Statement of Financial Position as at 31 March 2022
Statement of Financial Position as at 31 March 2022
Note(s) | 2022 | 2021 Restated* | |
Assets | |||
Current Assets | |||
Receivables from exchange transactions | 3 | 5 738 767 | 10 436 964 |
Receivables from non-exchange transactions | 4 | 9 452 146 | 34 674 |
Prepayments | 5 141 662 | 3 110 306 | |
Cash and cash equivalents | 5 | 244 373 304 | 150 764 296 |
264 705 879 | 164 346 240 | ||
Non-Current Assets | |||
Property, plant and equipment | 6 | 26 620 331 | 29 824 703 |
Intangible assets | 7 | 2 818 059 | 1 872 911 |
29 438 390 | 31 697 614 | ||
Total Assets | 294 144 269 | 196 043 854 | |
Liabilities | |||
Current Liabilities | |||
Operating lease liability | 8 | 3 259 196 | 1 600 515 |
Payables from exchange transactions | 9 | 15 656 404 | 32 065 786 |
Unspent conditional grants | 10 | 3 383 259 | – |
Provisions | 11 | 14 197 149 | 14 188 396 |
Income received in advance | 12 | 191 526 908 | 97 761 244 |
Deferred income: Backlog reduction project | 13 | 12 476 800 | 25 020 697 |
240 499 716 | 170 636 638 | ||
Total Liabilities | 240 499 716 | 170 636 638 | |
Net Assets | 53 644 553 | 25 407 216 | |
Accumulated surplus | 53 644 553 | 25 407 216 |
Statement of Financial Performance for the year ended 31 March 2022
Note(s) | 2022 | 2021 Restated* | |
Revenue | |||
Revenue from exchange transactions | |||
Fee income | 14 | 181 794 887 | 107 228 542 |
Sundry income | 15 | 217 309 | 2 325 801 |
Interest received | 16 | 9 557 126 | 4 006 563 |
Gain on foreign exchange | 127 249 | 171 284 | |
Total revenue from exchange transactions | 191 696 571 | 113 732 190 | |
Revenue from non-exchange transactions | |||
Transfer revenue | |||
Transfer payment received | 17 | 146 287 000 | 156 572 000 |
Services in kind: Backlog reduction project | 18 | 15 348 507 | 20 763 998 |
Grant realised | 19 | 5 389 733 | – |
Grant income | 20 | 8 822 956 | 2 104 925 |
Transfer of assets received from National Department of Health | – | 767 922 | |
Total revenue from non-exchange transactions | 175 848 196 | 180 208 845 | |
Total revenue | 367 544 767 | 293 941 035 | |
Expenditure | |||
Employee related costs | 21 | (181 949 226) | (147 089 885) |
Backlog reduction project | 22 | (52 275 755) | (67 516 871) |
Depreciation | 23 | (7 016 149) | (5 558 241) |
Impairment of assets | (404 044) | (624 618) | |
Lease rentals on operating lease | (19 518 295) | (15 502 556) | |
Bad debts written off | (6 179 867) | (2 795 929) | |
Laboratory services | 24 | (20 797 520) | (19 922 033) |
Loss on disposal of assets | (412 627) | (1 228 163) | |
Operating Expenses | 25 | (50 753 947) | (53 359 607) |
Total expenditure | (339 307 430) | (313 597 903) | |
Surplus (deficit) for the year | 28 237 337 | (19 656 868) |
Statement of Changes in Net Assets for the year ended 31 March 2022
Note(s) | Accumulated surplus / deficit | Total net assets | |
Balance at 01 April 2020 | 45 064 084 | 45 064 084 | |
Deficit for the period | (19 656 868) | (19 656 868) | |
Opening balance as previously reported | 20 306 128 | 20 306 128 | |
Adjustments: | |||
Correction of errors | 31 | 5 101 088 | 5 101 088 |
Restated* Balance at 01 April 2021 | 25 407 216 | 25 407 216 | |
Surplus for the period | 28 237 337 | 28 237 337 | |
Balance at 31 March 2022 | 53 644 553 | 53 644 553 | |
Cash Flow Statement for the year ended 31 March 2022
Note(s) | 2022 | 2021 Restated* | |
Cash flows from operating activities | |||
Receipts | |||
Fee and deferred income | 261 125 028 | 146 895 718 | |
Government grants | 146 287 000 | 156 572 000 | |
Interest income | 9 474 299 | 3 962 298 | |
Grant received | 8 772 992 | 16 704 382 | |
425 659 319 | 324 134 398 | ||
Payments | |||
Employee costs | (185 008 774) | (171 886 679) | |
Suppliers | (142 882 457) | (102 364 911) | |
(327 891 231) | (274 251 590) | ||
Net cash flows from operating activities | 26 | 97 768 088 | 49 882 808 |
Cash flows from investing activities | |||
Purchase of property, plant and equipment | (3 307 623) | (19 328 064) | |
Proceeds from sale of property, plant and equipment | 201 061 | 19 130 | |
Purchase of other intangible assets | (1 052 518) | (1 767 133) | |
Net cash flows from investing activities | (4 159 080) | (21 076 067) | |
Cash flows from financing activities | |||
Net increase in cash and cash equivalents | 93 609 008 | 28 806 741 | |
Cash and cash equivalents at the beginning of the year | 150 764 296 | 121 957 555 | |
Cash and cash equivalents at the end of the year | 5 | 244 373 304 | 150 764 296 |
Statement of Comparison of Budget and Actual Amounts for the year ended 31 March 2022
Budget on Cash Basis | Approved budget | Adjustments | Final budget | Actual amounts on comparable basis | Difference between final budget and actual | Reference |
Statement of Financial Performance Revenue | ||||||
Revenue from exchange transactions | ||||||
Fee income | 162 263 982 | – | 162 263 982 | 169 449 590 | 7 185 608 | 39.1 |
Backlog fee income | 45 000 000 | – | 45 000 000 | 12 345 297 | (32 654 703) | 39.1 |
Sundry income | – | – | – | 217 309 | 217 309 | 39.1 |
Interest received | 3 999 014 | – | 3 999 014 | 9 557 126 | 5 558 112 | 39.2 |
Total revenue from exchange transactions | 211 262 996 | – | 211 262 996 | 191 569 322 | (19 693 674) | |
Revenue from non-exchange transactions | ||||||
Transfer revenue Government grants | 146 287 000 | – | 146 287 000 | 146 287 000 | – | |
Services in kind | – | – | – | 15 348 507 | 15 348 507 | 39.8 |
Grants realised | – | – | – | 5 389 733 | 5 389 733 | 39.8 |
Grant received | – | – | – | 8 822 956 | 8 822 956 | 39.8 |
Total revenue from non-exchange transactions | 146 287 000 | – | 146 287 000 | 175 848 196 | 29 561 196 | |
Total revenue | 357 549 996 | – | 357 549 996 | 367 417 518 | 9 867 522 | |
Expenditure | ||||||
Employee related costs | (187 574 141) | – | (187 574 141) | (181 949 226) | 5 624 915 | 39.3 |
Backlog reduction project | (47 000 000) | – | (47 000 000) | (52 275 755) | (5 275 755) | 39.6 |
Depreciation | – | – | (7 016 149) | (7 016 149) | 39.4 | |
Impairment of assets | – | – | (404 044) | (404 044) | 39.4 | |
Lease rentals on operating lease | (22 730 570) | (22 730 570) | (19 518 295) | 3 212 275 | 39.7 | |
Bad debts written off | – | – | (6 179 867) | (6 179 867) | 39.9 | |
Contracted services | (20 800 000) | – | (20 800 000) | (20 797 520) | 2 480 | |
Operating expenses | (79 445 285) | – | (79 445 285) | (50 753 947) | 28 691 338 | 39.5 |
Total expenditure | (357 549 996) | – | (357 549 996) | (338 894 803) | 18 655 193 | |
Operating surplus | – | – | – | 28 522 715 | 28 522 715 | |
Loss on disposal of assets and liabilities | – | – | – | (412 627) | (412 627) | 39.4 |
Gain on foreign exchange | – | – | – | 127 249 | 127 249 | |
– | – | – | (285 378) | (285 378) | ||
Surplus before taxation | – | – | – | 28 237 337 | 28 237 337 | |
Actual Amount on Comparable Basis as Presented in the Budget and Actual Comparative Statement | – | – | – | 28 237 337 | 28 237 337 |
Accounting Policies
1. Presentation of Annual Financial Statements
The annual financial statements have been prepared in accordance with the Standards of Generally Recognised Accounting Practice (GRAP), issued by the Accounting Standards Board in accordance with Section 91(1) of the Public Finance Management Act (Act 1 of 1999) and the National Treasury issued guidelines, instruction notes and practice notes.
These annual financial statements have been prepared on an accrual basis of accounting and are in accordance with historical cost convention as the basis of measurement, unless specified otherwise.
In the absence of an issued and effective Standard of GRAP, accounting policies for material transactions, events or conditions were developed in accordance with paragraphs 8, 10 and 11 of GRAP 3 as read with Directive 5 issued by the Accounting Standards Board..
Assets, liabilities, revenues and expenses were not offset, except where offsetting is either required or permitted by a Standard of GRAP.
A summary of the significant accounting policies, which have been consistently applied in the preparation of these annual financial statements, are disclosed below.
When the presentation or classification of items in the annual financial statements is amended, prior period comparative amounts are restated if material. The nature and reason for the reclassification is disclosed. Where the accounting errors have been identified in the current year, the correction is made retrospectively as far as it is practical, and prior year comparatives are restated accordingly. Where there has been a change in accounting policy in the current year, the adjustment is made retrospectively as far as practicable, and the prior year comparatives are restated accordingly.
These accounting policies are consistent with the previous period.
1.1 Presentation currency
These annual financial statements are presented in South African Rand, which is the functional currency of the entity.
1.2 Going concern assumption
These annual financial statements have been prepared based on the expectation that the entity will continue to operate as a going concern for at least the next 12 months.
1.3 Materiality
Material omissions or misstatements of items are material if they could, individually or collectively, influence the decisions or assessments of users made on the basis of the financial statements. Materiality depends on the nature or size of the omission or misstatement judged in the surrounding circumstances. The nature or size of the information item, or a combination of both, could be the determining factor.
Assessing whether an omission or misstatement could influence decisions of users, and so be material, requires consideration of the characteristics of those users. The Framework for the Preparation and Presentation of Financial Statements states that users are assumed to have a reasonable knowledge of government, its activities, accounting and a willingness to study the information with reasonable diligence. Therefore, the assessment takes into account how users with such attributes could reasonably be expected to be influenced in making and evaluating decisions.
1.4 Significant judgements and sources of estimation uncertainty
In preparing the annual financial statements, management is required to make estimates and assumptions that affect the amounts represented in the annual financial statements and related disclosures. Use of available information and the application of judgement is inherent in the formation of estimates. Actual results in the future could differ from these estimates which may be material to the annual financial statements. Uncertainties about these estimates and assumptions could result in outcomes that require a material adjustment to the carrying amount of the relevant asset or liability in future periods.
In the process of applying these accounting policies, management has made judgements that may have a significant effect on the amounts recognised in the financial statements.
Estimates are informed by historical experience, information currently available to management, assumptions, and other factors that are believed to be reasonable under the circumstances. The estimates shall be reviewed on a regular basis. Changes in estimates that are not due to errors are processed in the period of the review and applied prospectively.
Other significant judgements, sources of estimation uncertainty and/or relating information, have been disclosed in the relating notes. In applying the entity’s accounting policies estimates shall be made on items such as the following:
Trade receivables
The entity assesses its trade receivables for impairment at the end of each reporting period. In determining whether an impairment loss should be recorded in surplus or deficit, the entity makes judgements as to whether there is observable data indicating a measurable decrease in the estimated future cash flows from a financial asset.
The impairment for trade receivables is calculated on a portfolio basis, based on historical loss ratios, adjusted for national and industry-specific economic conditions and other indicators present at the reporting date that correlate with defaults on the portfolio. These annual loss ratios are applied to loan balances in the portfolio and scaled to the estimated loss emergence period.
Impairment testing
In testing for, and determining the value-in-use of non-financial assets, management is required to rely on the use of estimates about the asset’s ability to continue to generate cash flows (in the case of cash-generating assets).
