Financial review

SUSTAINABLE FUNDING

In 2019 we were able to sustain good revenue levels despite not receiving several Grants from SOEs and again not being able to leverage Lottery support. Our corporate funding has improved and efforts at obtaining small grants from local authorities has delivered good results. The transition of the call centre business has sustained growth despite the change process and the annuity model provides continuous consistent funding.

COVID -19 will have significant impacts on funding for 2020 and the future as Bank rejections and Debit Order cancellations increase due to the economic downturn. We estimate the impact in 2020 to be about 20% of revenue.

INCOME AND EXPENSES

Grant revenue decreased by 36% in 2019, donations and bequests increased by 5%, call centre income increased by 7% so that total revenue was up by 4% just matching inflation. Raising funds is an activity requiring exceptional effort, charity doesn’t happen passively. It is unfortunate that National Government and SOE support has declined given the exceptional strategic national service we provide but I think we all understand the impact of corruption and state capture on each of these entities. It’s real and it is directly affecting our ability to raise funds from the state. Our gratitude to business and private individuals who continue to support us is expressed with sincerity, we can assure donors that funds are deployed to both guarantee, sustain and expand the service. Even during COVID-19 our operations have continued unabated.

The significant changes in expenditure relate to the call centre and capital projects. We have halved the call centre expenditure by taking over the business and still sustained revenues from that business. An independent valuation of the call centre business, by Dr John W Hendrikse (B.Com, MBA (Cum Laude), Ph.D), put the value of the business at R70 million in 2019. The NSRI Endowment Trust funded the purchase of the call centre business and in a single year we have recovered more than 50% of the cost. The business should be paid for in two years.

Our Capital Projects have finally taken off and we have been able to deliver the first 14m ORC Vessel and start the construction on two more. Major capital projects at Hermanus and Simons Town are complete. Several minor projects are also in process allowing for an expanded footprint of services along the coast and inland.

It is also significant that the NSRI External Audit for 2019 is a Clean Audit with no Qualification for the first time in over 50 years.

COVID 19 has already impacted on our cash flow but with careful planning and programming we can maintain capital expenditure on essential projects and ensure that operations remain fully capacitated.