cash flow from financing is 74,2 per cent, or R7,4 billion lower than expected due tolimited proceeds from borrowings realised at the end of the third quarter as a result oflower than expected issuance of bonds.

• Cash available at the end of the quarter amounted to R3.7 billion, which is43.2 per cent, or R2.8 billion lower than expected.

31

South African Social Security Agency

R'000

2018/19

Approved

Budget

Qtr3

forecast Qtr3_YTD

(Over)/under

spending


Cash flow direct



Interest and rent on land 869 652 961 -309



Current payments


Goods and services 4 232 220 3 174 165 1 761 059 1 413 106

Transfers and subsidies 30 001 22 501 29 024 -6 523

Cash flows from operating activities 40 839 30 631 1 583 633 -1 553 002

Cash flows from investing activities 31 091 23 318 -508 628 531 946

Investment in associates

Investment in associates - - -541 000 541 000


Buidlings and fixed structures - - 1 568 -1 568


Other fixed assets - - 8 316 -8 316

Sales of non-financial assets

Sales of non-financial assets 322 242 1 209 -968

Cash flows from financing activities 869 652 185 467

Cash at the beginning of the quarter 542 278 406 706 509 168 -102 462

Net change in cash and cash equivalents 11 261 8 448 1 012 864 -1 004 416

Cash at the end of the quarter 553 539 415 154 1 522 032 -1 106 878

32


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

revenue. Total cash forecast by quarter 3 is R5.8 billion

• A total of R5.7 billion was received (Cash receipts from stakeholders) in the third quarter of

2018/19, which is R100 million lower when compared to the forecast of R5.8 billion at the

beginning of the quarter.

• A total of R4.2 billion was paid to stakeholders (Cash payments to stakeholders) in the third

quarter of 2018/19, which is R1.6 million lower when compared to the forecast of R5.8 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 and SAPO. No invoices were received in quarter 3. SASSA expects the next

invoice from SAPO in January 2019. Pending payments to both stakeholders are expected to be

settled in quarter 4.

• Spending on non-financial assets during the third quarter of 2018/19 is R9.9 million higher due to

lower amount projected for computer software and accommodation for seconded employees

(residential buildings).

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

was made to SAPO to enable investment in infrastructure.

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

of the quarter amounts to R1.5 billion resulting in a variance of approximately R1.0 million due to

the lower than expected payments made during the quarter as mentioned above.

33

South African Tourism

R'000

2018/19

Approved

Budget

Qtr3

forecast

Qtr3

YTD

(Over)/

under

spending


Cash flow direct




Transfers received 1 208 048 1 121 481 1 121 497 -16

Cash paid to stakeholders 1 415 548 1 061 663 1 178 835 -117 173

Current payments


Goods and services 1 217 038 912 778 1 037 074 -124 296

Interest and rent on land 8 7 - 7

Cash flows from operating activities 24 016 229 227 89 675 139 552

Cash flows from financing activities -98 76 - 76

Cash at the beginning of the quarter 573 802 571 006 752 617 -181 612

Net change in cash and cash equivalents -0 229 303 89 675 139 628


34


• SAT’s revenue streams comprise the grant allocation from government, voluntary Tourism

Marketing South Africa (TOMSA) levies allocated through the Tourism Business Council of South

Africa (TBCSA), interest income, grading income, and sundry income (income from exhibitions

such as for instance INDABA and Meetings Africa).

• In the third quarter of 2018/19, SAT’s total cash receipts amounted to R1.3 billion , R22.4 million

less than projected.

• Transfers received amounted to R1.1 billion and constitute 88.4 per cent of the total cash receipts

from stakeholders.

• SAT’S main outflow is primarily driven by goods and services, which amounted to R1.04 billion or

85.2 per cent of the approved budget in the third quarter of 2018/19, R124.3 million higher than

projection for the quarter. The reason for the overspending is due to marketing activities related to

the operations of the entity, agency and support/outsourced services, research and development

and other unclassified goods and services such as exhibitions hosted by the entity.

• Cash available at the beginning of the third quarter amounted to R752.6 million, which was

R181.6 million more than expected.

• Cash available at the end of the third quarter amounted to R842.3 million, which was R42 million

more than expected due to the upfront allocation of the R1.1 billion transfer payment by the

Department of Tourism , which has improved cash position of the entity.

35

Unemployment Insurance Fund

R'000

2018/19

Approved

Budget

Qtr3

forecast

Qtr3

YTD

(Over)/under

spending


Cash flow direct

Cash receipts from stakeholders 32 687 805 23 308 948 25 810 093 -2 501 145

Fines, penalties and forfeits

Fines, penalties and forfeits 301 160 202 752 161 641 41 111

Interest and rent on land 2 338 424 1 666 271 8 183 570 -6 517 299

Transfers received (UI Contributions) 21 057 893 15 063 653 14 238 007 825 646


Profit from sale of investment instruments 8 990 328 6 376 272 3 226 875 3 149 397


Current payments

Compensation of employees 1 579 867 1 129 553 950 908 178 645

Goods and services 1 896 705 1 457 639 769 167 688 472

Transfers and subsidies 13 799 079 8 806 551 8 058 648 747 903

Cash flows from operating activities 15 412 154 11 915 205 16 031 370 -4 116 165

Cash flows from investing activities 212 450 535 428 -15 873 713 16 409 141



subsidiary)

Net cash flow from investing activities - Other - - -15 937 987 15 937 987

Purchase of non-financial assets

Buildings and fixed structures - 364 578 32 116 332 462



Cash at the beginning of the quarter -10 709 321 -8 011 992 2 704 048 -10 716 040

Net change in cash and cash equivalents 15 199 704 11 379 777 29 109 11 350 668


36


• The Fund generates its revenue from a specific purpose tax on employers and employees of equal contribution

of 1 per cent on salary and from interest on investments

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

– Benefits paid amounted to R8.1 billion which is R747.9 million less than forecasted due to underspending onthe Labour Activation Programme (LAP) Schemes. LAP could not finalise the 2018/19 Requests forPartnership Proposals (RFPP) that were issued as the Fund wanted to verify the credibility of the selectionprocess. As a result appointment letters to partners were only issued in December 2018 and the fundingagreement with the partners had to be finalised.

• The slow spending on compensation of employees is due to the 12.5 per cent vacancy rate at the end of

December 2018 arising from the newly created 28 call centre agent posts still to be filled.

• Cashflow from operating activities was R4.1 billon more than expected due to higher interest earned on fixed

income investments such as bonds and dividends from Johannesburg Stock Exchange listed equity and

property.

• Cash flow from investing activities was R16.4 billion more than expected due to the fund not credibly budgeting

or forecasting for this item, as well as the sale of investment instruments such as shares on which profits were

realised and deposited into the PIC current account. These profits were re-invested in Jan 2019.

• Cash available at the end of the quarter amounted to R2.7 billion which is R634.6 million less than forecasted

due to less contributions collected by SARS arising from job losses, moderation in wage settlements and

contraction in bonus pay-outs resulting in a decrease in PAYE growth levels and thus UIF contributions which is

based on salary.

quarterly expenditure reporting for public...

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