For non cash-generating-assets, estimates are made regarding the depreciated replacement cost, restoration cost, or service units of the asset, depending on the nature of the impairment and the availability of information.
Refer to note 6 for details regarding the impairment loss recognised in the current year.
Other provisions
Provisions shall be measured using the estimated future outflows required to settle the obligation. In the process of determining the best estimate of the amounts that will be required in future to settle the provision management considers the weighted average probability of the potential outcomes of the provisions raised.
This measurement entails determining what the different potential outcomes will be for a provision as well as the financial impact of each of those potential outcomes. Management then assigns a weighting factor to each of these outcomes based on the probability that the outcome will materialise in future.
1.4 Significant judgements and sources of estimation uncertainty (continued)
The factor is then applied to each of the potential outcomes and the factored outcomes are then added together to arrive at the weighted average value of the provisions.
Additional disclosure of these estimates of provisions are included in note 11 – Provisions.
Leave provision
Leave provision shall be measured using the accumulated leave days on the assumption that all days will be taken within the stipulated timeframe per applicable leave policy.
Refer to note 11 for details regarding the leave provisions.
Depreciation and amortisation
Depreciation and amortisation recognised on property, plant and equipment and intangible assets shall be determined with reference to the useful lives and residual values of the underlying items.
The useful lives of assets are based on management’s estimation of the asset’s condition, expected condition at the end of the period of use, its current use, expected future use and the entity’s expectations about the availability of finance to replace the asset at the end of its useful life. In evaluating the condition, the use of the asset informs the useful life. Management considers the impact of technology and minimum service requirements of the assets.
Refer to note for details regarding the change in estimate following the revision of useful lives of property, plant and equipment in the current year.
Contingencies
Management uses its best estimate of the value of the contingencies to be disclosed based on historical experience and assumptions per case.
1.5 Property, plant and equipment
Property, plant and equipment are tangible non-current assets (including infrastructure assets) that are held for use in the production or supply of goods or services, rental to others, or for administrative purposes, and are expected to be used during more than one period.
The cost of an item of property, plant and equipment is recognised as an asset when:
- it is probable that future economic benefits or service potential associated with the item will flow to the entity; and
- the cost of the item can be measured reliably.
Property, plant and equipment is initially measured at cost.
The cost of an item of property, plant and equipment is the purchase price and other costs attributable to bring the asset to the location and condition necessary for it to be capable of operating in the manner intended by management. Trade discounts and rebates are deducted in arriving at the cost.
Where an asset is acquired through a non-exchange transaction, its cost is its fair value as at date of acquisition.
Where an item of property, plant and equipment is acquired in exchange for a non-monetary asset or monetary assets, or a combination of monetary and non-monetary assets, the asset acquired is initially measured at fair value (the cost). If the acquired item’s fair value was not determinable, it’s deemed cost is the carrying amount of the asset(s) given up.
1.5 Property, plant and equipment (continued)
When significant components of an item of property, plant and equipment have different useful lives, they are accounted for as separate items (major components) of property, plant and equipment.
Costs include costs incurred initially to acquire or construct an item of property, plant and equipment and costs incurred subsequently to add to, replace part of, or service it. If a replacement cost is recognised in the carrying amount of an item of property, plant and equipment, the carrying amount of the replaced part is derecognised.
Property plant and equipment are depreciated on the straight line basis over their expected useful lives to their residual value.
Recognition of costs in the carrying amount of an item of property, plant and equipment ceases when the item is in the location and condition necessary for it to be capable of operating in the manner intended by management.
Property, plant and equipment is carried at cost less accumulated depreciation and any impairment losses. The useful lives of items of property, plant and equipment have been assessed as follows:
Item | Depreciation method | Average useful life |
Furniture and fixtures | Straight-line | 10-14 years |
Motor vehicles | Straight-line | 5 years |
Computer equipment | Straight-line | 5-7 years |
Leasehold improvements | Straight-line | 5-10 years |
Other fixed assets | Straight-line | 10-16 years |
The depreciation method used reflects the pattern in which the asset’s future economic benefits or service potential are expected to be consumed by the entity. The depreciation method applied to an asset is reviewed at least at each reporting date and, if there has been a significant change in the expected pattern of consumption of the future economic benefits or service potential embodied in the asset, the method is changed to reflect the changed pattern. Such a change is accounted for as a change in an accounting estimate.
The entity assesses at each reporting date whether there is any indication that the entity expectations about the residual value and the useful life of an asset have changed since the preceding reporting date. If any such indication exists, the entity revises the expected useful life and/or residual value accordingly. The change is accounted for as a change in an accounting estimate.
The depreciation charge for each period is recognised in surplus or deficit unless it is included in the carrying amount of another asset.
Items of property, plant and equipment are derecognised when the asset is disposed of or when there are no further economic benefits or service potential expected from the use of the asset.
The useful lives of the various components of property, plant and equipment have changed from the prior period to the current year.
The residual values and the useful lives of the assets have been reviewed at least at each annual reporting date.
The gain or loss arising from the derecognition of an item of property, plant and equipment is included in surplus or deficit when the item is derecognised. The gain or loss arising from the derecognition of an item of property, plant and equipment is determined as the difference between the net disposal proceeds, if any, and the carrying amount of the item.
1.6 Intangible assets
An asset is identifiable if it either:
- is separable, i.e. is capable of being separated or divided from an entity and sold, transferred, licensed, rented or exchanged, either individually or together with a related contract, identifiable assets or liability, regardless of whether the entity intends to do so; or
- arises from binding arrangements (including rights from contracts), regardless of whether those rights are transferable or separable from the entity or from other rights and obligations.
A binding arrangement describes an arrangement that confers similar rights and obligations on the parties to it as if it were in the form of a contract.
An intangible asset is recognised when:
- it is probable that the expected future economic benefits or service potential that are attributable to the asset will flow to the entity; and
- the cost or fair value of the asset can be measured reliably.
The entity assesses the probability of expected future economic benefits or service potential using reasonable and supportable assumptions that represent management’s best estimate of the set of economic conditions that will exist over the useful life of the asset.
Where an intangible asset is acquired through a non-exchange transaction, its initial cost at the date of acquisition is measured at its fair value as at that date.
Expenditure on research (or on the research phase of an internal project) is recognised as an expense when it is incurred. An intangible asset arising from development (or from the development phase of an internal project) is recognised when:
- it is technically feasible to complete the asset so that it will be available for use or sale.
- there is an intention to complete and use or sell it.
- there is an ability to use or sell it.
- it will generate probable future economic benefits or service potential.
- there are available technical, financial and other resources to complete the development and to use or sell the asset.
- the expenditure attributable to the asset during its development can be measured reliably.
Intangible assets are carried at cost less any accumulated amortisation and any impairment losses.
An intangible asset is regarded as having an indefinite useful life when, based on all relevant factors, there is no foreseeable limit to the period over which the asset is expected to generate net cash inflows or service potential. Amortisation is not provided for these intangible assets, but they are tested for impairment annually and whenever there is an indication that the asset may be impaired. For all other intangible assets amortisation is provided on a straight-line basis over their useful life.
The amortisation period and the amortisation method for intangible assets are reviewed at each reporting date.
Internally generated brands, mastheads, publishing titles, customer lists and items similar in substance are not recognised as intangible assets.
1.6 Intangible assets (continued)
Internally generated goodwill is not recognised as an intangible asset.
Amortisation is provided to write down the intangible assets, on a straight-line basis, to their residual values as follows:
Item | Depreciation method | Average useful life |
Developed software | Straight-line | 7 years |
Acquired software | Straight-line | 7 years |
1.7 Financial instruments
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or a residual interest of another entity.
The amortised cost of a financial asset or financial liability is the amount at which the financial asset or financial liability is measured at initial recognition minus principal repayments, plus or minus the cumulative amortisation using the effective interest method of any difference between that initial amount and the maturity amount, and minus any reduction (directly or through the use of an allowance account) for impairment or uncollectibility.
Credit risk 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.
Derecognition is the removal of a previously recognised financial asset or financial liability from an entity’s statement of financial position.
Fair value is the amount for which an asset could be exchanged, or a liability settled, between knowledgeable willing parties in an arm’s length transaction.
A financial asset is:
- cash;
- a residual interest of another entity; or
- a contractual right to:
– receive cash or another financial asset from another entity; or
– exchange financial assets or financial liabilities with another entity under conditions that are potentially favourable to the entity.
A financial liability is any liability that is a contractual obligation to:
- deliver cash or another financial asset to another entity; or
- exchange financial assets or financial liabilities under conditions that are potentially unfavourable to the entity.
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates.
Liquidity risk is the risk encountered by an entity in the event of difficulty in meeting obligations associated with financial liabilities that are settled by delivering cash or another financial asset.
1.7 Financial instruments (continued)
A financial asset is past due when a counterparty has failed to make a payment when contractually due.
Initial recognition
SAHPRA recognises a financial asset or a financial liability in its Statement of Financial Position when, and only when, the entity becomes a party to the contractual provisions of the instrument.
Upon initial recognition the entity classifies financial instruments or their component parts as a financial liabilities, financial assets or residual interests in conformity with the substance of the contractual arrangement and to the extent that the instrument satisfies the definitions of a financial liability, a financial asset or a residual interest.
Initial measurement of financial assets and financial liabilities
When a financial instrument is recognised, SAHPRA measures it initially at its fair value plus, in the case of a financial asset or a financial liability not subsequently measured at fair value, transaction costs that are directly attributable to the acquisition or issue of the financial asset or financial liability.
The entity measures a financial asset and financial liability initially at its fair value.
Subsequent measurement of financial assets and financial liabilities
SAHPRA measures all financial assets and financial liabilities after initial recognition at amortised cost. All financial assets measured at amortised cost, or cost, are subject to an impairment review.
Gains and losses
For financial assets and financial liabilities measured at amortised cost or cost, a gain or loss is recognised in surplus or deficit when the financial asset or financial liability is derecognised or impaired, or through the amortisation process.
Impairment and uncollectibility of financial assets
The entity assesses at the end of each reporting period whether there is any objective evidence that a financial asset or group of financial assets is impaired.
Financial assets measured at amortised cost:
- If there is objective evidence that an impairment loss on financial assets measured at amortised cost has been incurred, the amount of the loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows (excluding future credit losses that have not been incurred) discounted at the financial asset’s original effective interest rate. The carrying amount of the asset is reduced directly. The amount of the loss is recognised in surplus or deficit.
- If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, the previously recognised impairment loss is reversed directly. The reversal does not result in a carrying amount of the financial asset that exceeds what the amortised cost would have been had the impairment not been recognised at the date the impairment is reversed. The amount of the reversal is recognised in surplus or deficit.
1.7 Financial instruments (continued)
Derecognition of financial assets
The entity derecognises financial assets using trade date accounting. The entity derecognises a financial asset only when:
– the contractual rights to the cash flows from the financial asset expire, are settled or waived;
– the entity transfers to another party substantially all of the risks and rewards of ownership of the financial asset; or
– the entity, despite having retained some significant risks and rewards of ownership of the financial asset, has transferred control of the asset to another party and the other party has the practical ability to sell the asset in its entirety to an unrelated third party, and is able to exercise that ability unilaterally and without needing to impose additional restrictions on the transfer. In this case, the entity :
– derecognise the asset; and
– recognise separately any rights and obligations created or retained in the transfer.
Financial liabilities
The entity removes a financial liability (or a part of a financial liability) from its statement of financial position when it is extinguished — i.e. when the obligation specified in the contract is discharged, cancelled, expires or waived.
An exchange between an existing borrower and lender of debt instruments with substantially different terms is accounted for as having extinguished the original financial liability and a new financial liability is recognised. Similarly, a substantial modification of the terms of an existing financial liability or a part of it is accounted for as having extinguished the original financial liability and having recognised a new financial liability.
1.8 Statutory receivables
Identification
Statutory receivables are receivables that arise from legislation, supporting regulations, or similar means, and require settlement by another entity in cash or another financial asset.
Carrying amount is the amount at which an asset is recognised in the statement of financial position.
The cost method is the method used to account for statutory receivables that requires such receivables to be measured at their transaction amount, plus any accrued interest or other charges (where applicable) and, less any accumulated impairment losses and any amounts derecognised.
