Page 297 - SAMRC Annual Report 2023-24

FINANCIAL INFORMATION

ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2024
NOTES TO THE ANNUAL FINANCIAL STATEMENTS

(CONTINUED)

41. Budget differences

Material differences between budget and actual amounts
The baseline grant was cut by R37,450,000 due to budget cuts that were announced by National Treasury in the latter
part of the 2023/2024 financial year, this is reflected in the difference amount for transfers received. The adjustment also
reflects the VAT which is allocated as a transfer and subsidies expense. The SACENDU grant was included in the budgeted
transfers received, but was allocated to the sale of goods and services as this is managed as a separate contract.

Sale of goods and services and other non-tax revenue were higher than anticipated. Higher than anticipated external
funding from contracts and grants were received during the period under review. The increase in external contracts and
grant funding also had a material effect on the salaries and goods and services costs.

42. Risk management

Liquidity risk
The entity’s risk to liquidity is a result of the funds available to cover future commitments. The entity manages liquidity risk
through an ongoing review of future commitments and credit facilities. Trade and other payables are due within 12 months
and equal their carrying balances as the impact of discounting is not significant.

SAMRC’s primary source of income is government grants and contractual income, funds receivable is estimated when
preparing the MTEF. Budgets are prepared for each contract and spend is monitored on an ongoing basis to ensure the
liquidity of the entity.

Credit risk
This is the risk that one party to a financial instrument will cause a financial loss for the other party by failing to discharge
an obligation. Management has a debtors policy in place, and this makes provision for credit evaluation for customers
requiring credit above R1 million. Investments are allowed only in liquid securities and only with the SARB.

Contract work constitutes a significant portion of the SAMRC’s income, and the major exposure is delays in finalising
contracts, and disputes in terms of whether or not the outputs have been produced. A certain number of contracts are
stated and paid on a reimbursive basis, and this poses a risk if the funder is not satisfied with the outputs.

The SAMRC operates internationally and is exposed to foreign exchange risk arising from various currency exposures,
primarily with respect to the US dollar; GBP and the Euro. SAMRC receives substantial funding from the UK; USA and
Europe, as a result its statement of financial position can be affected by movements in the US dollar; GBP and Euro.
Foreign exchange risk arises from future commercial transactions, recognised assets and liabilities and net investments.

Due to uncertainties in respect of when cash will be received from overseas, SAMRC does not hedge foreign exchange
fluctuations.

Approximately 13% of SAMRC’s Trade and funder/grant debtors (R11,884,443) are exposed to currency compared to 9%
last year (R10,943,960).

SAMRC’s project office does a scenario calculation looking at how much would be lost if there was an unfavourable currency
change. On the basis of this outcome, it will be decided whether or not to proceed with a particular project.

SAMRC ANNUAL REPOR T 2023-24 295