Nominal interest rate is the interest rate and/or basis specified in legislation, supporting regulations or similar means.
The transaction amount for a statutory receivable means the amount specified in, or calculated, levied or charged in accordance with, legislation, supporting regulations, or similar means.
Recognition
The entity recognises statutory receivables as follows:
- if the transaction is an exchange transaction, using the policy on Revenue from exchange transactions;
- if the transaction is a non-exchange transaction, using the policy on Revenue from non-exchange transactions (Taxes and transfers); or
- if the transaction is not within the scope of the policies listed in the above or another Standard of GRAP, the receivable is recognised when the definition of an asset is met and, when it is probable that the future economic benefits or service potential associated with the asset will flow to the entity and the transaction amount can be measured reliably.
1.8 Statutory receivables (continued)
Initial measurement
The entity initially measures statutory receivables at their transaction amount.
Subsequent measurement
The entity measures statutory receivables after initial recognition using the cost method. Under the cost method, the initial measurement of the receivable is changed subsequent to initial recognition to reflect any:
- interest or other charges that may have accrued on the receivable (where applicable);
- impairment losses; and
- amounts derecognised.
Impairment losses
The entity assesses at each reporting date whether there is any indication that a statutory receivable, or a group of statutory receivables, may be impaired.
In assessing whether there is any indication that a statutory receivable, or group of statutory receivables, may be impaired, the entity considers, as a minimum, the following indicators:
- Significant financial difficulty of the debtor, which may be evidenced by an application for debt counselling, business rescue or an equivalent.
- It is probable that the debtor will enter sequestration, liquidation or other financial re-organisation.
- A breach of the terms of the transaction, such as default or delinquency in principal or interest payments (where levied).
- Adverse changes in international, national or local economic conditions, such as a decline in growth, an increase in debt levels and unemployment, or changes in migration rates and patterns.
If there is an indication that a statutory receivable, or a group of statutory receivables, may be impaired, the entity measures the impairment loss as the difference between the estimated future cash flows and the carrying amount. Where the carrying amount is higher than the estimated future cash flows, the carrying amount of the statutory receivable, or group of statutory receivables, is reduced, either directly or through the use of an allowance account. The amount of the losses is recognised in surplus or deficit.
In estimating the future cash flows, an entity considers both the amount and timing of the cash flows that it will receive in future. Consequently, where the effect of the time value of money is material, the entity discounts the estimated future cash flows using a rate that reflects the current risk-free rate and, if applicable, any risks specific to the statutory receivable, or group of statutory receivables, for which the future cash flow estimates have not been adjusted.
An impairment loss recognised in prior periods for a statutory receivable is revised if there has been a change in the estimates used since the last impairment loss was recognised, or to reflect the effect of discounting the estimated cash flows.
Any previously recognised impairment loss is adjusted either directly or by adjusting the allowance account. The adjustment does not result in the carrying amount of the statutory receivable or group of statutory receivables exceeding what the carrying amount of the receivable(s) would have been had the impairment loss not been recognised at the date the impairment is revised. The amount of any adjustment is recognised in surplus or deficit.
1.8 Statutory receivables (continued)
Derecognition
The entity derecognises a statutory receivable, or a part thereof, when:
- the rights to the cash flows from the receivable are settled, have expired or are waived;
- the entity transfers to another party substantially all of the risks and rewards of ownership of the receivable; or
- the entity, despite having retained some significant risks and rewards of ownership of the receivable, has transferred control of the receivable to another party and the other party has the practical ability to sell the receivable in its entirety to an unrelated third party, and is able to exercise that ability unilaterally and without needing to impose additional restrictions on the transfer. In this case, the entity:
– derecognise the receivable; and
– recognise separately any rights and obligations created or retained in the transfer.
The carrying amounts of any statutory receivables transferred are allocated between the rights or obligations retained and those transferred on the basis of their relative fair values at the transfer date. The entity considers whether any newly created rights and obligations are within the scope of the Standard of GRAP on Financial Instruments or another Standard of GRAP. Any difference between the consideration received and the amounts derecognised and, those amounts recognised, are recognised in surplus or deficit in the period of the transfer.
1.9 Leases
A lease is classified as a finance lease if it transfers substantially all the risks and rewards incidental to ownership. A lease is classified as an operating lease if it does not transfer substantially all the risks and rewards incidental to ownership.
Leases are classified as finance leases where substantially all the risks and rewards associated with ownership of an asset are transferred to the entity through the lease agreement. Assets subject to finance leases are recognised in the Statement of Financial Position at the inception of the lease, as is the corresponding finance lease liability.
The discount rate used in calculating the present value of the minimum lease payments is the government incremental borrowing rate, if it is impractical to determine the interest rate implicit in the lease.
The present value of the lease is considered to be substantial if the fair value exceeds 95% of the leased assets.
Assets subject to operating leases, i.e. those leases where substantially all of the risks and rewards of ownership are not transferred to the lessee through the lease, are not recognised in the Statement of Financial Position. The operating lease expense is recognised over the course of the lease arrangement.
The determination of whether an arrangement is, or contains, a lease is based on the substance of the arrangement at inception date; namely whether fulfillment of the arrangement is dependent on the use of a specific asset or assets or the arrangement conveys a right to use the asset.
Operating leases – lessee
Operating lease payments are recognised as an expense on a straight-line basis over the lease term. The difference between the amounts recognised as an expense and the contractual payments are recognised as an operating lease asset or liability.
The lease expense recognised for operating leases over the straight-line lease payments and the contractual lease payments.
1.10 Impairment of cash-generating assets
Cash-generating assets are assets used with the objective of generating a commercial return. Commercial return means that positive cash flows are expected to be significantly higher than the cost of the asset.
Impairment is a loss in the future economic benefits or service potential of an asset, over and above the systematic recognition of the loss of the asset’s future economic benefits or service potential through depreciation (amortisation).
Carrying amount is the amount at which an asset is recognised in the Statement of Financial Position after deducting any accumulated depreciation and accumulated impairment losses thereon.
A cash-generating unit is the smallest identifiable group of assets used with the objective of generating a commercial return that generates cash inflows from continuing use that are largely independent of the cash inflows from other assets or groups of assets.
Fair value less costs to sell is the amount obtainable from the sale of an asset in an arm’s length transaction between knowledgeable, willing parties, less the costs of disposal.
Recoverable amount of an asset or a cash-generating unit is the higher its fair value less costs to sell and its value in use.
Costs of disposal are incremental costs directly attributable to the disposal of an asset, excluding finance costs and income tax expense.
Identification
When the carrying amount of a cash-generating asset exceeds its recoverable amount, it is impaired.
The entity assesses at each reporting date whether there is any indication that a cash-generating asset may be impaired. If any such indication exists, the entity estimates the recoverable amount of the asset.
Irrespective of whether there is any indication of impairment, the entity also tests a cash-generating intangible asset with an indefinite useful life or a cash-generating intangible asset not yet available for use for impairment annually by comparing its carrying amount with its recoverable amount. This impairment test is performed at the same time every year. If an intangible asset was initially recognised during the current reporting period, that intangible asset was tested for impairment before the end of the current reporting period.
Value in use
Value in use of a cash-generating asset is the present value of the estimated future cash flows expected to be derived from the continuing use of an asset and from its disposal at the end of its useful life.
When estimating the value in use of an asset, the entity estimates the future cash inflows and outflows to be derived from continuing use of the asset and from its ultimate disposal and the entity applies the appropriate discount rate to those future cash flows.
1.11 Impairment of non-cash-generating assets
Recognition and measurement
If the recoverable service amount of a non-cash-generating asset is less than its carrying amount, the carrying amount of the asset is reduced to its recoverable service amount. This reduction is an impairment loss.
1.11 Impairment of non-cash-generating assets Recognition and measurement (continued)
An impairment loss is recognised immediately in surplus or deficit.
When the amount estimated for an impairment loss is greater than the carrying amount of the non-cash-generating asset to which it relates, the entity recognises a liability only to the extent that is a requirement in the Standards of GRAP.
The entity assesses at each reporting date whether there is an indication that an asset may be impaired. Where the carrying amount of an asset exceeds its recoverable amount the asset is considered impaired and is written down to its recoverable amount. An assets recoverable amount is the higher of the fair value less costs to sell, and the value-in-use of the asset.
This recoverable amount is determined for individual assets, unless those individual assets are part of a larger cash-generating unit, in which case the recoverable amount is determined for the whole cash-generating unit.
An asset is part of a cash-generating unit where that asset does not generate cash inflows that are largely independent of those from other assets or group of assets.
In determining the recoverable amount of an asset the entity evaluates the assets to determine whether the assets are cash-generating assets or non-cash generating assets. For cash-generating assets the value in use is determined as a function of the discounted future cash flows from the asset.
Where the asset is a non-cash generating asset the value in use is determined through one of the following approaches:
1. Depreciated replacement cost approach – the current replacement cost of the asset is used as the basis for this value. This current replacement cost is depreciated for a period equal to the period that the asset has been in use so that the final depreciated replacement cost is representative of the age of the asset.
2. Value-in-use for cash-generating assets – the estimated future cash flows are discounted to their present value using a discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. In determining fair value less costs to sell, other fair value indicators are used.
Impairment losses of continuing operations are recognised in the Statement of Financial Performance in those expense categories consistent with the function of the impaired asset.
Reversal of an impairment loss
The entity assesses at each reporting date whether there is any indication that an impairment loss recognised in prior periods for a non-cash-generating asset may no longer exist or may have decreased. If any such indication exists, the entity estimates the recoverable service amount of that asset.
An impairment loss recognised in prior periods for a non-cash-generating asset is reversed if there has been a change in the estimates used to determine the asset’s recoverable service amount since the last impairment loss was recognised. The carrying amount of the asset is increased to its recoverable service amount. The increase is a reversal of an impairment loss. The increased carrying amount of an asset attributable to a reversal of an impairment loss does not exceed the carrying amount that would have been determined (net of depreciation or amortisation) had no impairment loss been recognised for the asset in prior periods.
A reversal of an impairment loss for a non-cash-generating asset is recognised immediately in surplus or deficit.
An assessment is made at each reporting date as to whether there is any indication that previously recognised impairment losses may no longer exist or may have decreased. If such indication exists, the entity makes an estimate of the assets or cash-generating unit’s recoverable amount.
1.11 Impairment of non-cash-generating assets Recognition and measurement (continued)
A previously recognised impairment loss is reversed only if there has been a change in the assumptions used to determine the asset’s recoverable amount since the last impairment loss was recognised. The reversal is limited so that the carrying amount of the asset does not exceed its recoverable amount, nor exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognised for the asset in prior years. Such reversal is recognised in the Statement of Financial Performance.
1.12 Employee benefits short-term employee benefits
Short-term employee benefits are employee benefits (other than termination benefits) that are due to be settled within twelve months after the end of the period in which the employees render the related service.
Short-term employee benefits include items such as:
- wages, salaries and social security contributions;
- short-term compensated absences (such as paid annual leave and paid sick leave) where the compensation for the absences is due to be settled within twelve months after the end of the reporting period in which the employees render the related employee service;
- bonus, incentive and performance related payments payable within twelve months after the end of the reporting period in which the employees render the related service; and
- non-monetary benefits (for example, medical care, and free or subsidised goods or services such as housing, cars and cellphones) for current employees.
When an employee has rendered service to the entity during a reporting period, the entity recognises the undiscounted amount of short-term employee benefits expected to be paid in exchange for that service:
- as a liability (accrued expense), after deducting any amount already paid. If the amount already paid exceeds the undiscounted amount of the benefits, the entity recognises that excess as an asset (prepaid expense) to the extent that the prepayment will lead to, for example, a reduction in future payments or a cash refund; and
- as an expense, unless another standard requires or permits the inclusion of the benefits in the cost of an asset.
The expected cost of compensated absences is recognised as an expense as the employees render services that increase their entitlement or, in the case of non-accumulating absences, when the absence occurs. The entity measures the expected cost of accumulating compensated absences as the additional amount that the entity expects to pay as a result of the unused entitlement that has accumulated at the reporting date.
Short-term employee benefits encompasses all those benefits that become payable in the short term, i.e. within a financial year or within 12 months after the financial year. Therefore, short term employee benefits include remuneration, compensated absences and bonuses.
The entity recognises the expected cost of bonus, incentive and performance related payments when the entity has a present legal or constructive obligation to make such payments as a result of past events and a reliable estimate of the obligation can be made. A present obligation exists when the entity has no realistic alternative but to make the payments.
Post-employment benefits: defined contribution plans
Contributions made towards the Government Employees Pension Fund are recognised as an expense in the Statement of Financial Performance in the period that such contributions become payable. This contribution expense is measured at the undiscounted amount of the contribution paid or payable to the fund. A liability is recognised to the extent that any of the contributions have not yet been paid. Conversely an asset is recognised to the extent that any contributions have been paid in advance.
1.13 Provisions and contingencies
Provisions are recognised when:
- the entity has a present obligation as a result of a past event;
- it is probable that an outflow of resources embodying economic benefits or service potential will be required to settle the obligation; and
- a reliable estimate can be made of the obligation.
The amount of a provision is the best estimate of the expenditure expected to be required to settle the present obligation at the reporting date.
Provisions shall be measured as the present value of the estimated future outflows required to settle the obligation. Leave provision shall be measured using the accumulated leave days and the cost of salaries.
Where some or all of the expenditure required to settle a provision is expected to be reimbursed by another party, the reimbursement is recognised when, and only when, it is virtually certain that reimbursement will be received if the entity settles the obligation. The reimbursement is treated as a separate asset. The amount recognised for the reimbursement does not exceed the amount of the provision.
Provisions are reviewed at each reporting date and adjusted to reflect the current best estimate. Provisions are reversed if it is no longer probable that an outflow of resources embodying economic benefits or service potential will be required, to settle the obligation.
A provision is used only for expenditures for which the provision was originally recognised.
Contingent assets and contingent liabilities are not recognised. Contingencies are disclosed in note 28.
1.14 Commitments
Items are classified as commitments when an entity has committed itself to future transactions that will normally result in the outflow of cash.
Disclosures are required in respect of unrecognised contractual commitments. Commitments are recorded at cost in the notes of the annual financial statements.
Commitments for which disclosure is necessary to achieve a fair presentation should be disclosed in a note to the financial statements, if both the following criteria are met:
- Contracts should be non-cancellable or only cancellable at significant cost (for example, contracts for computer or building maintenance services); and
- Contracts should relate to something other than the routine, steady, state business of the entity – therefore salary commitments relating to employment contracts or social security benefit commitments are excluded.
1.15 Revenue from exchange transactions
Revenue is the gross inflow of economic benefits or service potential during the reporting period when those inflows result in an increase in net assets, other than increases relating to contributions from owners.
An exchange transaction is one in which the entity receives assets or services, or has liabilities extinguished, and directly gives approximately equal value (primarily in the form of goods, services or use of assets) to the other party in exchange.
1.15 Revenue from exchange transactions (continued)
Fair value is the amount for which an asset could be exchanged, or a liability settled, between knowledgeable, willing parties in an arm’s length transaction.
Measurement
Revenue is measured at the fair value of the consideration received or receivable, net of trade discounts and volume rebates. Fair value is the amount for which an asset could be exchanged, or a liability settled, between knowledgeable, willing parties in an arm’s length transaction.
Rendering of services
When the outcome of a transaction involving the rendering of services can be estimated reliably, revenue associated with the transaction is recognised by reference to the stage of completion of the transaction at the reporting date. The outcome of a transaction can be estimated reliably when all the following conditions are satisfied:
- The amount of revenue can be measured reliably;
- It is probable that the economic benefits or service potential associated with the transaction will flow to the entity;
- The stage of completion of the transaction at the reporting date can be measured reliably; and
- The costs incurred for the transaction and the costs to complete the transaction can be measured reliably.
When the outcome of the transaction involving the rendering of services cannot be estimated reliably, revenue is recognised only to the extent of the expenses recognised that are recoverable.
Service revenue is recognised by reference to the stage of completion of the transaction at the reporting date. Stage of completion is determined by services performed to date as a percentage of total services to be performed or total services to be performed or when a specific act is more significant than any other acts, the recognition is postponed until the significant act is executed
Interest received
Revenue arising from the use by others of entity assets yielding interest, royalties and dividends or similar distributions is recognised when:
- It is probable that the economic benefits or service potential associated with the transaction will flow to the entity, and
- The amount of the revenue can be measured reliably.
Interest is recognised in surplus or deficit using the effective interest rate method.
1.16 Revenue from non-exchange transactions
Revenue comprises gross inflows of economic benefits or service potential received and receivable by an entity, which represents an increase in net assets, other than increases relating to contributions from owners.
Non-exchange transactions are transactions that are not exchange transactions. In a non-exchange transaction, an entity either receives value from another entity without directly giving approximately equal value in exchange, or gives value to anotherentity without directly receiving approximately equal value in exchange.
1.16 Revenue from non-exchange transactions (continued)
Recognition
An inflow of resources from a non-exchange transaction recognised as an asset is recognised as revenue, except to the extent that a liability is also recognised in respect of the same inflow.
As the entity satisfies a present obligation recognised as a liability in respect of an inflow of resources from a non-exchange transaction recognised as an asset, it reduces the carrying amount of the liability recognised and recognises an amount of revenue equal to that reduction.
Measurement
Revenue from a non-exchange transaction is measured at the amount of the increase in net assets recognised by the entity.
When, as a result of a non-exchange transaction, the entity recognises an asset, it also recognises revenue equivalent to the amount of the asset measured at its fair value as at the date of acquisition, unless it is also required to recognise a liability. Where a liability is required to be recognised it will be measured as the best estimate of the amount required to settle the obligation at the reporting date, and the amount of the increase in net assets, if any, recognised as revenue. When a liability is subsequently reduced, because the taxable event occurs or a condition is satisfied, the amount of the reduction in the liability is recognised as revenue.
Transfers
Apart from services in-kind, which are not recognised, the entity recognises an asset in respect of transfers when the transferred resources meet the definition of an asset and satisfy the criteria for recognition as an asset.
The entity recognises an asset in respect of transfers when the transferred resources meet the definition of an asset and satisfy the criteria for recognition as an asset.
Transferred assets are measured at their fair value as at the date of acquisition.
Services in-kind
The entity recognise services in-kind that are significant to its operations and/or service delivery objectives as assets and recognise the related revenue when it is probable that the future economic benefits or service potential will flow to theentity and the fair value of the assets can be measured reliably.
Where services in-kind are not significant to the entity’s operations and/or service delivery objectives and/or do not satisfy the criteria for recognition, the entity disclose the nature and type of services in-kind received during the reporting period.
1.17 Comparative figures
Where necessary, comparative figures have been reclassified to conform to changes in presentation in the current year.
1.18 Fruitless and wasteful expenditure
Fruitless expenditure means expenditure which was made in vain and would have been avoided had reasonable care been exercised.
All expenditure relating to fruitless and wasteful expenditure is recognised as an expense in the statement of financial performance in the reporting period that the expenditure was incurred. The expenditure is classified in accordance with the nature of the expense, and where recovered, it is subsequently accounted for as revenue in the statement of financial performance.
A register of Fruitless and Wasteful Expenditure is maintained.
1.19 Irregular expenditure
Irregular expenditure as defined in Section 1 of the PFMA is expenditure incurred in contravention of or that is not in accordance with a requirement of any applicable legislation, including PFMA.
Confirmed irregular expenditure is investigated in order to establish facts whether the transgression is related to fraudulent, corrupt and other criminal conduct. Irregular expenditure is recorded in the irregular expenditure register as soon as it is identified.
If losses were incurred and the entity did not achieve value for money and it can be demonstrated that it is impractical to determine total losses incurred, details and reasons as to why the amount cannot be quantified are disclosed.
If losses can be quantified and losses incurred are irrecoverable, amount of losses irrecoverable are disclosed in the irregular expenditure note.
If losses were not incurred and value for money was achieved and the transgression was free of fraudulent, corrupt or other criminal conduct; condonation of irregular expenditure is requested from the relevant authority and in line with the relevant guidelines issued by National Treasury.
If amounts of irregular expenditure are condoned by the relevant authority, amounts are disclosed in the irregular expenditure note as amounts condoned.
If irregular expenditure was not condoned by the relevant authority, amounts are disclosed as amounts of losses irrecoverable in the irregular expenditure note under “amounts not condoned and not recoverable”.
If a liability for the irregular expenditure can be attributed to a person or company and is liable in law, a receivable should be raised for recovery from the irregular expenditure note.
If fraudulent, corrupt or other criminal conduct is alleged or confirmed, Treasury Regulations 33 and the debt management policy of SAHPRA are followed.
1.20 Segment information
A segment is an activity of an entity:
- that generates economic benefits or service potential (including economic benefits or service potential relating to transactions between activities of the same entity);
- whose results are regularly reviewed by management to make decisions about resources to be allocated to that activity and in assessing its performance; and
- for which separate financial information is available.
1.20 Segment information (continued)
Reportable segments are the actual segments which are reported on in the segment report. They are the segments identified above or alternatively an aggregation of two or more of those segments where the aggregation criteria are met.
SAHPRA operates in a single segment as budgets are not decentralised into regional activities.
1.21 Budget information
Budget information in accordance with GRAP 1 and 24, shall be provided in a separate disclosure note to the annual financial statements.
The approved budget is prepared on a modified cash basis and presented by economic classification linked to performance outcome objectives.
The approved budget covers the fiscal period from 2021/04/01 to 2022/03/31.
The annual financial statements and the budget are not on the same basis of accounting therefore a reconciliation between the statement of financial performance and the budget have been included in the annual financial statements. Refer to notes 35 & 38.
1.22 Related parties
A related party is a person or an entity with the ability to control or jointly control the other party, or exercise significant influence over the other party, or vice versa, or an entity that is subject to common control, or joint control.
Control is the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities.
Joint control is the agreed sharing of control over an activity by a binding arrangement, and exists only when the strategic financial and operating decisions relating to the activity require the unanimous consent of the parties sharing control (the venturers).
Related party transaction is a transfer of resources, services or obligations between the reporting entity and a related party, regardless of whether a price is charged.
Significant influence is the power to participate in the financial and operating policy decisions of an entity, but is not control over those policies.
Management are those persons responsible for planning, directing and controlling the activities of the entity, including those charged with the governance of the entity in accordance with legislation, in instances where they are required to perform such functions.
Close members of the family of a person are those family members who may be expected to influence, or be influenced by that person in their dealings with the entity.
The entity is exempt from disclosure requirements in relation to related party transactions if that transaction occurs within normal supplier and/or client/recipient relationships on terms and conditions no more or less favourable than those which it is reasonable to expect the entity to have adopted if dealing with that individual entity or person in the same circumstances and terms and conditions are within the normal operating parameters established by that reporting entity’s legal mandate.
1.22 Related parties (continued)
Where the entity is exempt from the disclosures in accordance with the above, the entity discloses narrative information about the nature of the transactions and the related outstanding balances, to enable users of the entity’s financial statements to understand the effect of related party transactions on its annual financial statements.
1.23 Events after reporting date
Events after reporting date are those events, both favourable and unfavourable, that occur between the reporting date and the date when the financial statements are authorised for issue. Two types of events can be identified:
- those that provide evidence of conditions that existed at the reporting date (adjusting events after the reporting date); and
- those that are indicative of conditions that arose after the reporting date (non-adjusting events after the reporting date).
The entity will adjust the amount recognised in the financial statements to reflect adjusting events after the reporting date once the event occurred.
The entity will disclose the nature of the event and an estimate of its financial effect or a statement that such estimate cannot be made in respect of all material non-adjusting events, where non-disclosure could influence the economic decisions of users taken on the basis of the financial statements.
2. New standards and interpretations
2.1 Standards and interpretations effective and adopted in the current year
In the current year, the entity had no new standards and interpretations that are effective for the current financial year and that are relevant to its operations.
2.2 Standards and interpretations issued, but not yet effective
The entity has not applied the following standards and interpretations, which have been published and are mandatory for the entity’s accounting periods beginning on or after 01 April 2022 or later periods:
Standard/Interpretation: | Effective date: Years beginning on or after | Expected impact: |
GRAP 25 (as revised): Employee Benefits | 01 April 2022 | Unlikely there will be a material impact |
GRAP 104 (as revised): Financial Instruments | 01 April 2025 | Unlikely there will be a material impact |
iGRAP 21: The Effect of Past Decisions on Materiality | 01 April 2023 | Unlikely there will be a material impact |
GRAP 2020: Improvements to the standards of GRAP 2020 | 01 April 2023 | Unlikely there will be a material impact |
GRAP 1 (amended): Presentation of Financial Statements | 01 April 2023 | Unlikely there will be a material impact |
3. Receivables from exchange transactions
Trade debtors | 9 587 352 | 9 296 319 |
Provision for impairment | (6 639 699) | (2 088 973) |
Rental deposit | 2 791 114 | 3 229 618 |
5 738 767 | 10 436 964 |
Statutory receivables included in receivables from exchange transactions above are as follows:
Retention fees | 8 764 638 | 7 091 538 |
Licence collection fees | 303 060 | 77 611 |
Inspection fees | 519 654 | 532 703 |
Section 21 | – | 1 594 467 |
9 587 352 | 9 296 319 | |
Provision for impairments | (6 639 699) | (2 088 973) |
Financial asset receivables included in receivables from exchange transactions above | 2 791 114 | 3 229 618 |
Total receivables from exchange transactions | 5 738 767 | 10 436 964 |
3. Receivables from exchange transactions (continued)
Statutory receivables general information
Transaction(s) arising from statute
The statutory receivables of SAHPRA relates to Retention fees, License collection fees and Inspections fees. All fees are charged in terms of the Medicines and Related Substances Act, 1965 (Act No. 101 of 1965) as amended.
The increase in statutory receivables increased due to the review of retention fee register.
Rental deposit decreased due to the payback of the rental deposit due relating to the previous lease agreement. The current leased accommodation required an annual deposit increase that was paid. This rental deposit is held in an interest bearing call account by the lessor and interest accrued to SAHPRA for the year.
Determination of transaction amount
SAHPRA is required to ensure that compliance with existing legislation is being promoted and controlled through a process of active inspection and investigation. The Minister may make regulations prescribing the fee to be paid to SAHPRA in respect of an application for the registration, and in respect of the registration of a medicine, medical device or IVD, the fee to be paid annually to SAHPRA in respect of the retention of the certification or the registration of a medicine, medical device or IVD and the date on which such annual fee shall be paid and he may also make regulations prescribing the fee payable in respect of the authorisation of the use of unregistered medicines, medical devices or IVDs, the issuing of permits and certificates under the Medicines and Related Substance Act, the issuing or renewal of any licence under this Act, the performance of inspections to assess the safety, quality and efficacy of medicines, scheduled substances, medical devices or IVDs for the purpose of registration, the evaluation of technical amendments and changes to the particulars contained in registers and the testing for batch release of biological medicines.
All fees regulated in the Medicine and Related Substances Act, as amended are published in the Government Gazette.
Interest or other charges levied/charged
There was no interest charged on the statutory receivable arising from exchange transactions at 31 March 2022 in line with SAHPRA’s revenue policy.
Basis used to assess and test whether a statutory receivable is impaired
If the person who is the holder of the certificate of registration issued in respect of any medicine, medical device or IVD fails to pay the prescribed annual fee in respect of the retention of the registration of that medicine, medical device or IVD before or on the prescribed date or such later date as the Chief Executive Officer may determine on application by that person, the Chief Executive Officer shall cancel the registration of that medicine, medical device or IVD.
Receivables from exchange transactions are impaired on a class of service basis. The impairment of trade receivables has been determined with reference to past default experience and the current economic environment in which these entities trade.
3. Receivables from exchange transactions (continued)
Reconciliation of provision for impairment | ||
Relating specifically to Statutory Receivables Opening balance | 2 088 973 | – |
Provision for impairment | 6 145 193 | 2 088 973 |
Amounts written off as uncollectable | (1 594 467) | – |
6 639 699 | 2 088 973 | |
Receivables past due but not impaired
Relating specifically to Statutory Receivables
Statutory receivables which are less than 1 year past due are not considered to be impaired. At 31 March 2022, R508 103 (2021: R6 894 638) were past due but not impaired.
The ageing of amounts past due but not impaired is as follows: | ||
9 months past due | 508 103 | 6 894 638 |
Factors the entity considered in assessing statutory receivables impaired
The following is considered as objective evidence that a trade receivable is impaired:
- Debtors did not respond to follow request or indicate financial difficulty;
- Judgement awarded in favour of the entity;
- Uneconomical to initiate or continue with legal proceedings; and
- Official transfers, cancellations and licenced site that have closed down and liquidated.
Receivables impaired
Relating specifically to Statutory Receivables
As of 31 March 2022, statutory receivables of R9 079 250 (2021: R2 170 899) were impaired and provided for.
The amount of the provision was R6 639 699 31 March 2022 (2021: R2 088 973).
The ageing of these receivables are as follows:
3 to 6 months | 207 400 | 856 673 |
6 – 12 months | 4 792 000 | 1 314 226 |
Over 12 months | 4 079 850 | – |
9 079 250 | 2 170 899 | |
3. Receivables from exchange transactions (continued)
Factors the entity considered in assessing statutory receivables impaired
The following is considered as objective evidence that a trade receivable is impaired:
- Debtors did not respond to follow request or indicate financial difficulty;
- Customer in liquidation;
- Judgement awarded in favour of the entity;
- Uneconomical to initiate or to continue with legal proceedings; and
- Official transfers, cancellations and licenced site that have closed down and liquidated.
Trade and other receivables past due but not impaired
Trade and other receivables which are less than 1 year past due are not considered to be impaired. At 31 March 2022, R- (2021: R716 856) were past due but not impaired.
A past due rental deposit was paid over to SAHPRA during the 2021/22 financial year. The ageing of amounts past due but not impaired is as follows:
3 months past due | – | 716 856 |
Trade and other receivables written off
As of 31 March 2022, trade and other receivables of R1 594 467 were written off and provided for and (2021: R706 955) were written off.
4. Receivables from non – exchange transactions
Grant receivable | 8 822 956 | 34 674 |
Staff debtors | 629 190 | – |
9 452 146 | 34 674 |
Grant receivables includes grant received from the Centres for Disease Control and Prevention (CDC), the Clinton Health Access Initiative (CHAI) and the Global Fund.
Staff debtors relate to section 197 transfer process of employees taken on from the NDoH where some employees were not removed from the NDoH persal system, two months medical aid contributions were not deducted from the employees’ salary during the transfer from persal to SAHPRA’s payroll.
5. Cash and cash equivalents
Cash and cash equivalents consist of:
Petty cash | 8 031 | – |
Bank balances held at ABSA bank | 2 370 048 | 150 764 296 |
Corporation for public deposits held at SA Reserve Bank | 241 995 225 | – |
244 373 304 | 150 764 296 |
No cash and cash equivalents balances are restricted except for unspent conditional grants as disclosed in note 10.
Credit quality of cash at bank
The credit quality of cash at bank held at ABSA Bank and SA Reserve Bank’s Corporation for Public Deposits that are neither past due nor impaired can be assessed by reference to external credit rating of Ba3 (long term) as per the Moody’s rating agency as at 31 March 2022. The entity’s maximum exposure to credit risk as a result of bank balances held is limited to the carrying value of these balances as detailed above.
6. Property, plant and equipment
2022 | 2021 | |||||
Cost / Valuation | Accumulated Depreciation and Accumulated Impairment | Carrying value | Cost / Valuation | Accumulated Depreciation and Accumulated Impairment | Carrying Value | |
Furniture and fixtures | 8 074 818 | (1 413 901) | 6 660 917 | 9 461 220 | (1 915 252) | 7 545 968 |
Motor vehicles | 971 954 | – | 971 954 | – | – | – |
Computer equipment | 21 467 037 | (8 694 350) | 12 772 687 | 19 224 842 | (4 551 884) | 14 672 958 |
Leasehold improvements 1 | 6 750 625 | (2 218 975) | 4 531 650 | 6 659 775 | (878 853) | 5 780 922 |
Other fixed assets 2 | 3 062 061 | (1 378 938) | 1 683 123 | 2 799 822 | (974 967) | 1 824 855 |
Total | 40 326 495 | (13 706 164) | 26 620 331 | 38 145 659 | (8 320 956) | 29 824 703 |
Reconciliation of property, plant and equipment – 2022 | ||||||
Opening Balance | Additions | Disposals | Depreciation | Impairment Loss | Total | |
Furniture and fixtures | 7 545 968 | 63 592 | (100 068) | (843 903) | (4 672) | 6 660 917 |
Motor vehicles | – | 971 954 | – | – | – | 971 954 |
Computer equipment | 14 672 958 | 2 857 938 | (301 707) | (4 078 255) | (378 247) | 12 772 687 |
Leasehold improvements 1 | 5 780 922 | 90 850 | – | (1 340 122) | – | 4 531 650 |
Other fixed assets 2 | 1 824 855 | 295 243 | (10 852) | (404 999) | (21 124) | 1 683 123 |
29 824 703 | 4 279 577 | (412 627) | (6 667 279) | (404 043) | 26 620 331 |
6. Property, plant and equipment (continued)
Reconciliation of property, plant and equipment – 2021
Opening Balance | Additions | Disposals | Transfers Received | Depreciation | Impairment Loss | Total | |
Furniture and fixtures | 2 397 116 | 7 622 383 | (947 615) | 16 875 | (918 173) | (624 618) | 7 545 968 |
Computer equipment | 10 603 804 | 6 707 221 | (222 535) | 751 047 | (3 166 579) | – | 14 672 958 |
Leasehold improvements 1 | – | 6 659 776 | – | – | (878 854) | – | 5 780 922 |
Other fixed assets 2 | 1 670 545 | 645 356 | (58 013) | – | (433 033) | – | 1 824 855 |
14 671 465 | 21 634 736 | (1 228 163) | 767 922 | (5 396 639) | (624 618) | 29 824 703 |
Other information
None of the property, plant and equipment for the current and prior year were pledged as security for any obligation. No expenditure has been incurred relating to capital maintenance
1 Leasehold improvements include improvements made to leased office accomodation. Refer to note 8 and 27.
2 Other assets relates to other office related equipments.
7. Intangible assets
2022 | 2021 | |||||
Cost/Valuation | Accumulated Amortisation and Accumulated Impairment | Carrying Value | Cost / Valuation | Accumulated Amortisation and Accumulated Impairment | Carrying Value | |
Computer software | 3 343 134 | (525 075) | 2 818 059 | 2 049 116 | (176 205) | 1 872 911 |
7. Intangible assets (continued)
Reconciliation of intangible assets – 2022
Opening Balance | Additions | Amortisation | Total | |
Computer software | 1 872 911 | 1 294 018 | (348 870) | 2 818 059 |
Reconciliation of intangible assets – 2021
Opening Balance | Additions | Amortisation | Total | |
Computer software | 267 380 | 1 767 133 | (161 602) | 1 872 911 |
Other information
Intangible assets consists of acquired computer software and there are no internally generated computer software in use.
8. Operating lease liability
Operating lease liability | 3 259 196 | 1 600 515 |
The operating lease liability relates to the straight-line effect to recognising the lease expense over the lease term effect as per the GRAP 13 requirements. Refer to note 27 for lease commitment disclosures.
9. Payables from exchange transactions
Trade payables | 4 763 825 | 13 242 087 |
Salary accrual | 1 584 383 | 1 551 333 |
Accrued thirteenth cheque | 2 251 260 | – |
Accrued expenditure | 6 673 294 | 17 272 366 |
Travel lodge card | 383 642 | – |
15 656 404 | 32 065 786 |
Overall trade payables from exchange transactions decreased due to amounts paid to the National Department of Health for expenditure incurred on behalf of SAHPRA.
SAHPRA considers that the carrying value of trade and other payables approximates the fair value. Salary accruals relates to acting allowances, travel and evaluator fees.
Accrued thirteenth cheque: During the 2021-22 financial year, the entity absorbed the Section 197 employees in its payroll system. These employees have a thirteenth cheque component that is either in their cost to company or as an employer benefit. The thirteenth cheque is paid in the employees’ birthday month and its accrued to year end.
Accrued expenditure decreased from prior year due to the entity improving expenditure management and travel expenditure incurred by the appointed SAHPRA travel agency.
10. Unspent conditional grants
Unspent conditional grants and receipts comprises of:
Nepad Auda grant | 297 630 | – |
BMGF grant | 3 085 629 | – |
3 383 259 | – | |
Movement during the year | ||
Additions during the year | 8 772 992 | – |
Income recognition during the year | (5 389 733) | – |
3 383 259 | – |
These amounts are invested in a ring-fenced investment at the Corporation for Public Deposits as disclosed in Note 5 until utilised. Should the conditions not be met, a repayment to the grantor will include interest accrued at a rate of 3.00 percent.
11. Provisions
Leave provision | 8 838 633 | 10 588 084 |
PMDS provision | 5 358 516 | 2 110 939 |
Provision for notch increase | – | 1 489 373 |
14 197 149 | 14 188 396 |
Leave provision
SAHPRA does not have an unconditional right to defer settlement of its leave liabilities and its policies stipulate that leave is forfeited if not used within 6 months after the start of a calendar year, except for capped leave. A significant part of the leave provision balance relates to take on balance for employees who were transferred from the National Department of Health to the entity.
Performance management and development system provision
SAHPRA has a newly approved performance management policy approved by the Board in April 2021 which enables the employer to incentivise employees based on performance.
In prior years, SAHPRA has paid performance bonuses based on the Department of Public Service and Administration (DPSA) approved Performance Management Development Scheme (PMDS) which limits performance payments on a percentage of the Cost of Employment budget.
The new approved policy requires SAHPRA to apply new assumptions to enable the estimation of performance bonuses based on the new policy, historical pay-out data and availability of funding.
11. Provisions (continued)
The target setting percentage of the policy was utilised as a benchmark and adjusted to accommodate and consider:
– Actual scores for the 2020/21 assessment
– That more staff will strive to comply and achieve with evidence available based on understanding and experiences of the 2020/21 assessment
– The inability to retain staff or failed recruitment due to inadequate package offering
Notch provision
Notch: The 2020-21 PMDS assessments will be moderated starting June 2021. The delay is attributed to the COVID-19 pandemic and extended lock down periods. Performance contracts were finalised later than normal for the majority of employees and those who did not contract are excluded from the Performance Management Cycle. The PMDS rewards for the 2020/2021 and the resultant notch-increase will be effected as per the PMDS policy after the moderation process. The provision was utilised in the 2021-22 financial year.
Current Cycle Leave | Previous Cycle Leave | Capped Leave | PMDS | Notch Increase | Total | |
As at 1 April 2021 | 2 635 350 | 7 293 766 | 658 969 | 2 110 938 | 1 489 373 | 14 188 396 |
Additions for the year | 2 518 091 | 5 536 899 | 261 933 | 5 358 516 | – | 13 675 439 |
Reversal during the year | (2 635 350) | (7 293 766) | (137 259) | (2 110 938) | (1 489 373) | (13 666 686) |
As at 31 March 2022 | 2 518 091 | 5 536 899 | 783 643 | 5 358 516 | – | 14 197 149 |
Current Cycle Leave | Previous Cycle Leave | Capped Leave | PMDS | Notch Increase | Total | |
As at 1 April 2020 | 3 086 240 | 3 117 512 | 937 822 | 4 967 201 | – | 12 108 775 |
Additions for the year | 2 635 350 | 7 415 690 | – | 1 078 859 | 1 489 373 | 12 497 348 |
Reversal during the year | (3 086 240) | (3 117 512) | (278 853) | (3 935 122) | – | (10 417 727) |
As at 31 March 2021 | 2 635 350 | 7 293 766 | 658 969 | 2 110 938 | 1 489 373 | 14 188 396 |
12. Income received in advance
Reconciliation
Unallocated deposits received | 72 348 162 | 35 981 594 |
Revenue received in advance | 119 178 746 | 61 779 650 |
191 526 908 | 97 761 244 |
The income received in advance relates to application fees received in advance for services to be rendered in future financials periods.
Unallocated deposits refer to the those payments received by SAHPRA in the ABSA bank account that is not matched to an application for service rendered by SAHPRA.
13. Deferred income : Backlog reduction project
Deferred income | 12 476 800 | 25 020 697 |
The deferred income balance relates to the fees received in prior years for the backlog reduction project. Revenue is realised as service is rendered relating to applications relating to the backlog reduction project.
14. Fee Income
Section 21 | 3 517 338 | 5 356 420 |
Section 21 veterinary | 169 320 | 133 990 |
Section 21 CMS | 11 370 | 23 170 |
Screening | 193 600 | 1 148 000 |
Clinical trials | 13 344 180 | 3 636 730 |
Pharma licence fee | 1 968 780 | 1 910 150 |
Licence retention fees | 8 227 400 | 6 140 000 |
Cannabis | 740 890 | 494 140 |
Cannabis inspection | 857 839 | – |
Evaluations | 18 317 125 | 8 736 190 |
Permits | 5 553 389 | 5 482 613 |
Amendments | 28 895 360 | 5 451 359 |
Inspection fees | 6 344 579 | 1 941 250 |
Retention fees | 65 347 000 | 29 367 600 |
Certificates | 751 800 | 472 000 |
Registration fee | 423 960 | 758 920 |
Backlog reduction project | 12 345 297 | 20 031 550 |
MD licence fees | 9 772 960 | 12 416 560 |
Biological medicine | 5 012 700 | 3 727 900 |
181 794 887 | 107 228 542 | |
Fees received per function | ||
Medicines evaluation, registration and product life cycle | 143 879 222 | 71 691 152 |
Inspections, permits and licences issued | 34 217 637 | 30 023 810 |
The use of unregistered medicines | 3 698 028 | 5 513 580 |
181 794 887 | 107 228 542 |
15. Sundry income
Discount received | – | 2 306 671 |
Proceeds from sale of assets and insurance | 217 309 | 19 130 |
217 309 | 2 325 801 |
16. Interest received
Interest revenue
Interest received | 9 557 126 | 4 006 563 |
Included in interest received is total interest income earned from cash held at ABSA bank based on the average interest rate of 3% (2021: 2%) and cash held at SA Reserve Bank Corporation for Public Deposits bank based on the average interest rate of 3.77% (2021: 0 %) per annum. Accrued interest on the rental deposit held by the lessor in a interest bearing call account at an average rate of 3.00% (2021: 3%) per annum.
17. Transfer payments
Operating grants | ||
Transfer payment from the NDoH | 146 287 000 | 156 572 000 |
18. Service in-kind
The nature and type of major classes of services in-kind received, are as follows:
Services in-kind that are significant to the entities operations and/or service delivery objectives Backlog reduction project | 15 348 507 | 20 763 998 |
SAHPRA received an in-kind benefit as services from international evaluators were paid directly by a third party. Other costs were incurred to render the services including bank charges and management fees. | ||
15 348 507 | 20 763 998 | |
Services in-kind not significant to the entity’s operations and/or service delivery objectives and/or do not satisfy the criteria for recognition CHAI CSIR Project | 2 236 152 | – |
CSIR incurred cost on behalf of SAHPRA through the CHAI grant whereby CSIR assists SAHPRA with Data anlaytics and analyse Healthcare professionals’ COVID-19 vaccination data. | ||
2 236 152 | – |
19. Grant realised
BMGF grant | 3 954 011 | – |
Nepad Auda grant | 1 435 722 | – |
5 389 733 | – |
Reconciliation of conditional contributions
Current-year receipts | 8 772 992 | – |
Conditions met – transferred to revenue | (5 389 733) | – |
Unspent – balance remaining | (3 383 259) | – |
– | – |
Refer to note 10 for the remaining balance of funds where conditions are still to be met.
20. Grant income
Backlog reduction project: Global fund grant | 7 889 314 | – |
Backlog reduction project: Center for Disease Control and Prevention (CDC) grant | – | 2 104 925 |
Clinton Health Access Initiative (CHAI) grant | 933 642 | – |
8 822 956 | 2 104 925 |
21. Employee related costs
Basic and non-pensionable salaries | 151 184 083 | 113 984 081 |
Thirteenth cheque and performance bonus | 12 922 352 | 4 550 898 |
Medical aid | 3 257 193 | 3 563 753 |
SDL and UIF | 1 756 899 | 415 844 |
Bargaining council | 3 470 | 14 919 |
Pension fund | 9 991 270 | 9 829 263 |
PAYE | 108 000 | 8 359 202 |
Travel allowances | 65 843 | – |
Housing benefits and allowances | 2 241 772 | 2 646 222 |
Leave accrued | (571 803) | 3 484 164 |
Cellphone allowances | 947 726 | 144 048 |
Standby allowances | 42 421 | 97 491 |
181 949 226 | 147 089 885 |
22. Backlog reduction project
Backlog clearance project | – | 3 813 |
Bank charges | 101 811 | 65 743 |
Backlog foreign evaluators | 7 000 996 | 11 764 046 |
Local evaluators | 7 490 649 | 10 866 433 |
Services in-kind | 15 348 507 | 20 763 998 |
Share of communication | 95 000 | 1 044 920 |
Extedo system | 1 282 909 | 2 177 546 |
Portal variations | – | 83 029 |
Share of rental | 779 120 | 745 796 |
Training | 11 843 | – |
Compensation of employees | 20 164 920 | 20 001 546 |
52 275 755 | 67 516 870 |
Included in foreign evaluators is a portion funded via services in-kind. Refer to note 18.
23. Depreciation and amortisation
Property, plant and equipment | 6 667 279 | 5 396 639 |
Intangible assets | 348 870 | 161 602 |
7 016 149 | 5 558 241 |
24. Laboratory services
Outsourced services
NCL Laboratory | 20 797 520 | 19 922 033 |
The National Control Laboratory (NCL) is an outsourced service for testing of biological medicines and vaccines on behalf of SAHPRA.
25. Operating expenses
Administrative costs | – | 114 052 |
Advertising | 180 624 | 191 394 |
Auda Nepad expenses | 1 228 733 | – |
Auditors remuneration | 3 351 670 | 4 925 961 |
Bank charges | 133 344 | 66 009 |
Board costs | 1 733 687 | 1 645 841 |
Bursaries | 72 069 | 10 140 |
Catering | 135 383 | 21 498 |
Cleaning | 535 441 | 534 593 |
Communication | 2 407 161 | 5 189 433 |
Computer expenses | 1 779 241 | 3 403 153 |
Conferences | 73 489 | 34 160 |
Consulting and professional fees 2 | 1 439 892 | 9 098 050 |
Expert committees | 17 075 693 | 13 515 251 |
General expenses | 910 | 42 741 |
Insurance | 295 234 | – |
Legal fees | 7 516 893 | 2 091 262 |
Licences | 3 380 027 | 1 888 853 |
Medicine testing | 155 616 | – |
Membership fees | 328 169 | 292 958 |
Minor assets | 44 182 | 95 895 |
Motor vehicle expenses | 1 711 586 | 2 535 672 |
Postage and courier | 13 222 | 118 220 |
Printing and publications | 348 785 | 206 115 |
Printing and stationery | 501 253 | 1 009 452 |
Protective clothing | 17 038 | 106 168 |
Refreshments | 40 974 | 21 489 |
Relocation of SAHPRA | 753 190 | 2 410 879 |
Repairs and maintenance | 212 115 | 32 958 |
Research and development costs | – | 256 210 |
Security | 278 712 | 57 931 |
Staff training and welfare | 1 072 912 | 764 658 |
Travel – local and overseas | 4 026 234 | 1 819 636 |
Utilities | (89 532) | 842 732 |
Venues and facilities | – | 16 243 |
50 753 947 | 53 359 607 |
2 Consulting and professional fees consist of payments made to service providers for recruitment, accounting, professional services and supply chain.
26. Cash generated from operations
Surplus (deficit) | 28 237 337 | (19 656 868) |
Adjustments for: | ||
Depreciation and amortisation | 7 016 149 | 5 558 241 |
Loss on disposal of assets and liabilities | 412 627 | 1 228 163 |
Impairment deficit | 404 044 | 624 618 |
Movements in operating lease liabilities | 1 658 681 | 1 600 515 |
Movements in provisions | 8 754 | 2 079 619 |
Assets transferred from NDoH | – | (767 922) |
Proceeds from disposal of assets | (201 062) | (19 130) |
Discount received | – | (2 306 671) |
Changes in working capital: | ||
Receivables from exchange transactions | 4 698 197 | (7 740 129) |
Other receivables from non-exchange transactions | (9 417 472) | 14 599 457 |
Prepayments | (2 031 352) | (2 658 726) |
Investing in payables | (1 213 454) | – |
Payables from exchange transactions | (16 409 387) | 10 695 935 |
Unspent conditional grant | 3 383 259 | – |
Income received in advance | 93 765 664 | 46 645 706 |
Deferred income – backlog reduction project | (12 543 897) | – |
97 768 088 | 49 882 808 |
27. Commitments
Authorised expenditure | ||
Already contracted for but not provided for | ||
| 3 495 905 | 3 318 000 |
| 2 408 338 | – |
| 5 044 548 | 4 305 223 |
| – | 116 597 |
| 8 424 632 | 5 929 468 |
| 571 869 | 855 347 |
| 68 834 418 | 75 435 857 |
| 4 841 843 | – |
| 2 574 904 | – |
| 1 878 446 | – |
98 074 903 | 89 960 492 | |
Total operational commitments | ||
Already contracted for but not provided for | 98 074 903 | 89 960 492 |
This committed expenditure will be financed by allocated operational budget of future years. | ||
Operating leases – as lessee (expense) | ||
Minimum lease payments due | ||
– within one year | 18 575 725 | 15 493 062 |
– in second to fifth year inclusive | 52 948 510 | 60 431 677 |
71 524 235 | 75 924 739 |
Operating lease payments represent rentals payable by SAHPRA for leased office properties for two locations. No restrictions, contingent rent or sublease payments apply. Annual escalation percentage over the terms of the lease. Refer to note 8 for lease straight-line liability.
28. Contingencies
Contingent liabilities
Claim against SAHPRA for services rendered
During the 2020/21 financial year, a letter of demand for services rendered were received from a recruitment consultant claiming that full services were rendered as per the Master Services agreement signed in the 2019/20 financial year. Management has previously disputed the claim that services were rendered in full and submitted that payment made to date is consistent with services rendered. The matter is currently following an arbitration process.
The letter of demand and intention to seek relief gives rise to a possible obligation, yet to be confirmed whether there is a present obligation that could lead to the payment of services in dispute.
Although SAHPRA still requires evidence and dispute that the services were rendered the possibility of an arbitration award is not remote. The estimated potential liability amounts to R1.3 million.
Contingent assets
Cost order
On 10 June 2021, SAHPRA was served with a court application in the Pretoria High Court and other respondents relating to the registration and sale of the J&J Vaccine.
The court dismissed the application on 1 July 2021 with costs and on 22 March 2022 the applicants filed an application for leave to appeal the cost order and SAHPRA is opposing the application for leave to appeal.
The court dismissal and subsequent leave to appeal gives rise to a contingent asset, yet to be confirmed through the court hearing the leave of appeal and the appeal. SAHPRA has good prospects of success, and the estimated contingent asset amounts to R594 378.
29. Related parties
Relationships Nature of related party
Executive Authority Dr J Phaahla
National Department of Health (controlling entity of SAHPRA) National Department of Health Accounting Authority Appointed Board members of SAHPRA
Members of key management SAHPRA executive management
Council for Scientific and Industrial Research Public entity in National sphere
Other related parties All public entities in National sphere
Appointed Board members of SAHPRA Wits Health Consortium
Related party balances
National Department of Health
Creditors balance – owing to NDOH | (1 073 324) | (14 105 167) |
Debtors balance – owing by the NDOH | – | 34 674 |
A related party transaction was identified with the Wits Health Consortium relating to medicine testing services procured. The transactions were at arms length and no outstanding balances are due.
No other balances due or owing to other related entities and all transactions entered into were at arms length.
Related party transactions
National Department of Health
Government grant received | 146 287 000 | 156 572 000 |
Council for Scientific and Industrial Research | ||
Rental expense | – | 2 493 996 |
29. Related parties (continued)
Remuneration of Executive Authority and Management Board fees 2022 | ||
Board Fees | Total | |
Prof. H.V. Rees – Chairperson 3 & 4 | 227 569 | 227 569 |
Ms M. Hela – Deputy Chairperson 3 | 56 607 | 56 607 |
Prof. M.S. Banoo – Member 1 & 3 | – | – |
Dr E.N. Madela-Mntla – Member 3 | 45 527 | 45 527 |
Dr T.M. Motshudi – Member 3 | 51 861 | 51 861 |
Prof. A. Dhai – Member 3 | 57 152 | 57 152 |
Prof. M.J. Mphahlele – Member 3 | 12 462 | 12 462 |
Dr U. Mehta – Member 3 | 37 294 | 37 294 |
Adv H. Cassim – Member 3 & 4 | 192 521 | 192 521 |
Dr M.S.M. Molefe – Member 2 | – | – |
Mr T.N. Baloyi – Member 3 & 4 | 172 500 | 172 500 |
Prof. K.C. Househam – Member 3 | 10 731 | 10 731 |
Prof. H. P. Demana – Member 3 & 4 | 49 408 | 49 408 |
Mr I. Mashau – Member 3 & 4 | 118 909 | 118 909 |
Ms L. Mothae – Member 3 & 4 | 95 059 | 95 059 |
Dr O. Khaole – Vice Chair 4 | 79 184 | 79 184 |
Dr J. Tsoka-Gwegweni – Member 4 | 25 348 | 25 348 |
Dr X Ngobese – Member 4 | 63 224 | 63 224 |
Ms D Maraka – Member 4 | 34 630 | 34 630 |
Prof. Y Choonara – Member 5 | 29 570 | 29 570 |
Prof. J Meyer – Member 5 | 21 836 | 21 836 |
Ms M Skhosana – Member 5 | 27 749 | 27 749 |
Dr A Kgasi – Member 5 | 20 955 | 20 955 |
Dr Z Makatini – Member 5 | 26 830 | 26 830 |
1 456 926 | 1 456 926 |
1 The Board fees reflects the actual claims incurred. At times Board members opt not to claim for meetings attended.
2 Member employed in the public sector – no fees claimed
3 1st Board term expired 30 September 2021
4 2nd Board term commenced 1 October 2021
5 Appointed December 2021
29. Related parties (continued)
Executive Management 2022
Name | Basic Salary | Post- Employment | Other Benefits Received Benefits | Total |
Dr B Semete-Makokotlela – Chief Executive Officer | 2 892 750 | – | 77 157 | 2 969 907 |
Ms P Nkambule – Chief Regulatory Officer | 1 536 809 | 140 542 | 53 437 | 1 730 788 |
Ms C. Reynecke – Chief Operating Officer | 2 163 426 | – | 64 737 | 2 228 163 |
Mr R.B. Gouws – Chief Financial Officer | 1 827 000 | – | 61 372 | 1 888 372 |
Mr G. Mtakati – HR Executive | 1 327 974 | – | 35 982 | 1 363 956 |
9 747 959 | 140 542 | 292 685 | 10 181 186 |
Board Fees 2021 1 | Board Fees | Total |
Prof. H.V. Rees – Chairperson | 193 024 | 193 024 |
Ms M. Hela – Deputy Chairperson | 136 357 | 136 357 |
Prof. M.S. Banoo – Member 1 | – | – |
Dr E.N. Madela-Mntla – Member | 102 547 | 102 547 |
Dr T.M. Motshudi – Member | 86 595 | 86 595 |
Prof. A. Dhai – Member | 133 569 | 133 569 |
Prof. M.J. Mphahlele – Member 2 | – | – |
Dr U. Mehta – Member | 61 965 | 61 965 |
Dr M.S.M. Molefe – Member 2 | – | – |
Adv. H. Cassim – Member | 160 527 | 160 527 |
Mr T.N. Baloyi – Member | 166 387 | 166 387 |
Prof. K.C. Househam – Member | 184 269 | 184 269 |
Prof. H.P. Demana – Member | 60 818 | 60 818 |
Mr I. Mashau – Member | 72 811 | 72 811 |
Ms L Mothae – Member | 245 149 | 245 149 |
1 604 018 | 1 604 018 |
1 The Board fees reflect the actual claims submitted. At times board members opt not to claim for meetings attended.
2 Prof. J Mphahlele and Dr MSM Molefe are employees in the public sector – no fees claimed.
29. Related parties (continued)
Executive Management 2021
Basic Salary | Post- Employment Benefits | OTher Benefits Received | Total | |
Name | ||||
Dr B Semete-Makokotlela – Chief Executive Officer | 2 850 000 | – | 44 945 | 2 894 945 |
Ms P Nkambule – Chief Regulatory Officer | 1 521 591 | 103 654 | 44 844 | 1 670 089 |
Ms C Reyneke – Chief Operations Officer 1 | 478 210 | – | 10 379 | 488 589 |
Mr M Kgauwe – Chief Financial Officer 2 | 1 205 620 | – | 22 539 | 1 228 160 |
Mr R.B Gouws – Chief Financial Officer 3 | 300 000 | – | 6 731 | 306 731 |
Mr G Mtakati – HR Executive 4 | 654 173 | – | 12 585 | 666 758 |
7 009 594 | 103 654 | 142 023 | 7 255 272 |
1Appointed – January 2021
2Resigned – November 2020
3Appointed – February 2021
4Appointed – October 2020
30. Independent audit committee members remuneration
Independent audit committee members – fees for attending meetings
Mr. E.O. Omolo1 | 41 413 | 35 113 |
Mr. M.A.E Amod2 | – | 3 572 |
Ms. Y. Pamla3 | 30 741 | – |
Mr. B. Gordon4 | – | – |
72 154 | 38 685 |
1 Appointed 2 May 2020
2 Appointed 2 May 2020, Resigned July 2020
3 Appointed 1 April 2021
4 Appointed 1 April 2021 – Member appointed in the public sector – no fees claimed.
31. Prior period errors
Services in-kind received from the Bill and Melinda Gates Foundation (BMGF) were previously disclosed in the Notes to the Financial Statements. The services in-kind received from BMGF are significant to SAHPRA’s operation and the service delivery objectives. Based on the significance of the services, the prior period disclosure was insufficient as the recognition of the services in-kind needs to be recognised on the face of the Statement of Financial Performance.
The clearing of the deferred income qualification has resulted in the re-classification of deferred income balances that relates to backlog but were previously disclosed under normal business operations. Previous services rendered in the backlog project were not allocated to payments received and this has resulted in an understatement in prior year’s revenue recognised. The clearing excercise also resulted in reclassification between unallocated deposits received and income received in advance.
Recognition of revenue for Inspection fees were reversed due to apply SAHPRA’s revenue recognition policy – date of report versus date of inspection – as the revenue recognition point. Additional retention fees were recognised and a receivable was raised after a completeness of register test was performed.
Certain claims from local evaluators paid in the Backlog reduction project were incorrectly processed to the current year instead of the prior year. This resulted in additional expenditure in the prior year.
Commitments relating to office accomodation was restated after taking into account the leasehold improvements not previously taken into account.
The correction of the error(s) results in adjustments as follows:
Statement of financial position | ||
Deferred income – Backlog reduction project | 3 152 597 | |
Income received in advance | (11 660 327) | |
Receivables from exchange transactions | (815 097) | |
Unallocated deposits received in advance | 2 197 680 | |
Payables from exchange transactions | (393 865) | |
Statement of financial performance | ||
Fee income | 5 494 953 | |
Backlog reduction project – expenditure | (21 157 863) | |
Service in-kind-Backlog reduction project | 20 763 998 |
31. Prior period errors (continued)
31.1Prior-year adjustments
Presented below are those items contained in the statement of financial position, statement of financial performance and disclosure that have been affected by prior-year adjustments:
Statement of financial position | ||||
2021 | ||||
Note | As Previously Reported | Correction of Error | Restated | |
Deferred income – Backlog reduction project | (21 868 100) | (3 152 597) | (25 020 697) | |
Income received in advance | (107 223 891) | 9 462 647 | (97 761 244) | |
Receivables from exchange transactions | 11 252 061 | (815 097) | 10 436 964 | |
Payables from exchange transactions | (31 671 921) | (393 865) | (32 065 786) | |
(149 511 851) | 5 101 088 | (144 410 763) |
Statement of financial performance | ||||
2021 | ||||
Note | As Previously Reported | Correction of Error | Restated | |
Fee income | (101 733 589) | (5 494 953) | (107 228 542) | |
Backlog reduction project | 46 359 007 | 21 157 863 | 67 516 870 | |
Service in-kind-Backlog reduction project | – | (20 763 998) | (20 763 998) | |
Surplus for the year | (55 374 582) | (5 101 088) | (60 475 670) | |
Commitments | ||||
2021 | ||||
Note | As Previously Reported | Correction of Error | Restated | |
Office accommodation | 88 263 391 | (12 827 534) | 75 435 857 |
32. Financial instruments disclosure
Categories of financial instruments | ||
2022 | ||
Financial assets | ||
At Amortised Cost | Total | |
Trade and other receivables from exchange transactions | 5 738 767 | 5 738 767 |
Other receivables from non-exchange transactions | 9 452 150 | 9 452 150 |
Cash and cash equivalents | 244 373 304 | 244 373 304 |
259 564 221 | 259 564 221 | |
Financial liabilities | ||
At Amortised Cost | Total | |
Trade and other payables from exchange transactions | 15 656 404 | 15 656 404 |
Income received in advance | 191 526 908 | 191 526 908 |
Deferred income – Backlog reduction project | 12 476 800 | 12 476 800 |
219 660 112 | 219 660 112 | |
2021 | ||
Financial assets | ||
At Amortised Cost | Total | |
Trade and other receivables from exchange transactions | 10 436 964 | 10 436 964 |
Other receivables from non-exchange transactions | 34 674 | 34 674 |
Cash and cash equivalents | 150 764 296 | 150 764 296 |
161 235 934 | 161 235 934 | |
Financial liabilities | ||
At Amortised Cost | Total | |
Trade and other payables from exchange transactions | 32 065 786 | 32 065 786 |
Income received in advance | 97 761 244 | 97 761 244 |
Deferred income – Backlog reduction project | 25 020 697 | 25 020 697 |
154 847 727 | 154 847 727 |
33. Risk management
Financial risk management
The entity’s activities expose it to a variety of financial risks: market risk (including currency risk, fair value interest rate risk, cash flow interest rate risk and price risk), credit risk and liquidity risk.
SAHPRA’s s risk management policies are established to identify and analyse the risks faced by SAHPRA to set appropriate risk limits and controls and to monitor risk and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in SAHPRA’s activities. SAHPRA, through its training and management standards and procedures, aims to develop a disciplined and effective control environment in which all employees understand their roles and obligations. The Audit and Risk Committee oversees how management monitors compliance with SAHPRA’s risk policies and procedures, and review the adequacy of the risk management framework in relation to the risk faced by the entity. The Audit and Risk Committee is assisted in its oversight role by the Internal Audit. The internal audit undertakes both regular and adhoc financial reviews of controls in place to mitigate the risk which are reported to the Risk, Audit and Governance Committee. There are no significant changes compared to the prior year.
Debtors are assessed at year end for recoverability and the necessary provision for write off will be raised if deemed material.
SAHPRA’s financial instruments consist mainly of cash and cash equivalents, receivable and payables. Bank deposits and balances, receivables and payables approximate their fair values due to the short-term nature of these instruments. The fair values together with the carrying amounts have been determined by using available market information and are presented in the statement of financial position.
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.
The table below analyses SAHPRA’s financial liabilities into relevant maturity groupings based on the remaining period at the statement of financial position to the contractual maturity date. The amounts disclosed in the table are the contractual undiscounted cash flows.
Maturity groupings | Later than one month | Later than one month and no three months | Later than one month and no three months | Later than one month and no later later than five | Total |
Trade payables from exchange transactions | – | 4 763 825 | – | – | 4 763 825 |
Revenue received in advance | – | – | – | 204 003 708 | 204 003 708 |
Provisions | – | – | 14 197 149 | – | 14 197 149 |
Operating lease payable | – | – | 3 259 196 | – | 3 259 196 |
Accrued expenditure | – | – | 6 673 294 | – | 6 673 294 |
Salary accruals | – | – | 1 584 383 | – | 1 584 383 |
Accrued thirteenth cheque | – | – | 2 251 260 | – | 2 251 260 |
Travel lodge card | 383 642 | – | – | – | 383 642 |
383 642 | 4 763 825 | 27 965 282 | 204 003 708 | 237 116 457 |
33. Risk management (continued)
Concentration of risk | ||||
Neither past due nor impaired | Past due but not impaired less than two months | Past due but not impaired more than two months | Carrying amount | |
Revenue received in advance | 204 003 708 | – | – | 204 003 708 |
Receivables from exchange and non-exchange transactions | – | – | 15 190 917 | 15 190 917 |
204 003 708 | – | 15 190 917 | 219 194 625 |
Credit risk
No credit limits were exceeded during the reporting period, and management does not expect any surplus (deficit) from non- performance by these counterparties.
Financial assets exposed to credit risk at year end were as follows:
Cash and cash equivalents | 244 373 304 | 150 764 296 |
Receivables from exchange and non-exchange transactions | 15 190 917 | 10 471 638 |
Market risk
Market risk is the risk that changes in the market prices such as interest rates, will affect SAHPRA’s income and value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposure within acceptable parameters, whilst optimising the return. SAHPRA’s is then exposed to one primary type of market risk, namely, interest rate risk.
Interest rate risk
As the entity has no significant interest-bearing assets, SAHPRA’s income and operating cash flows are substantially independent of changes in market interest rates.
34. Going concern
The annual financial statements have been prepared on the basis of accounting policies applicable to a going concern. This basis presumes that funds will be available to finance future operations and that the realisation of assets and settlement of liabilities, contingent obligations and commitments will occur in the ordinary course of business.
The potential adverse impact of COVID-19 has been considered by SAHPRA and is considered to have an insignificant impact on the ability to continue as a going concern.
35. Grant funding
35.1 Bill and Melinda Gates Foundation
During the year under review, SAHPRA received an in-kind donation from the Bill and Melinda Gates Foundation (BMGF). There is an in principle agreement in place between SAHPRA and the BMGF to financially support the “Backlog Reduction Project”. The support is specifically for:
– Providing ongoing backlog clearance project management support in the development to the official launch of the project and harmonisation of ‘business as usual’ with backlog processes.
– Recruitment, management and payment of international evaluators to support backlog clearance programme.
– Development of guidelines and procedures.
The maximum benefit for the period under review amounts to R15,3 million (2021: R19,9 million).
Refer to note 22 for more information regarding the Backlog reduction project expenditure and note 18 for the services in-kind note
35.2 Centers for Disease Control and Prevention – (Centers for Disease Control and Prevention – NDoH)
During the arior years , SAHPRA received a grant from the NDoH-Center for Disease Control and Prevention partnership (NDoH-CDC). NDoH-CDC Cooperative Agreement will provide R27 million towards SAHPRA’s Backlog Clearance.
Programme for the specific purpose of clearing applications related to HIV and TB drugs including DTG and TLD as first priorities. The benefit for the period under review amounts to R nil (2021: R2,1 million).
35.3 The African Union Development Agency – New Partnership for Africa’s Development (Auda-Nepad)
SAHPRA received a grant from Auda-Nepad to complement and support activities implemented in the AU-3S Target Countries towards strengthening of Safety Monitoring Systems for COVID-19 Vaccines. Refer to note 18 for the grant realised.
35.4 Clinton Health Access Initiative (CHAI)
CHAI has committed to support SAHPRA with necessary funding to ensure that SAHPRA can licence local pharmaceutical manufactures to produce and export their products globally but ensuring that these products are safe and efficacious.
Refer to Note 4 for amount invoiced for the project.
CHAI has also funded SAHPRA through CSIR to assist SAHPRA with data analytics and analyse healthcare professionals’ COVID-19 vaccination data generated through the Sisonke project and data that will be generated from subsequent vaccination rounds, all of it captured through the Vigilance Hub.
Refer to note 18 for the service in-kind note showing benefit received.
35.5 Global fund
The NDoH has through Global Fund resolved to fund SAHPRA to speedup the finalisation of the backlog of the registration of all applications for health products, ensure access to medicines to the public and to ensure effective medicine regulation in the Republic.
Refer to note 20 for for breakdown of grant received and note 10 for unspent grant.
36. Fruitless and wasteful expenditure
Opening balance as previously reported | 47 232 | – |
Add: Fruitless and wasteful expenditure identified – current year | 32 000 | 47 232 |
Less: Amount written off – current year | (47 232) | – |
Closing balance | 32 000 | 47 232 |
The determination relating to the prior year transgression has been concluded and the amount was subsequently written off. The transgression identified in the current year related to the payment for the replacement of lost spare keys. Determination on this matter is under way.
37. Irregular expenditure
Opening balance as previously reported | 10 369 881 | 5 038 900 |
Add: Irregular expenditure – current year | 3 009 868 | – |
Add: Irregular expenditure – prior period | – | 6 268 808 |
Less: Amount recovered – current year | (12 750) | – |
Less: Amount incorrectly classified as irregular expenditure | – | (6 335) |
Less: Amount condoned | (10 357 132) | (931 492) |
Closing balance | 3 009 867 | 10 369 881 |
All irregular expenditure raised in previous financial years has been condoned by the National Treasury following the implementation of consequence management.
Three transgressions were identified in the current year relating to non-approval of contract variations and incorrect B-BBEE score utlised. Determinations were conducted for the new transgressions and consequence management to follow.
38. Reconciliation between budget and statement of financial performance
Reconciliation of budget surplus/deficit with the surplus/deficit in the statement of financial performance:
Net surplus (deficit) per the statement of financial performance | 28 237 337 | (19 656 868) |
Adjusted for: | ||
(Under) / over expenditure on backog reduction project | 4 797 228 | 20 752 872 |
Prior period error adjustment | – | (6 310 050) |
Increase / decrease in backlog reduction project – grant received | 28 855 396 | 23 735 075 |
(Increase) Services in-kind | (15 348 507) | – |
Grants realised | (1 435 722) | – |
Backlog reduction project – grant received | (7 889 314) | – |
Over expenditure on impairment of assets | 404 044 | 624 618 |
(Increase) / decrease in fee income | (6 950 264) | 95 852 523 |
(Increase) / decrease in interest received | (5 558 112) | 1 993 438 |
Under expenditure on employee related costs | (5 790 060) | (68 681 994) |
Over expenditure on operating leases | (3 212 275) | (9 616 144) |
Under expenditure on operating expenses | (28 702 061) | (47 540 829) |
Over expenditure on depreciation | 7 016 149 | 5 558 241 |
Over expenditure on contracted services | 2 480 | (49 967) |
Over expenditure on loss of disposal of assets | 376 028 | 1 228 163 |
Over expenditure on bad debts | 5 537 961 | 2 795 929 |
Increase in transfer of assets | – | (767 922) |
Increase in gain on foreign exchange | (127 249) | (171 284) |
Increase in sundry income | (213 059) | (2 325 801) |
Decrease in grant received | – | 2 580 000 |
Net surplus per approved budget | – | – |
39. Budgeted differences
Material differences between budget and actual amounts
39.1 Fee and sundry income
Fee income is higher than budget due to the effect of fees gazetted and more applications received than anticipated. Sundry income is more than budget due to proceeds received, previously not budgeted for.
39.2 Interest received
Interest received is higher than the budget due to a higher interest rate received on invested cash at the Corporation for Public Deposits.
39.3 Employee-related costs
Employee related costs are lower than the budget due to delay in appointments.
39.4 Asset-related expenditure
Depreciation, impairments and loss on disposal are not budgeted for as SAHPRA utilises a cash basis for budgeting.
39.5 Operating expenses
Operating expenses are lower than budget due to planned expenditure not finalised as anticipated.
39.6 Backlog reduction project
Expenditure is more than budget due to applications not finalised as anticipated.
39.7 Lease rentals on operating lease
Expenditure is lower than budget due to delay in relocation of the Cape Town and Durban offices and the reassessment on levy rates which resulted in a significant credit note applied by the lessor.
39.8 Grant revenue
Grant revenue not budgeted for.
39.9 Non-cash expenditure
Non-cash expenditure is not budgeted for as SAHPRA utilises a cash basis for budgeting.